This paper is divided into three parts. The first will examine some of the more common money laundering schemes, including their purposes and operations. The second part will outline the relevant U.S. statutes and regulations; while the third part will address foreign statutes, conventions, and treaties.
"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 quantities of cash and traffickers who wished to invest their profits. Money laundering techniques are also utilized by legitimate businesses in order to evade taxes on legal business profits.
Laundering schemes may be divided into two categories: those whose purpose is to avoid the filing of currency transaction reports (CTRs, or their foreign equivalents) and those whose purpose is to disguise the origin of certain identifiable assets. Many money launderers will att...