How Does Money Laundering Work? – Delena D. Spann

Al Capone, one of the most notorious gangsters in history, presided over a vast empire of organized crime. He was eventually convicted of tax evasion, but his illegal earnings from gambling, bootlegging, brothels, and extortion could not be found as they had been hidden through investments in various businesses. This practice of hiding illegal money is known as money laundering, which has been around as long as money itself. With the recent introduction of virtual currencies, offshore banking, the darknet, and global markets, money laundering schemes have become more complex. The three basic steps of money laundering are placement, layering, and integration. Placement involves converting illegally obtained money into legitimate assets, layering involves distancing the funds from their origins through multiple transactions, and integration allows the cleaned money to re-enter the mainstream economy and benefit the original criminal. Money laundering was not officially recognized as a federal crime in the United States until 1986. Today, the United Nations, national governments, and various non-profits fight against money laundering, but the practice remains prevalent.