Money laundering

According to the U4 Corruption Glossary, money laundering is the process whereby the origin of dishonest and/or illegally obtained money is concealed so that it appears to come from a legitimate source. Money laundering is often use to disguise the proceeds of corruption, and is widely practiced by drug traffickers, human traffickers, kleptocrats and white-collar criminals. Bank secrecy and tax havens make laundered money particularly hard to trace.

For international legal efforts to control money laundering see:

• the United Nations Convention Against Corruption

• the United Nations Convention Against Transnational Organized Crime and its Protocols

According to ACAMS International Glossary of Key Money Laundering Terms and Acronyms, the term 'Money laundering' is described as the process of concealing or disguising the existence, illegal source, movement, destination or illegal application of illicitly derived property or funds to make them appear legitimate.

It generally involves the placement of funds into a financial system, the layering of transactions to disguise the source, ownership and location of the funds, and then the integration of the funds into society in the form of holdings that have the appearance of respectabil­ity.

The definition of money laundering varies in each country where it has been made a crime. With the focus on terrorist financing and the laundering of funds used to facilitate terrorism, money laun­dering can now be looked at as the process by which funds are moved out of the reach of legiti­mate, oppressive or corrupt governments.

Criminals in the United States might launder their ill-gotten gains to avoid the U.S. authorities. North Korean citizens might try to hide any family heir­looms of value in order to avoid confiscation by the Communist regime. Small businessmen in Russia might avoid reporting income or might run their businesses “underground” to avoid corrupt local tax collectors.

This view of money laundering is useful when considering the motives, as well as the cultural or national differences, in money laundering schemes.