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What is Money Laundering and Why is it Illegal?

Money laundering is a common topic on police shows and in spy movies. It sounds dramatic and it adds spice to the plot of the show. However, most people do not actually know what laundering money really is and why it is illegal.

If you have been charged with money laundering, you need a strong defense attorney.
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What is Money Laundering?

According to the federal government, money laundering occurs when a person obtains money in an illegal manner and tries to hide, disguise, or conceal the nature of the money, the source of the money, or control of that money. In simpler terms, when money is gained from illegal purposes, a person who tries to hide where that money came from by using it for legitimate purposes is committing the criminal act of money laundering.

A typical money laundering theme in movies shows a mobster robbing a bank. Then, after returning from the crime spree, the mobster “funnels” the money through his construction business as “payment for services” that was not really completed. The money is then accounted for legally, the business pays taxes on these funds, and the money is “washed.”

The “Capone Factor”

You may ask yourself why a criminal would go through all the efforts of cleaning money that they had gotten illegally so that they could pay taxes on it. No one likes to pay taxes, so it would seem ridiculous that someone committing a crime would willingly do so. The answer to that question is simple: Al Capone.

Al Capone was one of the most notorious gangsters from the early 1930’s. Notorious for bank robberies, boot legging, and even suspected of several different other crimes including murder, Al Capone was at the top of the list of gangsters.

Capone and his gang were incredibly smart and the police and other law enforcement services could never connect him to any of the alleged crimes they believe that he was connected to. There was never any evidence. However, the Internal Revenue Service came up with an idea: audit his bookkeeping. After an intense investigation, it was discovered that the money that Al Capone had did not match his income level. Capone was charged with tax evasion and sent to prison for 30 years.

It did not take long for other gangsters and those involved in criminal activity to realize the potential of being sent to prison for tax evasion if they were not caught for their actual crimes. Criminals then began to hide their money and misdirect their ill-gotten cash so that taxes were always paid on the wealth that they enjoyed.

Common Money Laundering Schemes

Money laundering can occur in a variety of manners. The schemes can be very complex or very simple. However they occur, they are still all considered illegal. Some of the most common schemes include:

  • Funneling through a Cash Business. Several businesses are famous for accepting a lot of cash for their transactions. This includes home repair, lawn services, food vendors, paid parking lots, strip clubs and bars, casinos, and beauty salons. Many people create receipts for services never provided and wash the money through the business.
  • Small Deposits with Money Orders. Purchasing money orders in small sums and making small random deposits is a simple way to wash money. Criminal purchase money orders in various amounts from random locations and then make bank deposits. The deposits are so small that they do not send off warning signals at the bank, and since they are not in cash, they are not considered suspicious. Keeping deposits under $10,000 also keeps the bank from notifying the authorities of large bank transactions.
  • Bulk Cash Smuggling. Although this has become harder to do, many criminals try to smuggle bulk lots of cash into foreign countries to deposit the money into off shore accounts. This usually takes place in countries with little interest in pursuing money laundering criminals and not provide deposit information to other governments.
  • Casino Winnings. The illegal money is used to purchase casino chips. The criminal plays on the floor for a while and then cashes in the chips for a lump sum check. Once the check is received, it is deposited as gambling winnings and reported on their taxes.
  • Cash Real Estate Deals. Many criminals use the cash to buy distressed properties and then fix and resell the property for legitimate money and a profit.

Of course, there are many other schemes that are being used to launder money. This is just a sampling of the most common schemes seen in criminal court.

Money Laundering is a Crime

Because of the impact that money laundering has both nationally and internationally, money laundering schemes are often charged under national and international laws. Anyone charged with this type of crime will automatically face federal charges with the possibility of international charges depending on where the money was laundered.

To be charged with money laundering, the prosecutor must show that the persona accused:

  • Willfully and knowingly engaged in a financial transaction;
  • The money used in the financial transaction was from an illegal action; and
  • The purpose of that transaction was to hide the origin of the money.

The prosecutor may add additional charges to the crime of money laundering if they see fit.

If you or your loved one has been charged with the serious crime of money laundering, it is in your best interest to seek help from a lawyer who understands the severity of these charges. Money laundering is often associated with racketeering and organized crime and additional charges for these crimes may be attached to the money laundering charges.

Many of these charges could lead to immediate seizure of your property, assets and the money in question. It will be imperative to protect your rights and your possessions when being charged with this type of crime. Hiring an aggressive criminal defense attorney for money laundering will be your best chance at building a defense for these serious charges.


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