Money Laundering
The process of disguising illegally obtained money as legitimate income by moving it through financial systems and transactions to hide its criminal origin.
The practice of concealing the source of funds obtained through illegal activities by routing them through financial systems, businesses, or transactions to make them appear legitimate. The process typically involves placement (introducing illicit cash into the financial system), layering (conducting complex transactions to obscure the money's origin), and integration (reintroducing the funds into the economy as seemingly clean money).
What this means in real life
A drug dealer deposits cash from illegal sales into a restaurant they own, mixing it with genuine revenue. When they withdraw the money as business profit, it now looks like legitimate earnings from the restaurant, allowing them to spend it openly.
What it isn’t
It is not simply having a lot of cash or being secretive about money. Money laundering specifically requires converting illegally obtained funds into apparently legitimate sources—a person with legal wealth who keeps it private is not laundering money.
Commonly misused online
People often use 'money laundering' loosely to mean any financial secrecy or tax evasion, but it technically refers only to disguising criminal proceeds as legitimate, not all financial dishonesty.