Financial regulations in the United States are set to prevent money earned illegally from being introduced into the financial system. Because of this, some individuals who earn money from activities like the drug trade or other illegal methods have to find a way to make the money they earn appear as though it was obtained legally.
The law takes a harsh stance against illegally earned money because it’s viewed as a way for criminal enterprises to remain operational. Understanding a bit about how money laundering occurs is critical.
3 stages of money laundering
Money laundering typically occurs in three stages. Each of these serves an important purpose that’s meant to make the money seem legitimate.
- Placement: The illegally earned money is introduced into the financial system through a bank, business or high-asset goods.
- Layering: The money goes through a series of transactions, such as sending offshore, transferring between accounts or converting to cryptocurrency, to disguise the origin of the funds.
- Integration: The money is reintroduced into the economy in a way that makes it appear as though it was earned legally. This includes things like using fake companies or investing in real estate.
Money laundering is the way that some individuals can make illegally gained money appear legal, but it can lead to criminal charges. This white collar crime can lead to serious consequences if a conviction occurs. Anyone who’s facing these charges should ensure they have the assistance of someone who can help them determine what defense strategy they should employ.
