A person or entity that conducts a transaction that aims to conceal the source of ill-gotten money may be engaging in money laundering. Often, money laundering is part of a tax evasion scheme and may involve the use of dummy corporations or holding companies to conceal the source of the cash. These corporations or holding companies often claim to perform services that are typically paid for in cash.
This is important because it is harder to pinpoint the identity of the party who initially received the money from an illegal activity. The money is then deposited into a business account associated with the shell company, and a party can withdraw the money from the account. Fake receipts and invoices are also created to give the impression that it is a legitimate company and to provide an explanation for how the money entered those accounts.
In some cases, those involved in a money laundering operation will make use of offshore financial institution accounts. Although the Foreign Account Tax Compliance Act, enacted in 2010, imposes sanctions on owners of foreign bank accounts that fail to comply with its reporting requirements, there are still opportunities in some areas to avoid them .
Those who have been issued white-collar crime charges such as money laundering may wish to talk to a criminal defense attorney as soon as possible. Legal counsel can often begin to construct a defense strategy to use before or at trial. In some cases, where the defendant is a minor part of a larger enterprise, the attorney can negotiate an agreement with the prosecutor to reduce or withdraw the charges in exchange for the defendant’s offer to testify against the principals.