The Origin and Evolution of Money Laundering: A Century-Old Crime
Money laundering is a concept that has been around for centuries, but the modern form of the crime was effectively invented by the American Mafia. In this article, we will explore the history of money laundering, its evolution, and the methods employed by various criminals to disguise illegal proceeds as legitimate income.
Modern Money Laundering and the American Mafia
The term 'money laundering' comes from the various techniques used by criminals to clean the appearance of illicit funds. Criminals from the early 20th century would open up 'laundry mats' and invest money from illicit activities, disguising it as legitimate profits by putting coins in the machines. This method effectively converted 'dirty money' into seemingly clean profits.
Investigators began to notice strange patterns: it was unusual for a 'mom and pop' laundry business to suddenly become a multi-million dollar company during the Great Depression. It was primarily Meyer Lansky and Bugsy Siegel who persuaded the Mafia to monetize on legal gambling, building the Las Vegas strip. This legal enterprise allowed the Mafia not only to generate profits through legitimate gambling but also to expand their money laundering rackets into various venues, including restaurants and casinos.
Legal Definition and Evolution of Money Laundering
Money laundering is a legal term, and it requires a specific defined action within a particular jurisdiction to be considered illegal. No law, no crime. In the United States, the movement of money tied to a crime is sufficient to add a money laundering charge to the charges for the crime.
While the concept of money laundering has evolved over time, the basic idea of hiding and disguising illegal proceeds has remained constant. The first individuals who engaged in cheating, stealing, and hiding the proceeds of a crime likely predate any recorded history. Allegations of theft and deception can be found in some of the earliest forms of writing.
The Emergence of Modern Representative Money
Modern representative money, which symbolically represents a valuable commodity like gold, emerged during the 15th to 17th centuries in Europe and Asia. With the advent of these new forms of money, local barons or monarchs required farmers and merchants to keep records of their finances to levy taxes. Those who found themselves with large, unexplained sums of money often needed to dispose of it to avoid taxes. Thus, the practice of money laundering through creative means began.
Today, money launderers are more innovative and have far better means of laundering illicit or expensive money than those available six or seven hundred years ago. Despite advancements in technology, the core concept of keeping illegal proceeds hidden remains the same.
Conclusion
From the laundry mats of the 1920s to the sophisticated financial schemes of today, money laundering has evolved significantly over the centuries. While the tactics have changed, the core concept of disguising illegal proceeds as legitimate income remains constant. Understanding the history and evolution of money laundering can help us better address and prevent this crime in the modern era.