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Money laundering: Turning dirty money into legal cash

No matter how clean the name sounds, money laundering is an ugly process that takes illegal earnings and makes them appear legal through a series of transactions and investments. Most people do not understand the process of money laundering or know what the consequences entail.

The process

Money laundering has three stages: placement, layering and integration:

  1. Placement – how the funds initially enter the financial system. This stage is the most vulnerable position for money laundering to take place.
  2. Layering – a series of transactions designed to conceal where the money actually came from. The transactions are often sent out of the country to evade detection.
  3. Integration – funds are acclimated to the legal economy where they are used for any purpose.

Many countries, including the United States, set up requirements for financial institutions to report any suspicious operations or traces of “dirty money.” However, there are a handful of countries with few banking regulations and are considered havens for money laundering.

The repercussions

The U.S. has several laws that prohibit money laundering in different forms. Each law builds off the last by adding new ways people approach money laundering and how financial institutions can safeguard themselves from money launders.

The Bank Secrecy Act (1970) initially established requirements for reporting by private individuals and institutions for transactions over $10,000, properly conducting individuals making transactions and maintain a paper trail of financial transactions.

There would be six more laws enacted from 1986 through 2001 to prevent money laundering from drug traffickers to terrorist cells. The most recent act was the Intelligence Reform and Terrorism Prevention Act of 2004 – which required certain financial institutions to report cross-border electronic transmittals of funds.

With the growth of internet crime, more launders resort to the dark web to turn their “dirty money” into legal cash. Fortunately, many state and federal laws track launders online and using money laundering as the anchor for several crimes.

Typically, people who are charged with money laundering are connected to other crimes such as drug trafficking, embezzlement and fraud. The combination of charges can make the punishments more severe. In Georgia, you can spend up to 20 years in prison with additional fines for a felony conviction.

Money laundering may sound clean, but it’s a dirty process that helps criminals continue their illegal behaviors. Do not associate with any schemes that may help someone “clean” their illicit earnings or be tied to racketeering.

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J. Pete Theodocion, Attorney at Law
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Augusta, GA 30901

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