Money laundering is a criminal activity. Bankrate explains how it works.
Money laundering is the practice of making money that was gained through criminal means, such as smuggling weapons, look as if it came from a legitimate business activity.
Money laundering often involves financial institutions to make the money look as if it came from a legal source. Instead of depositing a large sum of money all at once at a bank, a money launderer will deposit small sums over time to avoid drawing attention. Money earned illegally may be taken to a country where money laundering laws aren’t as strictly enforced, but this often requires smuggling cash across national borders.
There are three steps in money laundering:
One common way to launder money is to set up a legitimate business, called a “front,” and pad each day’s earnings. The business merges the illegal funds with the business’ legitimate funds to conceal the source of the dirty money. By falsifying the earnings, the business mingles the legitimate funds with the illegal funds so that it’s difficult to distinguish between the two.
Use Bankrate’s calculator to determine your tax bracket.
A couple earn a large sum of money through drug trafficking and need a way to disguise the source of their income. They decide to open a restaurant with the dirty money. Each day, when they record their earnings in the books, they pad what they claim to have made. Over time, their drug money is incorporated into their legitimate earnings and the couple are able to start spending the money without any record of how they truly obtained it. The drug money has been laundered.
Laundering money isn’t the only illegal way to handle cash. Here are six other money habits that are against the law.
If you have to rank a top priority, it should be establishing a habit that will serve you well for your entire life: knowing how to save money.
Financial goals are measuring sticks that apply to any area of your money management skills that you’re looking to improve.
Sharga shares why the current market is different from the one that preceded the 2008 housing crisis.
Bankrate’s poll finds that Americans are re-evaluating what they want from work.
Cost of living is used to compare the livability of different cities.
Realizing the need to start building equity, this family upgraded a house, and their finances in the process.
Some junior sports leagues mean thousands in annual costs. Here’s what to do.
Exchange-traded funds have exploded in popularity in recent years.
Weigh the pros and cons to decide if debt consolidation is right for your situation.
