"News flash: you're not supposed to launder money. No, no one will come get you if you accidentally leave a $5 bill in the pocket of your jeans on laundry day. ""Laundering"" in the financial sense refers to the process of making dirty money clean in a more metaphoric way. If someone earns a buck doing something illegal, they need to be able to account for it in some legitimate fashion in order to spend it. Otherwise, the government is going to get wise.
There are lots of ways to launder (and yes, it's legal for us to tell you about them). 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—voilà—the theater business shows itself to be hugely profitable with repeated ""sold out"" showings (even though there's never really more than a handful of people there)...and the bootlegging profits are now disguised as profits from the theater.
Today, money laundering usually involves fake accounts, fancy transactions faked on computer screens, and offshore accounts. The idea is the same: you create falsified documents in some way (called ""cooking the books"") to hide what you're doing from the IRS and the government. Anti-laundering laws are out there to catch people who do it and make sure their goose is cooked if they cook the books."
Related or Semi-related Video
Finance: What is Money Laundering?2 Views
Finance allah shmoop what is money laundering Whoa whoa whoa
This guy needs to be taxed and legitimized And after
taxing he gets out of the wash and has shrunk
to a ten dollar bill But at least he can
go out in public now Ok Ok So that's not
sort of money laundering The government's worried about money laundering
means trying to hide money you make illegally by setting
up fake businesses running the money through those businesses as
if while they're actually legitimate riel things real sales happen
And then to continue the money laundering story you show
some profits on those businesses for which yes you then
get taxed But then the money is quote legitimized unquote
in the eyes of the government so that you can
freely spend it on clothes and jewelry And you know
maserati's that go one eighty five The idea is that
you create fake companies when you launder money fake accounts
fake customers So it looks like the money is coming
from a legal normal business when it's really coming from
shady deals like a drug dealing and stuff like that
for better or worse the movie theater business was a
key tool in laundering money for the mob in the
early twentieth century and that a movie could be licensed
from a studio for a fixed fee of say a
hundred bucks a night and then magically even though the
movie was eight years old and in black and white
that movie theater sold out three shows a night every
night for a month generating tens of thousands of dollars
in revenues which would then launder bootlegging alcohol e kind
of money back into the normal system so that the
theater owner could pay for you know private school and
orthodontia and all that stuff for his kids and leave
a substantial tip for their surprisingly well dressed garbage collector
And if you've seen breaking bad while you know that
walter white mastered money laundering that carwash magically had huh
Hundreds of cars go through it every day even though
in reality it only had a few dozen but the
government wasn't counting cars It had no idea how bigger
little the carwash was and frankly it well didn't really
care as long as it was able to tax the
money coming in from walter's high octane blue meth so
the lesson Money laundering is bad Walter white isn't a
good role model and always remember to separate your lights 00:02:25.775 --> [endTime] and darks when washing a load
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