WEBVTT

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As one of the most notorious gangsters
in history,

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Al Capone presided over a vast
and profitable empire of organized crime.

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When he was finally put on trial,

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the most he could be convicted of
was tax evasion.

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The nearly $100 million a year,

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that's 1.4 billion in today's currency,

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that Capone had earned from
illegal gambling,

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bootlegging,

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brothels,

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and extortion,

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would have served as evidence
of his crimes.

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But the money was nowhere
to be found.

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Capone and his associates had hidden it
through investments in various businesses

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whose ultimate ownership
couldn't be proven,

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like cash-only laundromats.

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In fact, those laundromats are part of
the reason for the name of this activity,

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money laundering.

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Money laundering came 
to be the term for any process

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that cleans illegally obtained funds
of their dirty criminal origins,

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allowing them to be used within
the legal economy.

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But Capone wasn't the first
to launder money.

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In fact, this practice is about
as old as money itself.

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Merchants hid their riches from
tax collecters,

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and pirates sought to sell their bounty
without drawing attention

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to how they got it.

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With the recent arrival 
of virtual currencies,

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offshore banking,

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the darknet,

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and global markets,

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schemes have become much more complex.

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Although modern money laundering
methods vary greatly,

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most share three basic steps:

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placement,

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layering,

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and integration.

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Placement is where illegally obtained
money is converted into assets

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that seem legitimate.

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That's often done by depositing funds
into a bank account

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registered to an anonymous corporation
or a professional middleman.

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This step is where criminals are often
most vulnerable to detection

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since they introduce massive wealth
into the financial system

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seemingly out of nowhere.

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The second step, layering, involves
using multiple transactions

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to further distance the funds
from their origin.

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This can take the form of transfers
between multiple accounts,

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or the purchase of tradable property,

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like expensive cars,

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artwork,

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and real estate.

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Casinos, where large sums of money
change hands every second,

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are also popular venues for layering.

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A money launderer may have their
gambling balance made available

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at a casino chain's locations 
in other countries,

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or work with employees
to rig games.

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The last step, integration, allows clean
money to re-enter the mainstream economy

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and to benefit the original criminal.

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They might invest it into a legal business

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claiming payment by producing
fake invoices,

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or even start a bogus charity,

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placing themselves 
on the board of directors

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with an exorbitant salary.

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Money laundering itself

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wasn't officially recognized as a federal
crime in the United States until 1986.

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Before that point, the government
needed to prosecute a related crime,

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like tax evasion.

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From 1986 on, they could confiscate
wealth simply by demonstrating

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that concealment had occurred,

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which had a positive effect on prosecuting
major criminal operations,

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like drug traffickers.

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However, a legal shift has raised concerns

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involving privacy 
and government surveillance.

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Today, the United Nations,

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national governments,

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and various nonprofits

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fight against money laundering,

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yet the practice continues to play
a major role in global crime.

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And the most high-profile instances
of money laundering

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have involved 
not just private individuals,

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but major financial institutions
and government officials.

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No one knows for sure the total
amount of money

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that's laundered on a yearly basis,

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but some organizations estimate it to be
in the hundreds of billions of dollars.