How Money Laundering Works Money laundering is essential for criminal organizations that wish to use

illegally obtained money effectively. Dealing in large amounts of illegal cash is inefficient and dangerous.
Criminals need a way to deposit the money in legitimate financial institutions, yet they can only do so if
it appears to come from legitimate sources. KEY TAKEAWAYS Criminals use a wide variety of money
laundering techniques to make illegally obtained funds appear clean. Online banking and
cryptocurrencies have made it easier for criminals to transfer and withdraw money without detection.
The prevention of money laundering has become an international effort and now includes terrorist
funding among its targets. How Money Laundering Works Money laundering is essential for criminal
organizations that wish to use illegally obtained money effectively. Dealing in large amounts of illegal
cash is inefficient and dangerous. Criminals need a way to deposit the money in legitimate financial
institutions, yet they can only do so if it appears to come from legitimate sources. The process of
laundering money typically involves three steps: placement, layering, and integration. Placement puts
the "dirty money" into the legitimate financial system. Layering conceals the source of the money
through a series of transactions and bookkeeping tricks. In the final step, integration, the now-laundered
money is withdrawn from the legitimate account to be used for whatever purposes the criminals have in
mind for it. There are many ways to launder money, from the simple to the very complex. One of the
most common techniques is to use a legitimate, cash-based business owned by a criminal organization.
For example, if the organization owns a restaurant, it might inflate the daily cash receipts to funnel
illegal cash through the restaurant and into the restaurant's bank account. After that, the funds can be
withdrawn as needed. These types of businesses are often referred to as "fronts." In another common
form of money laundering, called smurfing (also known as "structuring"), the criminal breaks up large
chunks of cash into multiple small deposits, often spreading them over many different accounts, to
avoid detection. Money laundering can also be accomplished through the use of currency exchanges,
wire transfers, and "mules"—cash smugglers, who sneak large amounts of cash across borders and
deposit them in foreign accounts, where money-laundering enforcement is less strict. Electronic Money
Laundering The Internet has put a new spin on the old crime. The rise of online banking institutions,
anonymous online payment services and peer-to-peer (P2P) transfers with mobile phones have made
detecting the illegal transfer of money even more difficult. Moreover, the use of proxy servers and
anonymizing software makes the third component of money laundering, integration, almost impossible
to detect—money can be transferred or withdrawn leaving little or no trace of an IP address. Money can
also be laundered through online auctions and sales, gambling websites, and virtual gaming sites, where
ill-gotten money is converted into gaming currency, then back into real, usable, and untraceable "clean"
money. Preventing Money Laundering Governments around the world have stepped up their efforts to
combat money laundering in recent decades, with regulations that require financial institutions to put
systems in place to detect and report suspicious activity. The amount of money involved is substantial:
According to a 2018 survey from PwC, global money laundering transactions account for roughly $1
trillion to $2 trillion annually, or some 2% to 5% of global GDP . In 1989, the Group of Seven (G-7)
formed an international committee called the Financial Action Task Force (FATF) in an attempt to fight
money laundering on an international scale. In the early 2000s, its purview was expanded to combating
the financing of terrorism. The United States passed the Banking Secrecy Act in 1970, requiring financial
institutions to report certain transactions to the Department of the Treasury, such as cash transactions
above $10,000 or any others they deem suspicious, on a suspicious activity report (SAR). The
information the banks provide to the Treasury Department is used by the Financial Crimes Enforcement
Network (FinCEN), which can share it with domestic criminal investigators, international bodies or
foreign financial intelligence units. While these laws were helpful in tracking criminal activity, money
laundering itself wasn't made illegal in the United States until 1986, with the passage of the Money
Laundering Control Act. Shortly after the 9/11 terrorist attacks, the USA Patriot Act expanded money-
laundering efforts by allowing investigative tools designed for organized crime and drug trafficking
prevention to be used in terrorist investigations. The Association of Certified Anti-Money Laundering
Specialists (ACAMS) offers a profession

How Money Laundering Works Money laundering is essential for criminal organizations that wish to use
illegally obtained money effectively. Dealing in large amounts of illegal cash is inefficient and dangerous.
