Money Laundering is something commonly affiliated with the mob, but that’s not the only place you will find it being put to use. Money laundering is the act of hiding large sums of money to protect it from being taxed and monitored from government eyes. Its often a method used and involved with ‘dirty’ money, or in plain explanation, money that is earned in an unethical manner. It helps the rich stay rich, and comes down to being a very complex sequence of events that leads to the money being clean and very usable. The ability to avoid taxation on the large amounts of cash this normally falls in coordination to saves SHITLOADS of cash, which is only an inconvenience to the people who don’t get to have a share of the wealth.
Another type of money laundering involves corporation owners funneling International transactions through different payment services that won’t get tracked back to a US bank account. This is a very common practice for online services and payment processors that are capable of shifting money to different places without getting tracked by The Man.
Why the hell do people do this, you ask? Easy, the government feels that if you are making money in the US, you have to basically pay your respects. And this isn’t chump change either, they’re taking out around 35% based on how much you make.
Let’s make it clear that money laundering is a crime that carries a normal conviction time of a 6 year jail sentence. It is commonly found that most offenders of this are either career criminals such as drug dealers, embezzlers, pimps, prostitutes, and well, you get it. Other common offenders while I’m sure you will be shocked to hear it are: Corrupt politicians, con artists, and public officials that take bribes to make certain political outcomes lead to a particular destination.
The problem is that when these individuals acquire a large amount of physical cash they can’t simply deposit it into a bank, it will create a red flag, and end up being investigated. Banks that operate in the United States by law have to report deposits that exceed $10,000.00. Do the people who make deposits of $10,000 plus dollars in a brown lunch bag really think it doesn’t look suspicious? Sometimes you have to wonder, but either way, they have found effective ways around this particular problem.
Money laundering comes down to a composition of stages to make it seem like the money earned is from a legitimate source. Crime affiliated sources often try to link it up to a business of sorts to act as a cover, and to make the funds look as though they are earned in an honest way. Either way you look at it money laundering comes down to 3 clear steps that leads to ‘dirty money’ becoming ‘clean money’.
Step 1- Placement
At this stage the individual that is laundering the money puts it into a legitimate financial institution. This stage has a high level of risk and is often something that is given to a particular individual to make several stops at different locations to avoid suspicion. The problem however is that banks by law are required to report high-value transaction which will draw unwanted attention to the person committing to the money laundering process.
Step 2- Layering
Additional layering is when you send money through a number of different financial transactions to give it a different form of value and making it harder to follow/trace. This could be a number of different wire transfers, bank to bank transfers, transfers to different names in different countries, currency exchange, high-value purchases such as cars, boats, and houses, and making continual withdrawals and deposits of different amounts to throw confusion into the mix. The overall concept of this process is changing the actual form of the money, and making it as difficult to trace as possible. This is the most complex step of the stages and is what makes the ‘dirty money’ very difficult to trace.
Integration is when the cash comes back into the ‘mainstream economy’ as a legitimate source of money. It comes from a legal transaction that essentially makes the money ‘clean’. This could be something such as a final bank transfer into the account of a local business that takes on the image of an ‘investment’ in exchange for a profit cut. It could also be identified as a purchase of a very expensive boat or home. At the integration part of money-laundering it is very unlikely that the individual will be caught unless there is a long paper trail that has been followed since the very initial stages. Once the integration period comes around the finances can essentially be disputed as legitimate and clean.
Ex. Walter White from Breaking Bad had his money integrated into his car wash by creating fake cash transactions. These transactions would then get claimed for tax reasons, and it keeps Uncle Sam happy and you under the radar.
There is also the use of offshore banks to hide money as well on account that their money laundering regulations are either non-existent, or far less strict than the banking laws in the US. Individuals who commit to money laundering look at this as a potential way to move their money without drawing attention to themselves. Examples of the banking institutions would be an offshore account in say, the Cayman Islands. To avoid US soil, you’ll need to have all overseas transactions handled by an overseas payment processor; along with a corporation setup in another country with everything avoiding US soil. Corporations should be setup as a layered entity, meaning that if you are the president of your company, nobody should know about it but you. A lot of online gambling companies have these protective layers to avoid any backlash.
Another example of money laundering practice is the usage of casinos. At casinos ‘dirty money’ can be used to purchase chips, which then can be exchanged for ‘clean money’. Even under the circumstances of looking into the identification of who purchased the chips, from this point forward there is no way of proving whether or not the money was ‘dirty’, which puts the federal agents at a great disadvantage to prevent this kind of laundering.
Money laundering is a process that has become easier to accomplish over the passing of years due to the rise of various global financial markets. Bank secrecy laws protect individuals that are depositing money, and while the government throws a hissy fit over trying to get identification of ‘x’ individual, the money is being moved and layered, and then becomes untraceable.
The various guidelines banks run under in the United States, as well as specific countries financial regulations, make the process of money laundering more tricky and challenging. In the past these kinds of guidelines didn’t exist, and as a result of these guidelines there has been more and more involvement with offshore accounts to act as a ‘middle-man’ to make the operation still much easier to accomplish. Rules are made to be broken, and this is a great example of how to do it. As the ‘rules and regulations’ of financial exchange continue to become more strict in specific areas it’s simply a given that these finances will be moved off the grid to make it happen anyway.
In regard to the law discovering the various tricks that are in play, it isn’t so much that they discover it on their own. It isn’t coming down to a new implementation of ways to crack these financial trickster’s ways, or the discovery of a way to break the operation wide open, it is more along the lines of catching someone who isn’t as good at completing the money laundering operation. It’s taking one person who is capable of being a ‘rat’, and when you catch an individual that isn’t one of the higher ups they will beg for mercy while giving away the real people who run the show.
The result of money laundering becoming such a large threat to financial ‘fairness’ in the United States has led to businesses having to submit all of their information to a kind of ‘anti-money laundering league’, which allows the government to keep strict tabs on businesses and make sure they are running in accordance with the law. Even under these situations you fall under the threat of corrupt officials in all areas of the political party, but that doesn’t mean that there aren’t still honest people out there trying to insure that things are running as they should. The fact is, who is going to turn away $50,000-$100,000 to turn a blind eye? That’s the real question of justice right there.
The penalty for money laundering falls under several different degrees of punishment, but the average sentence according to a 2001 report in which there were 900 convictions for the charge of money laundering, was 6 years of prison time. The consideration to whether an individual considers 6 years of their life worth the payoff of successful money laundering is a questionable concept to consider for the simple fact of this: would you consider a life-time of wealth and financial freedom worth the risk of loss for 6 years of life? Perhaps even less than that? That’s the scary part, it’s actually a very difficult thing to consider and really wonder whether or not that kind of risk is worth the payoff.
Money laundering effects the financial governing of the US in several ways. Every year between $500 billion and 1$ trillion dollars are laundered. This leads more corruption, more job loss and pension cuts, more drug-related crime, and more of a disadvantage to the business owners that don’t commit in these kinds of acts. Money laundering has an enormous negative impact on society as a whole outside of the individuals that are committing the crime, whom are profiting some incredible numbers.
With such large amounts of profit in this kind of illegal action it’s safe to say that it isn’t going to stop anytime soon. There is no real reason for the individuals committing the crime to stop when they are accomplishing such profits. This doesn’t make it right, but on the grounds of common sense, if you were doing something that was bringing in millions of dollars a year and you hadn’t been caught yet, why would you stop? The individuals who run this operation think the same exact way. Who doesn’t love to be up to their neck in money?