![]() ![]() An additional $2,000 – which is money coming from illegal activities – will be added to that amount, and the restaurant will falsely report that it took in $4,000 in cash sales for the day. Say, for example, that the restaurant takes in $2,000 in cash in one day. The restaurant reports daily cash sales much higher than what it actually takes in. Money obtained from illegal activities is gradually deposited into a bank through the restaurant. The money laundering process usually goes something like the following:Ī criminal or criminal organization owns a legitimate restaurant business. In fact, the origin of the term “money laundering” comes from infamous gangster Al Capone’s practice of using a chain of laundromats he owned to launder huge amounts of cash. One of the most commonly used and simpler methods of “washing” money is by funneling it through a restaurant or other business where there are a lot of cash transactions. Final integration is when the money is freely used legally without the necessity to conceal it any further.Layering is the continuing transfer of the money through multiple transactions, forms, investments, or enterprises, to make it virtually impossible to trace the money back to its illegal origin.Initial entry or placement is the initial movement of an amount of money earned from criminal activity into some legitimate financial network or institution.Money laundering typically occurs in three phases: In short, money laundering aims to disguise money made illegally by working it into a legitimate financial system, such as a bank or business. To deal with the problem of having millions of dollars in cash obtained from illegal activities, criminal enterprises create ways of “laundering” the money to obscure the illegal nature of how it is obtained. The recipients of such large amounts of cash also do not want to have to acknowledge it as income, thereby incurring massive income tax liabilities. Some banks have been complicit in aiding money laundering operations.Ī major business problem of large, organized criminal enterprises – such as drug smuggling operations – is that they end up with huge amounts of cash that they need to conceal in order to avoid attracting investigations by legal authorities.Money laundering operations deal with trillions of dollars worldwide each year therefore, money laundering activities exert a substantial impact on major national economies.Money laundering is the illegal process of converting money earned from illegal activities into “clean” money – that is, money that can be freely used in legitimate business operations and does not have to be concealed from the authorities. ![]()
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