Criminals need a way to deposit the money in legitimate financial institutions, yet they can only do so if
it appears to come from legitimate sources. KEY TAKEAWAYS Criminals use a wide variety of money
laundering techniques to make illegally obtained funds appear clean. Online banking and
cryptocurrencies have made it easier for criminals to transfer and withdraw money without detection.
The prevention of money laundering has become an international effort and now includes terrorist
funding among its targets. How Money Laundering Works Money laundering is essential for criminal
organizations that wish to use illegally obtained money effectively. Dealing in large amounts of illegal
cash is inefficient and dangerous. Criminals need a way to deposit the money in legitimate financial
institutions, yet they can only do so if it appears to come from legitimate sources. The process of
laundering money typically involves three steps: placement, layering, and integration. Placement puts
the "dirty money" into the legitimate financial system. Layering conceals the source of the money
through a series of transactions and bookkeeping tricks. In the final step, integration, the now-laundered
money is withdrawn from the legitimate account to be used for whatever purposes the criminals have in
mind for it. There are many ways to launder money, from the simple to the very complex. One of the
most common techniques is to use a legitimate, cash-based business owned by a criminal organization.
For example, if the organization owns a restaurant, it might inflate the daily cash receipts to funnel
illegal cash through the restaurant and into the restaurant's bank account. After that, the funds can be
withdrawn as needed. These types of businesses are often referred to as "fronts." In another common
form of money laundering, called smurfing (also known as "structuring"), the criminal breaks up large
chunks of cash into multiple small deposits, often spreading them over many different accounts, to
avoid detection. Money laundering can also be accomplished through the use of currency exchanges,
wire transfers, and "mules"—cash smugglers, who sneak large amounts of cash across borders and
deposit them in foreign accounts, where money-laundering enforcement is less strict. Electronic Money
Laundering The Internet has put a new spin on the old crime. The rise of online banking institutions,
anonymous online payment services and peer-to-peer (P2P) transfers with mobile phones have made
detecting the illegal transfer of money even more difficult. Moreover, the use of proxy servers and
anonymizing software makes the third component of money laundering, integration, almost impossible
to detect—money can be transferred or withdrawn leaving little or no trace of an IP address. Money can
also be laundered through online auctions and sales, gambling websites, and virtual gaming sites, where
ill-gotten money is converted into gaming currency, then back into real, usable, and untraceable "clean"
money. Preventing Money Laundering Governments around the world have stepped up their efforts to
combat money laundering in recent decades, with regulations that require financial institutions to put
systems in place to detect and report suspicious activity. The amount of money involved is substantial:
According to a 2018 survey from PwC, global money laundering transactions account for roughly $1
trillion to $2 trillion annually, or some 2% to 5% of global GDP . In 1989, the Group of Seven (G-7)
formed an international committee called the Financial Action Task Force (FATF) in an attempt to fight
money laundering on an international scale. In the early 2000s, its purview was expanded to combating
the financing of terrorism. The United States passed the Banking Secrecy Act in 1970, requiring financial
institutions to report certain transactions to the Department of the Treasury, such as cash transactions
above $10,000 or any others they deem suspicious, on a suspicious activity report (SAR). The
information the banks provide to the Treasury Department is used by the Financial Crimes Enforcement
Network (FinCEN), which can share it with domestic criminal investigators, international bodies or
foreign financial intelligence units. While these laws were helpful in tracking criminal activity, money
laundering itself wasn't made illegal in the United States until 1986, with the passage of the Money
Laundering Control Act. Shortly after the 9/11 terrorist attacks, the USA Patriot Act expanded money-
laundering efforts by allowing investigative tools designed for organized crime and drug trafficking
prevention to be used in terrorist investigations.

