Over 700 finance terms, Shmooped to perfection.
You're not supposed to launder money. "Laundering" usually refers to hiding money from the government, whatever government in theory is... governing. There are lots of ways to launder. In the good ol' days, the system was very straightforward: A bootlegger made a ton of money selling illegal alcohol but wanted to find another way to show that he had "legitimately" made the dough so the authorities wouldn't catch on. Well, a theater could show a cheap film but still be "sold out." So a bootlegger buys a movie theater and, voila, the movie theater business shows itself to be hugely profitable with repeated "sold out" showings, and the bootlegging profits are now hidden.