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Re: Money Laudering/ site

Posted by SR on February 01, 2005

In Reply to: Money Laudering posted by David Ward on February 01, 2005

From Google...
"The meaning of Money Laundering is clear enough, but when was it invented? On University Challenge recently they implied it was first used at the time of Nixon and the Watergate scandal. Yet I have also heard that it dates from the time of prohibition in America.
The term "money laundering" is said to originate from Mafia ownership of Laundromats in the United States. Gangsters there were earning huge sums in cash from extortion, prostitution, gambling and bootleg liquor. They needed to show a legitimate source for these monies.

One of the ways in which they were able to do this was by purchasing outwardly legitimate businesses and to mix their illicit earnings with the legitimate earnings they received from these businesses. Laundromats were chosen by these gangsters because they were cash businesses and this was an undoubted advantage to people like Al Capone who purchased them.

Al Capone, however, was prosecuted and convicted in October, 1931 for tax evasion. It was this that he was sent to prison for rather than the predicate crimes which generated his illicit income and according to Robinson this tale that the term originated from this time is a myth. He states that:

"Money laundering is called what it is because that perfectly describes what takes place - illegal, or dirty, money is put through a cycle of transactions, or washed, so that it comes out the other end as legal, or clean, money. In other words, the source of illegally obtained funds is obscured through a succession of transfers and deals in order that those same funds can eventually be made to appear as legitimate income"."

Check the site below for the rest of the concise history of 'money laundering.
http://www.laundryman.u-net.com/page1_hist.html
SR