Money Laundering Money Laundering This paper is divided into thr

"Money laundering," states one prominent study, "is the process by which one conceals the existence, illegal source, or illegal application of income, and then disguises that income to make it appear legitimate." The process of "laundering" profits from illegal activities became a necessary component of any successful criminal enterprise after Al Capone was convicted of tax evasion in 1931. Consequently, many criminals did not bank the profits from their criminal enterprises, often storing the cash obtained from these activities in trunks and shoeboxes. One individual who was not content to hide his profits "under his bed" was Meyer Lansky, who practically invented the basic laundering schemes which are still in use today. The enactment of the Bank Secrecy Act in 1970, requiring banks to report currency transactions of $10,000 dollars or more, helped to solve the major problem of locating and tracing funds within the banking system; consequently, laundering techniques began to emphasize the avoidance of the reporting requirement. The expansion of the drug trade in the late 1970's and early 1980's led to an explosion in the laundering business, the result of enormous quanti

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operation is to avoid the appearance of suspicious activity; simply wiring the funds back to the U.S. might attract the attention of law enforcement authorities. The most common method of disguising this transfer, as developed by Meyer Lansky, is to give it the appearance of a loan, either from a bank or a foreign corporation. Lansky would frequently transfer the funds from the Swiss account to a Liechtenstein anstalt (an entity combining characteristics of a trust with those of a corporation), then "borrow" the funds from the anstalt (or the Swiss bank). The loan would then be "repaid" with interest (to himself) and the interest deducted from his income tax as a business expense. Although the "loan-back" technique is still used, the majority of money being laundered today belongs to South American drug cartels and never returns to its country of origin, be it the U.S. or a European state. In the United States there are two sets of provisions which affect proceeds acquired from criminal activities. The first is Subchapter II of Chapter 53 of Title 31 and the related regulations (31 C.F.R. Part 103), requiring financial institutions to report certain transactions to the Treasury Department. The second set, Title 18, sections 1956
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Approximate Word count = 4104
Approximate Pages = 16 (250 words per page)