New Payment Methods and Insufficiencies in their Regulatory Scheme

Description

Money laundering is the process by which individuals who generate money through illicit activities create the perception that their funds derive from legitimate sources. Generally, this entails mixing illegally acquired earnings with money that has been legally obtained. As a result, tracing the source can become difficult, allowing the money to continue through a complex network of transactions. If a person tries to their spend ill-gotten gains without first obscuring its origins, three outcomes are possible: the individual may be liable for unpaid taxes on the earnings; the money may be linked to a crime and the owner subject to prosecution; and/or the money can be seized by the government, if it finds that it was illegally obtained. For these reasons, criminals and their organizations recognize that it is imperative to hide the sources of their illegally acquired money in order to spend it freely, without the risk of loss or prosecution.