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Tax Engineering

What is money laundering?


Question

What is money laundering? Is money laundering legal?

Answer

Money laundering is a process of legalization of funds obtained by illegal activities, including criminal. In order to be able to use this money openly and publically they first have to be transferred from the black market to legitimate economy going through the process of money laundering. The funds can be legalized through payment gateways, lottery frauds or property acquisition. 

Currently, money laundering is not a problem of just one particular country, but something that affects the economy of the whole world and that can be fought only by the collaborated efforts of the authorities of all states.   

The scheme of money laundering  

The process of money laundering can be separated into 3 stages:  

  1. Placement. In this stage the illegal funds are introduced into the financial system by depositing it to a bank account or investing in real estate and shares. 
  2. Laundering. Using offshore companies, nominee services or third parties the funds get disassociated from it origin and converted into luxury real estate, cars, jewelries and other assets. 
  3. Integration. The criminals sell the goods that were bought with illegal money and invest received funds into completely legal activities.  


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