What is Money Laundering
What is money laundering?Originally money laundering meant taking money that was generated from some kind of criminal activity, such a drug dealing or gambling, and making the money look legitimate. For example, if a criminal organization takes in $150,000 in cash it may want to keep its money in a bank, especially if the organization is taking in that amount of money each week. Why a bank? First, because it is safer than keeping it hidden in a home or a warehouse. Like everyone else, criminals are afraid of being robbed. Second, because it is much easier to spend the money if it is not in cash. It is hard to hide paying $300,000 for a home in $20 bills.
Today, the term "money laundering" is used to describe a number of federal offenses involving cash or property derived from most federal crimes. It is not just limited to efforts to make dirty money look clean. The kinds of activity made criminal is described later
How is money laundering committed?In many different ways. For example an unlawful gambling enterprise may invest its profits in a restaurant. Because restaurant customers frequently pay in cash, the enterprise can have the restaurant inflate its sales and "run the cash" through the restaurant. Cash deposited in the bank then looks like it came from a legitimate business; once in the bank it can withdrawn and used for any purpose without question.
Any time someone makes a deposit at a bank for more than $10,000--this means 10,000.01-- the bank must fill out a currency transaction report (known as a CTR) notifying the federal government. To avoid this reporting requirement, criminals will divide up their cash into amounts under $10,000.01 and deposit the lesser amounts on different days or on the same day at multiple banks.
What are other kinds of money laundering.While money laundering originally referred to making dirty money look clean, today it covers other kinds of conduct as well. Transporting more than $10,000 into or out of the United States without filing a report at the border is a crime. Hiding ill gotten gains from the government can be a crime in some circumstances. For instance, if a drug dealer puts his money into a safe deposit box for the purpose of hiding the money, that can be a crime as well.
Some criminal organizations engage in very elaborate and sophisticated financial transactions to keep their profits in their hands and away from the government.
Why is money laundering a crime?Most of the crimes punished by the federal government are committed for profit. Federal law enforcement agencies have decided that one of the most effective means of stopping these crimes is to take the profit away.
How do I avoid getting into trouble?If you are traveling and carrying more than $10,000 in cash or travelers checks, be sure to fill out a report when you leave or enter the United States.
If you have more than $10,000 in cash, don't divide it up into smaller amounts before taking it to the bank. Trying to prevent a bank from reporting the transaction in this fashion is called structuring and is a crime.
If you receive more than $10.000 in connection with any single transaction, say you sell a car or a boat, be sure to get identifying information from the purchaser (a copy of their drivers license would be good), fill out a form 8300 that you can download from the IRS, and file it on time, within 15 days.
Don't commit any crimes in the first place.