Introduction to Money Laundering

Introduction to money laundering

Money Laundering History

  • It 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 risky, time-consuming, and a highly expensive process. Holding illegal income in bank accounts or through other financial instruments leads to a tax liability which if not paid, can ultimately lead to legal consequences. It is probably 2000 years old. It might have been originated in the United States. But it can be traced to China in the early 10th Century.
  • There were many kinds of frauds in past and might be there in the future. But this process of hiding money has affected the economies of various countries. It is believed that if all the money channelized through this process gets back into the economy and used in an efficient manner, then, there would be no hunger and war.
  • It is believed that this kind of laundering originated in the United States because of Italian members of the mafia named Al Capone.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. Imagine that if it wouldn’t have been Al Capone, then today this laundering fraud would have had some different name and reference.

This module covers the following topics:

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