The Basics
Money Laundering, is essentially the act of making money that comes from one Source A (illegal) look like it comes from another Source B (legitimate). It is essentially disquising the origins of money obtained through illegal activities so that it looks like it came from legal sources. This way the money cannot connect them to illegal activities and law enforcement cannot seize it.
The Process
The basic money laundering process can be done in three simple steps:
1) Placement - first you need to place the money into a legitimate financial institution, this is often in the form of small cash bank deposits. Since banks are required to report high-value transactions.
2) Layering - this step involves sending the money through various financial transactions to change its form and make it difficult to follow. This could be through bank-to-bank transfers, wire transfers, deposits and withdrawals, changing the currency, or purchasing high valued items such as precious metals, diamonds, or real estate.
3) Integration - this step involves the money re-entering the economy in a legitimate form of a legal transaction. This could be purchasing goods or services that actually do not exist or in the form of a ficticious loan to yourself from a third-party or to a third-party from yourself - which will never actually be repaid since it is really fake.
Different Methods
Structuring Deposits - also known as smurfing, this method involves breaking up large amounts of money into small deposits. In the United States this ammount must be below $10,000 or the bank will be required to report the deposit to the government and the IRS. With this method the money is deposited into one or more banks by multiple people (known as smurfs) or by a single person over an extended period of time.
Overseas Banks - it is also useful to launder money through various “offshore accounts” in countries which have bank secrecy laws or anonymous banking. A complex scheme can involve hundreds of bank transfers to and from offshore banks. Major offshore banking centers include the Bahamas, Bahrain, the Cayman Islands, Switzerland, Hong Kong, Antilles, Panama, and Singapore.
Placement: A series of separate deposits to a bank in Israel. On one trip, 12 deposits are made in a single day.
Layering: Before U.S. or Israeli authorities had a chance to notice the suddenly huge balance in the account, they had the Israeli bank wire transfer everything to Panama, where bank secrecy laws are in effect. From that account, Antar could make anonymous transfers to various offshore accounts.
Integration: They then slowly wired the money from those accounts to the legitimate Crazy Eddie’s Electronics bank account, where the money got mixed in with legitimate dollars and documented as revenue.
Shell Companies - are fake companies that exist for no other reason than to launder money. They take in dirty money as “payment” for supposed goods or services but actually provide no goods or services. They simply create the appearance of legitimate transactions through fake invoices and balance sheets.
Placement: They deposit cash from U.S. drug sales in Panama bank accounts.
Layering: They then transfer the money from Panama to more than 100 bank accounts in 68 banks in nine countries in Europe, always in transactions under $10,000 to avoid suspicion. The bank accounts were in made-up names and names of different people. They then set up shell companies in Europe in order to document the money as legitimate income.
Integration: The plan was to send the money to Colombia, where they would use it to fund numerous legitimate businesses.
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