Can someone explain what 'Money Laundering' is in simple language?

Answer 1

Its taking illegal earnings and making them look legal.

For example, lets say you had a illegal drug business and sold $10m worth of drugs. Well, how you going to spend it or bank it without people asking questions? Well, you could set up a dummy business and make out the business made $10m - therefore allowing you to spend it or bank it without drawing too much attention to yourself.

Thats it in basic terms, it can get more complicated with complicated ways of laundering it but thats the basics.

Answer 2

Money laundering is when one hides the real source of where money comes from.

For example, if I were selling drugs and I made up the name of a company and said I was the owner of the company that would be an exampe of money laundering.

It's more complex than that, but that's the basic idea.

Answer 3

Cyd,

I'll give it a try.

Feds/Narcs/Interpol are always looking for transfers of large sums of money. Why? Drug dealers and arms salespeople traditionally have tons of money floating around from profits on illegal sales. In order to use these funds and also avoid police detection they set up a company to show huge LEGAL profit on illegal activities. Set up a casino and claim $1 billion in transactions, "launder the money" from this casino thru a legit bank and the illegal funds go undetected. This is a simplification of the activity - I hope that I've helped.

Answer 4

Very well. Person a sells a half a million dollars in drugs. He has no obvious reason for having the money. He puts in a vending rout and a small pizza parlor. Cash and carry only, and these make him about $300.00 per day but he reports $3000.00 to the government. the extra $2700.00 is from the dirty drug money. It is now clean because the government sees it as legitimate income.

Answer 5

I laundered a $20 bill and I found it in the pocket today when I put my jeans on

Answer 6

It is the transfer of undeclared monies through various banking sources, keeping the amounts below the limit where the government will take a close look. Transfering the money around and around, eventually to a shell company that doesn't exist to avoid paying taxes.

Answer 7

Money laundering means you take money from an illegal business and put it in to a legitamate business without being caught.

Answer 8

Say you have a large amount of cash that you obtained illegally.

You move that through the bank accounts of a legitimate business.

In other words - the "dirty" money coming in appears to be from a customer, and then checks are written to a fake vendor - who is also you.

Answer 9

An example: Someone sells drugs and takes that money (dirty) and goes to a retail store in one part of city and buys lot of items then takes those items with recipient to the same store in another part of town and gets a cash (clean) refund.