Money laundering is an illegal activity where criminals make their dirty money look clean. It’s often used to hide money from illegal sources but can also be used to hide legitimate money, like in wealthy divorces where one party doesn’t want to share with their ex.
The process generally starts with depositing the illicit money into a bank account or spending it on expensive items. Then, they try to mix these funds around to disguise where they came from, using electronic transfers or selling off the pricey goods.
With the rise of digital tech, money laundering has become easier. Criminals use the Internet, foreign banks, and fake companies to hide their money. Strict national privacy laws make it harder for authorities to track down these assets.
Take Nauru—an island nation with only a few thousand people but about 400 registered banks. This raises suspicions that it might be a haven for criminals, especially Russians. However, big cities are usually more popular for laundering due to the high volume of daily financial transactions, which helps criminals remain unnoticed.
Interestingly, money funding extremist groups often starts as legal money, making it hard to detect initially. Banks must now report any suspicious activities. However, what’s considered ‘suspicious’ can be vague. For example, transferring over $10,000 needs to be reported and explained. To dodge this, some criminals use a method called “smurfing”—moving amounts just under $10,000 repeatedly to avoid detection.
Everyone can help fight money laundering. While banks and financial institutions are the first line of defense, business owners also need to be on the lookout. If a customer seems unusually wealthy or makes large purchases and you question their ability to afford them, stay alert.
It’s important to know your clients well. Police and customs officers can seize money they believe is tied to money laundering. Reporting any suspicious behavior can protect you from being accused of helping.
One major case involved Liberty Reserve, a company that laundered over $6 billion and served more than a million clients, handling 12 million transactions each year.
In the UK, it’s estimated that £27 to 57 billion is laundered annually, showing just how big this criminal activity is, especially with today’s digital advancements.
For those involved in money laundering cases, legal teams like Burton Copeland’s offer specialized assistance.