David L. McCormick

An experienced and approachable attorney with the skills needed to resolve your legal problems

How money laundering works

On Behalf of | Aug 5, 2021 | White Collar Crimes

White-collar crimes in Minneapolis, Minnesota, are rarely violent and are committed for financial gain. The term “white-collar crime” derives from the usual offender, which includes employees in financial sectors. One type of this crime includes money laundering.

Overview of money laundering

Money laundering commonly involves three steps: placement, layering and integration. A common method involves setting up a legitimate business as a front for illegal activity. For example, if a scammer uses a restaurant as a front to sell smuggled jewelry, this would be the placement phase. The scammer sells the stolen jewelry and makes the transaction look legitimate by listing it in the books.

During the layering stage, the scammer could deposit funds in accounts with different names or in another country. The scammer then integrates the money by buying business equipment to make it look like a legitimate transaction.

Other money laundering variations

Structured deposits, or smurfing, involve making several small transactions to hide illegal funds. In the United States, banks must report large transactions of $10,000 or more to the government.

Several countries have private banking laws, which scammers can use to their advantage. Scammers may use the hawala system, an underground banking system, allowed in some countries to transfer money without actually moving it. This system does not keep records, so it makes tracing transactions difficult, but many countries make it illegal.

Another method is to use a shell company, which is a business that only exists on paper with no employees or assets. The scammer only creates it to look like a legitimate business for money laundering, but they could use fake invoices.

A person does not have to complete a white-collar crime successfully to get charged. However, prosecution needs substantial evidence, even in simple cases, so it may be possible to have the charges reduced or dismissed.