Eli5: Why does counterfeit money need to be “washed”?


I’ve been watching way too much Good Girls. Why does counterfeit money need to be “washed”? Why can’t you just spend it like a normal person spending normal money?

In: 0

If you spend a lot though, it might raise a few eyebrows as to where you’re getting it. Money laundering is the creation of a forged paper trail that shows it as income from somewhere.

In theory you could spend it on every day purchases like gas and groceries and such but if you go to make large purchases like cars or houses and decide to pay in all cash the seller is gonna do their research and make sure you are someone who could likely have that amount of money in cash and that’s where a person would run into issues. Washing it makes it clean in the sense that you now have a reputable source as to how you got the money. If someone just showed up to buy a house with half a million in cash it would raise some eyebrows but if that person also happens to own a restaurant business they can slowly push the money through that front and make it show up as legitimate money in terms of profits from the restaurant.

Money laundering is for criminal revenues, e.g. from selling drugs or prostitution. The money itself is normal legal cash.

It needs to be “laundered” because there is a lot of it. If you have a suitcase of cash, you will not be able to buy a house with it, or deposit it into a bank. Not without a proof of legitimate source.

So you need to get proof that money is from some legitimate source, like business profits or casino winnings.

Counterfeit money is usually used to buy one small thing at a time. I am not sure if this is called laundering. if you come into a store with a wad of cash, they will check it very carefully before accepting it.

You need to be able to get rid of large amounts quickly, and have something legitimate to show where that $ came from. Think about it this way, if you go to let’s say the local outlets. You spend thousands and buying everything you want, they will quickly uncover a connection to you and probably locate you. If you wash it, you basically negotiate let’s say $50 for every $100. A million in counterfeit money would give you half of that value but it would place the initial blame on the person/entity that is actually putting it in circulation. The money you deposit is legitimate or has now become electronic. Eventually a financial institution with recognize the problem with the counterfeit bills and you will have to run. Now you have a head start!

“Washing” money is replacing the “dirty” money that you have with money that doesn’t have any connection to any illegal actions.

Counterfeit money, like other dirty money, is connected to crime(in the case of the creation of the counterfeit money itself being a crime).

If you spend a counterfeit $100 bill and you get back a bunch of smaller bills and some change, you’ve gotten rid of the thing that would provide easy evidence of you committing a crime, and you’ve replaced it with plain old money that you can use any way money can be used.