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money laundering

MUN-ee LAWN-der-ing /ˈmʌni ˈlɔːndərɪŋ/

noun phraseC1GREGMAT

formallegal

The concealment of the origins of illegally obtained money, typically by means of transfers involving foreign banks or legitimate businesses.

Money laundering is a process designed to make 'dirty' money (from illegal activities) appear 'clean' or legitimate. It involves several stages, often including placement, layering, and integration, to obscure the money's true source.

The story behind the word. The term 'money laundering' is thought to have originated in the United States during the Prohibition era, when organized crime syndicates needed to disguise the illicit profits from alcohol sales. They would often purchase legitimate businesses, like laundromats, and mix their illegal cash with the legitimate income, making it appear 'clean.' The phrase became more widely known in the 1970s and 80s as governments began to crack down on organized crime and drug trafficking.

Word relationships

financial obfuscation: More academic term for making financial dealings unclear, not necessarily illegal.

financial transparency: Openness and clarity in financial dealings.

Word family

launder money (verb phrase): To conceal the origins of illegally obtained money.
money launderer (noun): A person who engages in money laundering.

Collocations

combat money laundering
anti-money laundering (AML)
money laundering scheme
allegations of money laundering

Example sentences

"The drug cartel used a network of shell companies to facilitate their extensive money laundering operations." Reporting on a criminal investigation.
"Banks are required to report suspicious transactions to combat money laundering and terrorist financing." Discussing financial regulations.

Memory hook

Imagine literally 'LAUNDERING' dirty money in a washing machine, making it look clean and legitimate. Washing dirty money

When not to use

Do not use 'money laundering' for simple tax evasion or for the direct theft of money, unless the act involves disguising the source of those funds.

Fun facts

The three stages of money laundering are typically identified as placement (introducing dirty money into the financial system), layering (obscuring the trail through complex transactions), and integration (returning the money to the criminals as legitimate funds).

Related words

illicit, collusion

Explore more words

laundering, extortion, Foreign Exchange, embezzlement, extradition, landfill

Also appears in

Criminology, Law Enforcement & Penal Systems → White-Collar & Corporate Crime