Lindsey & Ferry, P.A.

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Basics that everyone needs to know about money laundering

Income and revenue earned through legitimate means will be subject to taxation. There may be sales tax involved, as well as income tax for the individual or business. Taxed assets are easy for someone to deposit in a bank account, claim when trying to qualify for financing or use for a major purchase.

Illicit or untaxed income is much harder to use for big transactions. It is virtually impossible for someone to buy a piece of real estate with money obtained by selling illegal drugs, for example. Money laundering is the process by which an individual or business takes illicit money and makes it look legitimate.

People ranging from executives and store owners to cashiers and real estate agents could find themselves accused of involvement in money laundering conspiracies. Learning about what constitutes money laundering can help you protect yourself.

How does money laundering work?

There are infinite potential ways for someone to engage in money laundering. Some of the more common tactics include making cash purchases or even working with a business to create a paper trail legitimizing the money. Some organized criminal enterprises may even operate businesses for the sole intent of laundering money and may not actually care about providing goods or services to the general public.

For example, a company offering yard work services could record thousands of cash transactions every month for maintaining lawns or doing other maintenance work for homeowners. However, rather than doing the work, what they really do is create receipts so that it seems like there’s a legitimate source for the income which is actually from illicit drug transactions, the sale of stolen goods or prostitution.

Could you be unaware of your involvement in money laundering?

Most money laundering schemes involve mutual knowledge and consensual involvement by all of the parties participating. However, sometimes legitimate businesses find themselves implicated in the money laundering activities of local criminal enterprises.

For example, if your convenience store sells prepaid debit cards and a known local criminal keeps buying as many as they can with cash each day, continuing to allow those transactions could implicate the cashier or even the business owner in the money laundering efforts of an organization with which they are not actually involved. Any services or goods that help someone sidestep financial regulations could put a business at risk of criminal charges.

Recognizing what constitutes money laundering could help you avoid making mistakes in your career that put you at risk and can also help you respond to pending white-collar criminal charges.

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