money loundering
In: Economics
Imagine you are running an illegal side hustle that gains you quite a bit of income. However the tax inspector starts getting suspicious of you since you seam to spend a lot more money then what your taxable income would provide. This is not a big issue as you just need to fill in a form to declare your extra income, pay taxes on it and you are good. But on the form you have to declare where your income comes from. And putting down your illegal operation is a sure way to get the police interested in you. So in order to spend the money you gain illegally you need to have some sort of explanation of how you got the money legally. And this is called money laundring. It usually involves some legal business or operation which in reality runs with a loss but you are providing it with the illegally gotten money in a way that can not be traced so it makes a great profit. For example it is very hard for the government to count how many goes into a business and pays cash.
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