Money laundering

Money laundering is a catch-all term for any activity that tries to convert the proceeds of crime into legitimate money. Crimes that generate money illegally include drug dealing, terrorism, tax evasion and fraud. Having committed a crime, a criminal will want to hide the proceeds and make them difficult for the authorities to trace back. That’s because criminal proceeds are usually subject to confiscation orders.

This can be done via “layering” transactions designed to conceal the origin of the ”hot” money. A classic target for this type of transaction would be eurobonds, which are not personally registered, making ownership harder to trace. Having done a number of layering transactions, the criminal will aim to integrate the sale proceeds from the last one back into the economy by spending the now “clean” money.

Since money laundering is connected with serious crime, the penalties are stiff – a maximum of 14 years in prison, coupled with an unlimited fine.

• Watch Tim Bennett’s video tutorial: What is money laundering?

MoneyWeek magazine

Latest issue:

Magazine cover
Heading higher?

Or are house prices set to fall?

The UK's best-selling financial magazine. Take a FREE trial today.
Claim 4 FREE Issues

'Would you rather upset God, or have Him just ignore you?'

In the first of three interviews with Merryn Somerset Webb, Hugh Hendry, manager of the Eclectica Fund, talks about what it takes to be a good hedge fund manager – and how he learned to stop worrying and love central banks.


Which investment platform?

When it comes to buying shares and funds, there are several investment platforms and brokers to choose from. They all offer various fee structures to suit individual investing habits.
Find out which one is best for you.


21 November 1969: The first permanent Arpanet link

A milestone in the formation of the internet, the first permanent Arpanet link was established on this day in 1969 between researchers in the United States.