In common parlance, money laundering is the process of taking illegally-gained, “dirty” money and making it appear legal or “clean.”
Who needs to wash money? A classic case is the drug dealer who’s sitting on a pile of cash but can’t very well explain where he got it from. The same concept, however, applies to other unlawful activity like financial frauds, computer crimes, alien smuggling, arms trafficking, public corruption, and illegal gambling.
How does one wash money? Although there are many ways to skin this cat, the process generally involves three steps:
Money-laundering laws, however, apply to a broader range of conduct than that. They don’t just apply when people move around dirty money to disguise its source, nature, control, ownership, or location. They also apply when people move dirty money to promote the unlawful activity (e.g. by reinvesting the proceeds into it); to evade taxes; or to avoid currency-reporting requirements. See generally 18 U.S.C. § 1956; 31 U.S.C. §§ 5316, 5324, & 5332. They even apply when people knowingly engage (or attempt to engage) in any transaction involving more than $10,000 in dirty money, regardless of intent. 18 U.S.C. § 1957. And they apply to schemes to mask the source of legal money that is intended to support terrorism.
Below are a few of the important money-laundering laws we’ve enacted and their highlights.
Bank Secrecy Act (1970)
Money Laundering Control Act (1986)
Annunzio-Wylie Anti-Money Laundering Act (1992)
Money Laundering Suppression Act (1994)
Uniting and Strengthening America by Providing Appropriate Tools to Restrict, Intercept, and Obstruct Terrorism (USA PATRIOT) Act (2001)