Why is it called money laundering?

On Behalf of | Jan 13, 2019 | Firm News

You’ve probably heard of money laundering. You know it has to do with moving money around to try to hide illegal activity. You know that the act of laundering it is also illegal in its own right. But have you ever wondered why they call it that to begin with?

You really just have to think of the end goal of the process, and it makes a lot of sense. Initially, you start off with “dirty money.” This is usually money that is related to a criminal enterprise. Maybe you got it by selling drugs or embezzling money from a company or defrauding people who thought you were going to invest the money for them. Regardless, it comes from an illegal source.

That makes it problematic for you. You can’t really use the money without setting off a lot of red flags. If your tax returns say you make $60,000 per year and you’re spending like someone who makes millions, it’s pretty clear that something does not add up.

What you need to do, then, is take that dirty money and turn it into clean money. Just as with clothes, people refer to this process as laundering. After you do it, the money appears to come from a legitimate source and you can use it as you wish.

What is a front?

A front is a business that helps turn that dirty money into clean money. It may be a legitimate business in its own right — a restaurant or a car wash, for example — and people may go to it without realizing that it is part of the scheme. But the real goal for the business is simply to take in and then distribute the dirty money.

Someone could do this, for instance, by running extra transactions through at the restaurant for meals that were never ordered and never prepared. These meals can then get paid for with the dirty money. The paperwork shows that the money came to the restaurant in what appears to be a legal manner. After the restaurant receives the money, it then goes into the owner’s bank account and gets redistributed.

From the outside, it looks like a restaurant owner is having a very good year and staying busy. In reality, they’re doing something else on the side and funneling the money through the failing restaurant. The bookkeeping attempts to hide it.

Facing charges

As noted at the beginning, this process is illegal. If you’re facing some serious federal accusations, the outcome of the case could have a drastic impact on your future. You must know how to fight for that future and protect your rights through your viable defense options.