Introduction to Money laundering

Money Laundering first came into existence at the beginning of the 20th Century. However, this practice of concealing, hiding or disguising illegal income can be traced back to the 13th Century B.C, when waterways were originally used as international trade routes. With time the practice of money laundering got highlighted and it has become a very risky, time-consuming and a highly expensive process. Holding illegal income in bank accounts or through other financial instruments leads to tax liability which if not paid, can ultimately lead to legal consequences.

Alphonse “Al” Capone or Scarface, probably the most famous mob gangsters, earned an estimated $100,000,000 of illegally gained proceeds annually, which he laundered through a series of businesses. However, his subsequent incarceration in the 1930s was not as a result of money laundering or his criminal activities such as bootlegging, prostitution and gambling, but in fact was as a result of being found guilty of a $1,000,000 tax evasion. His imprisonment in Alcatraz ultimately brought an end to his Chicago based criminal operations.

What is Money Laundering?

Money laundering is the process of concealing the source of money obtained by illicit means such as gambling, corruption, extortion, drug trafficking, human trafficking, etc., Money is moved around the financial system again and again in such manner that its origin gets hidden. It is the process of making dirty money clean.

In other words, it is ‘Any actual or attempted act aimed at concealing or camouflaging the nature of illegally or illegitimately earned property to make it look as proceeds from legal sources’. Criminal organizations utilize this process to enable them to exploit further criminal opportunities in a systematic and large scale manner.

Estimates suggest that the size of the problem is over $500 billion annually. Money laundering is a very serious issue, although often thought as a victimless crime. Without it, international organized crime would not be able to function.


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