How humans have sent each other money throughout history | Smart Change: Personal Finance

Money laundering is the process of taking money earned through illegal or illicit activities and, by filtering it through an intermediary, making it appear to come from legitimate sources. Contemporary society views this as criminal behavior, but hiding money is a crime of context, and the context is never quite the same. In this regard, money laundering began thousands of years ago in China when traders laundered profits after local governments banned various forms of trading. Since then, black market transactions, bribery, extortion (think here of the “protection” money paid to organized crime syndicates) and a myriad of other illegal schemes have resulted in more more sneaky ways to hide and “clean up” dirty money.

When the 18th Amendment to the United States Constitution made the importation, manufacture, sale, and consumption of alcohol illegal in 1919, a perhaps natural result was an explosion of organized crime, with multiple groups vying for the upper hand in the now illicit world of drinking. In order to hide their ill-gotten profits, crime syndicates would buy up legitimate businesses and then combine the financial flows from legal and illegal operations. Such behavior led to the notorious conviction of crime lord Al Capone for tax evasion, when prosecutors were able to prove that the illegally obtained money went directly to him and was never reported to the government.


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