Money laundering refers to the conversion of huge amounts of money earned from illegal activities like smuggling in to the out result of legal sources. In different countries, money laundering is treated as a crime having varied definitions. It is one of the most important operations related to underground economy. In United States, money laundering refers to the practice of doing such monetary transactions which hides the sources, identity and target of money earned from illegal activities. Money laundering has a wider definition according to the law of UK. Earlier, the term “money laundering” was used for representing only monetary transactions related with organized crime.
At present, the definition of money laundering has been expanded by the international and government institutions. Now, money laundering is known as any kind of monetary deal which produces money as a result of illegal activities. Therefore, even activities like false accounting or tax evasion are considered as money laundering. According to the UK law, money laundering does not need to include monetary transactions. Any activity which involves illegal transaction of economic goods is taken as money laundering.
There are different examples of money laundering. By knowing these examples, one can trace money laundering. An example of money laundering is chasing up. If an individual has a bank account and he deposits some amount in his bank account every week then he is expected to deposit roughly the same amount of money every week. However, if there is a major discrepancy between his deposits then it may draw suspicion. In such cases, the banks may report this to the concerned authority. In United States, the bank cashier needs to report Financial Crimes Enforcement Network about the cash deposits more than $10,000. Such transactions are considered as “significant cash transactions”.
One needs to understand what actually makes money from illegal sources being treated as laundered. As we have told that the act of concealing the source of money earned through illegal sources is known as money laundering; one should understand that merely earning cash through an illegal activity is not money laundering. When a person conceals the source of money originated from an illegal transaction then it is called money laundering. The act of generating money through illegal activities is a different offense. Different countries have employed different methods for tracking and fighting money laundering.