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Finance Glossary

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Over 700 finance terms, Shmooped to perfection.

Money Laundering

Definition:

It seems innocent enough: You toss your favorite jeans in the wash and don’t check the pockets. The $5 you had in there after lunch comes out clean and a little crumpled. No harm, no foul.

But that’s not the sort of money laundering the government is worried about. Money laundering means trying to hide money you make illegally by cooking the books, setting up fake businesses, and basically committing a bunch of fraud. The idea is that you create fake companies, fake accounts, or fake customers, so it looks like the money is coming from a legal business when it’s really coming from shady deals.

If you’ve seen Breaking Bad, you know that Walter White got into some seriously shady stuff—including money laundering. He created businesses and even hired an attorney (we're looking at you, Saul) to help him hide where the money was coming from. It's no meth cooking, but... not great.