"Money laundering" is the process that criminals use to disguise the true origin and ownership of cash by funneling it through lawful enterprises. Illegally obtained wealth is "laundered" to conceal its sources and to make it appear legitimate. A surprising number and variety of legitimate business organizations may be victims or inadvertent participants in the crime of money laundering.
The Money Laundering Control Act makes it a crime to launder money or to help someone else do so. The Act's two central provisions are sections 1956 and 1957. Section 1956 prohibits transactions that use proceeds that are (a) known to be from specified unlawful activity; and (b) intended to promote or conceal certain kinds of illegal activity or circumvent state or federal reporting requirements. Section 1957 prohibits any transaction involving proceeds of specified unlawful activity where the proceeds are worth more than $10,000. "Specified unlawful activity" covers some 170 offenses that range from violent and drug-related crimes to copyright infringement and tax evasion.
Other money-laundering laws impose certain reporting requirements, some of which apply to all business organizations. For example, any organization that receives more than $10,000 in cash in a single transaction or in a series of related transactions must file IRS Form 8300 within 15 days of the receipt.
Measures that an organization can take to avoid being used in a money-laundering scheme include (1) ascertaining the true identity of new customers and becoming familiar with their business activities; (2) watching for situations where a person named on the account is not the person controlling the account; and (3) closely scrutinizing transactions that might lend themselves to money laundering - especially those in cash.
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