How Money Laundering Works Money laundering is essential for criminal organizations that wish to use
illegally obtained money effectively. Dealing in large amounts of illegal cash is inefficient and dangerous.
Criminals need a way to deposit the money in legitimate financial institutions, yet they can only do so if
it appears to come from legitimate sources. KEY TAKEAWAYS Criminals use a wide variety of money
laundering techniques to make illegally obtained funds appear clean. Online banking and
cryptocurrencies have made it easier for criminals to transfer and withdraw money without detection.
The prevention of money laundering has become an international effort and now includes terrorist
funding among its targets. How Money Laundering Works Money laundering is essential for criminal
organizations that wish to use illegally obtained money effectively. Dealing in large amounts of illegal
cash is inefficient and dangerous. Criminals need a way to deposit the money in legitimate financial
institutions, yet they can only do so if it appears to come from legitimate sources. The process of
laundering money typically involves three steps: placement, layering, and integration. Placement puts
the "dirty money" into the legitimate financial system. Layering conceals the source of the money
through a series of transactions and bookkeeping tricks. In the final step, integration, the now-laundered
money is withdrawn from the legitimate account to be used for whatever purposes the criminals have in
mind for it. There are many ways to launder money, from the simple to the very complex. One of the
most common techniques is to use a legitimate, cash-based business owned by a criminal organization.
For example, if the organization owns a restaurant, it might inflate the daily cash receipts to funnel
illegal cash through the restaurant and into the restaurant's bank account. After that, the funds can be
withdrawn as needed. These types of businesses are often referred to as "fronts." In another common
form of money laundering, called smurfing (also known as "structuring"), the criminal breaks up large
chunks of cash into multiple small deposits, often spreading them over many different accounts, to
avoid detection. Money laundering can also be accomplished through the use of currency exchanges,
wire transfers, and "mules"—cash smugglers, who sneak large amounts of cash across borders and
deposit them in foreign accounts, where money-laundering enforcement is less strict. Electronic Money
Laundering The Internet has put a new spin on the old crime. The rise of online banking institutions,
anonymous online payment services and peer-to-peer (P2P) transfers with mobile phones have made
detecting the illegal transfer of money even more difficult. Moreover, the use of proxy servers and
anonymizing software makes the third component of money laundering, integration, almost impossible
to detect—money can be transferred or withdrawn leaving little or no trace of an IP address. Money can
also be laundered through online auctions and sales, gambling websites, and virtual gaming sites, where
ill-gotten money is converted into gaming currency, then back into real, usable, and untraceable "clean"
money. Preventing Money Laundering Governments around the world have stepped up their efforts to
combat money laundering in recent decades, with regulations that require financial institutions to put
systems in place to detect and report suspicious activity. The amount of money involved is substantial:
According to a 2018 survey from PwC, global money laundering transactions account for roughly $1
trillion to $2 trillion annually, or some 2% to 5% of global GDP . In 1989, the Group of Seven (G-7)
formed an international committee called the Financial Action Task Force (FATF) in an attempt to fight
money laundering on an international scale. In the early 2000s, its purview was expanded to combating
the financing of terrorism. The United States passed the Banking Secrecy Act in 1970, requiring financial
institutions to report certain transactions to the Department of the Treasury, such as cash transactions
above $10,000 or any others they deem suspicious, on a suspicious activity report (SAR). The
information the banks provide to the Treasury Department is used by the Financial Crimes Enforcement
Network (FinCEN), which can share it with domestic criminal investigators, international bodies or
foreign financial intelligence units. While these laws were helpful in tracking criminal activity, money
laundering itself wasn't made illegal in the United States until 1986, with the passage of the Money
Laundering Control Act. Shortly after the 9/11 terrorist attacks, the USA Patriot Act expanded money-
laundering efforts by allowing investigative tools designed for organized crime and drug trafficking
prevention to be used in terrorist investigations.