Some people say that money laundering relates to large amounts of money: it doesn’t. The amount doesn’t matter, only the source does.
Some people say that it “generally” includes “foreign banks”: it doesn’t. Money laundering doesn’t have to happen through banks at all, nor does it have to happen across borders. If a person commits a crime that directly or indirectly creates a benefit, then the assets that represent that benefit are, if they are dealt with in any way, laundered.
The term “money laundering” is often said to have originated at the time of the famous American gangsterism that arose originally out of Prohibition – the banning of alcoholic drinks. Several mechanisms were used to disguise the origins of the large amounts of money generated by the import and sale of alcohol and other “rackets” such as gambling, some of which was illegal.
Ironically, one of the methods of concealing the source of the money was legal gambling. The major headache that gangsters faced was that the money was in cash, often in small denomination coins. If the coins were put into the bank, the questions would be asked. But the storage of large amounts of money in low value coins is a storage nightmare. So they created businesses, one of which was slot machines, and another of which was laundries – so, it is said, that the term “money laundry” was born. These were not “laundromats” despite what many people say: they weren’t invented until long after Capone had been jailed.
But whilst the term “money laundering” was invented in the 20th Century, the principles of money laundering have been around for far longer. Sterling Seagrave in his excellent book “Lords of the Rim” conducts a round-up of the history of the Overseas Chinese. He explains how the abuse of merchants and others by rulers led them to find ways to hide their wealth, including ways of moving it around without it being identified and confiscated. Money laundering in this sense was prevalent 4000 years before Christ.
Money laundering means different things in different places. This is because only proceeds of crime (or criminal conduct) can be laundered. Also, many countries have restricted the classification of crimes that are regarded as underlying crimes for money laundering purposes. So, in some countries any conduct which, if a person were convicted would lead to a sentence of imprisonment will be regarded as a predicate crime, whilst in others only offences described in a list are to be regarded as creating “dirty money.” A further twist is that some countries will allow a person to be prosecuted for laundering the proceeds of criminal conduct overseas, provided the conduct would have been criminal conduct in both countries.
In most countries that have counter-money laundering laws, a person can be guilty of the offence of laundering the proceeds of someone else’s criminal conduct.
Many countries have laws that mean that laundering is a continuing offence and the date of the predicate crime is irrelevant.
Also, many countries have changed the law , over time, in two important ways: the first is to include a provision for a person to be guilty of laundering if there was “reasonable cause for suspicion.” That means that a Court can find that the person knew or ought to have known that the money was, or was likely to have been, the proceeds of criminal conduct.
The second is to include a provision that it is an offence to be involved in laundering-type transactions where the money is intended by someone else to be used in the preparation for or execution of a crime.