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.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Watch Tim Bennett's video tutorial: What is money laundering?
-
Premium Bonds winners announced – did you scoop the September jackpot?NS&I has announced the winners for September’s Premium Bonds prize draw, with two lucky savers becoming overnight millionaires. Did you win this month?
-
What is the 25x retirement rule and does it work?The 25x retirement rule has been around for decades but many experts question if it is a suitable strategy
