Money laundering is the attempt to conceal the origins of illicit capital. By attempting to make the proceeds of money obtained through criminal activity, people can cover up widespread misconduct. Money laundering allows those who earn money through drug sales, prostitution and other criminal activity to pay taxes on those funds and use them for legitimate purposes. They can deposit the funds in bank accounts, invest them or use them for large purchases they cannot complete with cash. If regulatory officials begin to suspect money laundering, they may conduct an in-depth investigation.
The business owners or professionals implicated in a money laundering scheme could face major penalties. Those running businesses or trying to creatively manage funds need to be aware of what can look like money laundering to avoid unnecessary criminal charges or respond to pending allegations. The following are some of the most common types of money laundering.
Smurfing
Money laundering involving large transactions is likely to draw the attention of regulatory officials. Financial institutions generally have to report larger transactions, including cash deposits of $10,000 or more. Bigger sales transactions conducted in cash or large financial transfers could also draw the attention of regulatory officials. Those engaged in money laundering often intentionally break the transactions down into smaller amounts that are subject to fewer regulations and less attention-grabbing.
Using shell companies
Trying to hide the actual origins of capital may require transferring funds through an intermediary organization. Some businesses or individuals intentionally start companies that serve as financial intermediaries. Shell companies may not actually perform any business functions other than to help move money and make it harder to track.
Cash-related money laundering
Frequently, those intending to engage in money laundering move into cash-intensive industries. Restaurants and car washes are among the various types of businesses that people can run to cover up an inflow of illicit cash. By falsifying transactions, those attempting to launder money can make funds obtained through illegal behavior seem like legitimate proceeds from business transactions.
Understanding what might lead to white-collar criminal charges or look like criminal activity can help people develop viable defense strategies after an arrest. Thorough financial reviews and proper legal representation are both crucial for those accused of white-collar criminal offenses who hope to exonerate themselves.