What is money laundering?

By: Caden Ligman

Image taken from: https://www.information-age.com/rapid-change-same-threat-money-laundering-rapidly-evolving- challenge-123458401/

The U.N. Office on Drugs and Crimes estimates that annually, up to $2 trillion was made from illegal businesses globally. In the U.S. alone, this number is about $300 million, about two percent of the US’s economy. However, in order to cover up this illegal revenue, criminals hide their money. In order for them to actually be able to access their money they must be able to hide, and move their funds. Therefore, criminals resort to money laundering.

Money laundering is the process of cleaning illegally obtained money from its criminal origins. Placement, layering, and integration are the three basic steps involved in money laundering.

Placement is when Illegally made money is invested into companies or operations that seem legitimate. This is done by depositing large amounts of money into a bank account by posing as someone else. Depositing large amounts of money into a bank account however can raise suspicions among the feds.

The second step is layering. Layering is the process of distancing the funds from their origin. For example, someone who is laundering money might purchase real estate or expensive cars. This allows money launders to store their wealth in assets.

The last step, which is integration, Is the process of re-entering the money into the economy so that it can be spent or invested. Money launderers may invest in a legal business where they will claim payment by producing fake invoices that were never actually paid.

Money laundering has potential devastating economic, and social consequences. America’s greatest threats, such as drug dealers, terrorists and arms dealers, use money laundering to grow their operations. According to a report done by the U.N., laundering costs countries around the world $800 billion to $2 trillion each year. Money that is laundered also goes untaxed which results in higher taxes for average citizens.

There are also social effects money laundering has, money laundering also drives up the cost of government because of the need for extra law enforcement.

Today, the United Nations, and national governments, fight against money laundering, yet this practice still plays a major role in global crime. Not only have individuals practiced money laundering, but governments and high ranking officials have as well. No one knows for sure the total amount of money laundered around the world each year, but some believe it to be in the hundreds of billions of dollars.

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