Money Laundering: An Overview of Term Paper

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S. Department of Justice Press Release, 2007). Hiding money in banks of small island nations is a popular form of money laundering, hence the term 'off-shore' companies for the use of concealing funds as well as creating the off-shore gambling facilities themselves.

Relationship between Illegal Drugs and Gambling

The illegal drug trade and illegal gambling often exhibit a symbiotic relationship in the case of money laundering. Casinos have also been used as ways for drug traffickers to launder money as criminals, including drug traffickers, cash in the 'chips' of their winnings -- the purchase of the original chips may have been bought with illegally obtained funds, but by cashing in the chips the funds now appear to be 'earned' through gambling. Even the state lottery has been implicated in money laundering schemes. Members of a cocaine ring engaged in one scheme whereby they would "purchase winning four-digit State of Michigan lottery tickets with drug proceeds from an individual who obtained them from the true winners in cash. These winning tickets, valued at over $1 million, would be redeemed with the State of Michigan's lottery bureau and used to purchase homes, make mortgage payments, and purchase vehicles, hiding the fact that the true source of the money were derived from... drug organization cocaine sales" ("16 Additional People Indicted in Large Scale Drug and Money Laundering Case," U.S. Drug Administration Press Release, 2007).

Changes in the Law

Recently, the U.S. Supreme Court made it more difficult for the federal government to prosecute money-laundering cases. Two cases, one involving a drug courier driving across the border to Mexico border with $81,000 in cash in his car, the other a long-running illegal lottery that operated in bars and restaurants in northwestern Indiana, revolved around the 1986 Money Laundering Control Act. The Act defines money laundering as a financial transaction that "represents the proceeds of some form of unlawful activity" (Greenhouse 2008).

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The question regarding the illegal lottery "was whether [the term] 'proceeds' referred to the total receipts of the activity or only the net profits. The man accused of running the operation, Efrain Santos, was charged with money laundering based on the payments he made to his runners, collectors and winners. He argued that these payments were made from his receipts, not his profits, and so could not be prosecuted as money laundering" and because of the ambiguity in the law's wording, the court found for the defendant (Greenhouse 2008). The question in the drug trafficking case, Cuellar v. United States, No. 06-1456, was if the mere act of concealing cash violated the scope of the foreign-transportation portion of the statute, and the court found that the secrecy must be part of a larger "design" to disguise the illegal source of the money (Greenhouse 2008).

The difficulties of prosecuting individuals for money laundering remain, as creative financial accounting and the use of off-shore and Internet sites and banks makes it increasingly difficult to regulate and investigate financial transactions. Technology can enable criminals to remain one step ahead of the law, particularly in online, illegal gambling which lacks a physical 'trail' of evidence, unlike drug trafficking. But despite these limitations in prosecutors' ability to prove an individual or organization is engaged in money laundering, money laundering remains one of the most effective ways to curtail both the drug trade and illegal gambling.

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