Summary

The goal of money laundering is to hide the tainted origin of criminal revenue. In this sense, it is a secondary crime that is always connected to another breach of law. These offenses can be different types of theft, trade in illicit goods, as well as other non-violent acts such as tax fraud, bribery, and, nowadays more relevantly, cybercrime. Depending on the size of the unlawful income, criminals may launder on their own or collaborate with other specialists. Especially in cases of large-scale tax evasion, grand corruption, transnational drug trafficking and similar highly organized forms of crime, laundering can entail very complex schemes performed in multiple countries. To describe and analyze this activity, a three-stage model is a widely accepted framework. The placement is the first step, when the illicit money is introduced into the financial system. The layering involves multiple transactions to remove the traces of these funds, while in the last stage criminals attempt to integrate the laundered money into the legal economy through various kinds of investments.

Beginning with the 1970s, increasing international cooperation aimed to counter this activity and set standards that were later adapted to national judicial systems. Different types of crime were the focus of such approaches, which also shaped the methods used. During the Prohibition era rum-running and illegal gambling raised the most concern, later the war on drugs, and from the early 2000s the war on terror, and more recently the cryptocurrencies are in focus of anti-money laundering. The financial extent of worldwide money laundering is difficult to estimate with reasonable precision, but it is comparable to national economies in magnitude. Money laundering can have a social as well as financial impact, especially when it helps corrupt politicians to stay in power, decreases tax morale to unfeasible depths or enables organized criminals to take over whole economic sectors and geographic areas.