Businesses and individuals sometimes earn money in an unlawful manner and then need to find a way to make those funds appear legally earned. Some do this through money laundering, which is a complex process of making that happen.
Laws in the United States forbid money laundering, so individuals and businesses who engage in this process can face legal consequences in this country. Many government agencies in the U.S. and overseas monitor transactions for suspicious activities. In the U.S., this includes the Department of Justice and the Financial Crimes Enforcement Network.
Money laundering in international trade
Money laundering is common in international trade because of the various entities that would have to track transactions. The sheer volume of transactions that are present in these situations can make it difficult for auditors and governing bodies to trace.
There are three basic stages to money laundering.
- Placement: This is the introduction of the illegal funds into the financial system through a variety of methods, including the use of shell companies, cash deposits or high-value purchases.
- Layering: This is when multiple transactions, including using offshore accounts, complex business deals and wiring funds, are made to hide the origin of the money.
- Integration: This is when the laundered money is reintroduced into the economy, often through seemingly legitimate investments or business ventures.
When a company or an individual learns they’re being accused of money laundering, they should find out about the options they have for addressing those allegations. These cases are often highly complicated, so it may be best for them to work with someone who’s familiar with these matters as they develop their defense strategy.