What Is Money Laundering?

Money laundering involves making large amounts of money generated by a criminal activity, such as drug trafficking or terrorist funding, appear to be earned legally. This complex process usually involves three stages: placement, layering, and integration. Initially, the illicit money is introduced into the financial system (placement), followed by various complex transactions to obscure its origin (layering), and finally, the now-laundered money is reintroduced into the economy as legitimate funds (integration).

The History of Money Laundering

Seagrave writes that the government considers merchant activities with a great amount of suspicion as they were considered to be ruthless, greedy and they follow different rules. Besides this a considerable amount of the income of merchants came from black marketing, extortion, and bribe. The merchants who remained invisible were able to keep their wealth safe from the continuous extortion by bureaucrats.

So they used techniques like converting money into readily movable assets and moving the cash out of the jurisdiction in order to invest the money in the business. This technique is still used by many money launderers and we will explore certain aspects later on