What is money laundering?
In: Economics
say you’re a criminal. Your criminal activities have made you a LOT of money.
But you can’t just go around and spend it – the police will get suspicious if you suddenly have expensive things that you can’t afford. and you can’t just put that money into the bank – if the police investigate you for your crimes or the IRS audits you, you can’t tell them the money came from your criminal activities.
Since you can’t explain where the money came from, it’s dirty and has to be cleaned.
So, you decide to invest in a local business – you buy an arcade or salon or some other shop that deals with lots of small cash transactions on a daily basis.
Then when you are open, you pretend to make some sales alongside your regular sales.
Say you made 1000 dollars today from coins in your arcade, well in your books you write down that you actually made 1700.
Then you take that 700 dirty dollars and deposit it into the bank, now it’s clean and you have an excuse of where the money came from.
so, you keep doing this, each day you just add some of your illegal money to your legal money and it looks like you’re just doing really well at your business and the cops won’t wonder where the money came from.
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