Money laundering is the generic term used to describe the process by which criminals disguise the original ownership and control of the proceeds of criminal conduct by making such proceeds appear to have derived from a legitimate source.
The processes by which criminally derived property may be laundered are extensive. Though criminal money may be successfully laundered without the assistance of the financial sector, the reality is that hundreds of billions of dollars of criminally derived money is laundered through financial institutions, annually. The nature of the services and products offered by the financial services industry (namely managing, controlling and possessing money and property belonging to others) means that it is vulnerable to abuse by money launderers.

How is the offence of money laundering committed? Money laundering offences have similar characteristics globally. There are two key elements to a money laundering offence: 1. The necessary act of laundering itself i.e. the provision of financial services; and 2. A requisite degree of knowledge or suspicion (either subjective or objective) relating to the source of the funds or the conduct of a client.
The act of laundering is committed in circumstances where a person is engaged in an arrangement (i.e. by providing a service or product) and that arrangement involves the proceeds of crime. These arrangements include a wide variety of business relationships e.g. banking, fiduciary and investment management.
The requisite degree of knowledge or suspicion will depend upon the specific offence but will usually be present where the person providing the arrangement, service or product knows, suspects or has reasonable grounds to suspect that the property involved in the arrangement represents the proceeds of crime. In some cases the offence may also be committed where a person knows or suspects that the person with whom he or she is dealing is engaged in or has benefited from criminal conduct.

Are all crimes capable of predicating money laundering? Different jurisdictions define crime predicating the offence of money laundering in different ways. Generally the differences between the definitions may be summarised as follows: 1. Differences in the degree of severity of crime regarded as sufficient to predicate an offence of money laundering. For example in some jurisdictions it is defined as being any crime that would be punishable by one or more years imprisonment. In other jurisdictions the necessary punishment may be three or five years imprisonment; or 2. Differences in the requirement for the crime to be recognized both in the country where it took place and by the laws of the jurisdiction where the laundering activity takes place or simply a requirement for the conduct to be regarded as a crime in the country where the laundering activity takes place irrespective of how that conduct is treated in the country where it took place. In practice almost all serious crimes, including, drug trafficking, terrorism, fraud, robbery, prostitution, illegal gambling, arms trafficking, bribery and corruption are capable of predicating money laundering offences in most jurisdictions.

Can Fiscal Offences such as tax evasion predicate Money Laundering? The answer depends upon the definition of crime contained within the money laundering legislation of a particular jurisdiction.
Tax evasion and other fiscal offences are treated as predicate money laundering crimes in most of the worlds most effectively regulated jurisdictions.

Why is money laundering illegal? The objective of the criminalisation of money laundering is to take the profit out of crime. The rationale for the creation of the offence is that it is wrong for individuals and organisations to assist criminals to benefit from the proceeds of their criminal activity or to facilitate the commission of such crimes by providing financial services to them.

How is money laundered? The processes are extensive. Generally speaking, money is laundered whenever a person or business deals in any way with another person’s benefit from crime. That can occur in a countless number of diverse ways.
Traditionally money laundering has been described as a process which takes place in three distinct stages.
Placement, the stage at which criminally derived funds are introduced in the financial system.
Layering, the substantive stage of the process in which the property is ‘washed’ and its ownership and source is disguised.
Integration, the final stage at which the ‘laundered’ property is re-introduced into the legitimate economy.
This three staged definition of money laundering is highly simplistic. The reality is that the so called stages often overlap and in some cases, for example in cases of financial crimes, there is no requirement for the proceeds of crime to be ‘placed’.

To combat this criminal activity, Congress passed the Bank Secrecy Act of 1970, which requires banks to report any financial transactions of $10,000.01 or more. Congress followed up this Act sixteen years later with the Money Laundering Control Act of 1986, which rendered money laundering a federal crime. In 2001, Congress passed the USA Patriot Act, which expanded the scope of reporting responsibilities and included more types of financial institutions in an effort to combat the financing of terrorist activities.
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China is the world leader in this ancient art. Between 2002 and 2011, some $ 1.08 trillion Party illegally in the country, despite the currency-control laws that require people to obtain a permit to exchange more than $ 50,000 a year worth of yuan in any foreign currency. But this is a truly international pastime. In the same period, a bit 'of $ 880.96 billion was prompted by Russia, $ 461.86 billion left Mexico, $ 370.38 billion left Malaysia, $ 343.93 billion left India, $ 266.43 billion left the' Saudi Arabia, and $ 192.69 billion left Brazil. The total outflow, among 20 emerging economies, was $ 5.9 trillion, equivalent to $ 49 billion per month. By corrupt politicians and drug cartels for tax cheats and deadbeats foods, pretty much everyone is doing it. Americans who wish to spirit their money offshore are increasingly finding their efforts undermined by Foreign Account Tax Compliance Act of Washington in 2010, which requires foreign banks to hand over information on accounts held by US citizens. But a lot of roads remain for the dedicated money launderer - especially if he or she is willing to break the law.