What is money laundering?
In British law, money laundering is defined as the process of concealing, disguising, converting, transferring or removing criminal property.
It is an offence to launder your own ill-gotten gains, but you can also be prosecuted for knowingly helping manage another person’s dirty money. An offence only occurs if the cash can be identified as the proceeds of a crime; for example corruption, bribery, theft, drug dealing or even tax evasion.
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In practice, laundering usually involves injecting cash gained through these kinds of activities into the legitimate financial system, in a way which disguises its origins, so that the money appears to come from a clean source.
In the UK, the offence carries a maximum prison term of 13 years. The main legislation governing money laundering is the Proceeds of Crime Act 2002.
The longest sentences are reserved for complex schemes, which involve abuse of trust and power, pressuring others into helping, and a long and close relationship between the money handler and the criminal.
Why is money laundered?
It is difficult to spend dark money without first hiding where it came from. A criminal may suddenly find themselves with large amounts of cash. Too much to keep under the mattress. Enough to arouse the suspicion of the bank manager when it is deposited. Paying for houses, cars, holidays and school fees with stacks of £50 notes is difficult to do without attracting the attention of the taxman.
Spending and safeguarding the money can be as complicated as acquiring it. The predicament is explained in the television series Breaking Bad, when corrupt lawyer Saul Goodman tries to persuade a drug dealer to hide the source of his earnings by investing in a nail salon.