1 00:00:11,093 --> 00:00:13,984 As one of the most notorious gangsters in history, 2 00:00:13,984 --> 00:00:19,928 Al Capone presided over a vast and profitable empire of organized crime. 3 00:00:19,928 --> 00:00:21,738 When he was finally put on trial, 4 00:00:21,738 --> 00:00:26,363 the most he could be convicted of was tax evasion. 5 00:00:26,363 --> 00:00:28,604 The nearly $100 million a year, 6 00:00:28,604 --> 00:00:32,308 that's 1.4 billion in today's currency, 7 00:00:32,308 --> 00:00:34,737 that Capone had earned from illegal gambling, 8 00:00:34,737 --> 00:00:35,898 bootlegging, 9 00:00:35,898 --> 00:00:37,045 brothels, 10 00:00:37,045 --> 00:00:38,412 and extortion, 11 00:00:38,412 --> 00:00:41,317 would have served as evidence of his crimes. 12 00:00:41,317 --> 00:00:44,985 But the money was nowhere to be found. 13 00:00:44,985 --> 00:00:49,265 Capone and his associates had hidden it through investments in various businesses 14 00:00:49,265 --> 00:00:52,736 whose ultimate ownership couldn't be proven, 15 00:00:52,736 --> 00:00:55,474 like cash-only laundromats. 16 00:00:55,474 --> 00:01:00,605 In fact, those laundromats are part of the reason for the name of this activity, 17 00:01:00,605 --> 00:01:02,995 money laundering. 18 00:01:02,995 --> 00:01:06,235 Money laundering came to be the term for any process 19 00:01:06,235 --> 00:01:12,185 that cleans illegally obtained funds of their dirty criminal origins, 20 00:01:12,185 --> 00:01:16,515 allowing them to be used within the legal economy. 21 00:01:16,515 --> 00:01:20,375 But Capone wasn't the first to launder money. 22 00:01:20,375 --> 00:01:24,606 In fact, this practice is about as old as money itself. 23 00:01:24,606 --> 00:01:27,536 Merchants hid their riches from tax collecters, 24 00:01:27,536 --> 00:01:31,746 and pirates sought to sell their bounty without drawing attention 25 00:01:31,746 --> 00:01:33,836 to how they got it. 26 00:01:33,836 --> 00:01:36,096 With the recent arrival of virtual currencies, 27 00:01:36,096 --> 00:01:37,765 offshore banking, 28 00:01:37,765 --> 00:01:39,467 the darknet, 29 00:01:39,467 --> 00:01:41,136 and global markets, 30 00:01:41,136 --> 00:01:44,607 schemes have become much more complex. 31 00:01:44,607 --> 00:01:47,876 Although modern money laundering methods vary greatly, 32 00:01:47,876 --> 00:01:50,836 most share three basic steps: 33 00:01:50,836 --> 00:01:51,948 placement, 34 00:01:51,948 --> 00:01:53,138 layering, 35 00:01:53,138 --> 00:01:55,476 and integration. 36 00:01:55,476 --> 00:02:00,337 Placement is where illegally obtained money is converted into assets 37 00:02:00,337 --> 00:02:02,366 that seem legitimate. 38 00:02:02,366 --> 00:02:05,656 That's often done by depositing funds into a bank account 39 00:02:05,656 --> 00:02:11,737 registered to an anonymous corporation or a professional middleman. 40 00:02:11,737 --> 00:02:15,400 This step is where criminals are often most vulnerable to detection 41 00:02:15,400 --> 00:02:18,966 since they introduce massive wealth into the financial system 42 00:02:18,966 --> 00:02:21,899 seemingly out of nowhere. 43 00:02:21,899 --> 00:02:26,278 The second step, layering, involves using multiple transactions 44 00:02:26,278 --> 00:02:30,067 to further distance the funds from their origin. 45 00:02:30,067 --> 00:02:33,127 This can take the form of transfers between multiple accounts, 46 00:02:33,127 --> 00:02:35,758 or the purchase of tradable property, 47 00:02:35,758 --> 00:02:37,428 like expensive cars, 48 00:02:37,428 --> 00:02:38,303 artwork, 49 00:02:38,303 --> 00:02:39,917 and real estate. 50 00:02:39,917 --> 00:02:43,780 Casinos, where large sums of money change hands every second, 51 00:02:43,780 --> 00:02:47,208 are also popular venues for layering. 52 00:02:47,208 --> 00:02:50,609 A money launderer may have their gambling balance made available 53 00:02:50,609 --> 00:02:53,960 at a casino chain's locations in other countries, 54 00:02:53,960 --> 00:02:57,709 or work with employees to rig games. 55 00:02:57,709 --> 00:03:03,260 The last step, integration, allows clean money to re-enter the mainstream economy 56 00:03:03,260 --> 00:03:06,059 and to benefit the original criminal. 57 00:03:06,059 --> 00:03:08,669 They might invest it into a legal business 58 00:03:08,669 --> 00:03:11,309 claiming payment by producing fake invoices, 59 00:03:11,309 --> 00:03:13,950 or even start a bogus charity, 60 00:03:13,950 --> 00:03:16,490 placing themselves on the board of directors 61 00:03:16,490 --> 00:03:19,370 with an exorbitant salary. 62 00:03:19,370 --> 00:03:20,689 Money laundering itself 63 00:03:20,689 --> 00:03:26,950 wasn't officially recognized as a federal crime in the United States until 1986. 64 00:03:26,950 --> 00:03:30,730 Before that point, the government needed to prosecute a related crime, 65 00:03:30,730 --> 00:03:33,680 like tax evasion. 66 00:03:33,680 --> 00:03:37,840 From 1986 on, they could confiscate wealth simply by demonstrating 67 00:03:37,840 --> 00:03:40,610 that concealment had occurred, 68 00:03:40,610 --> 00:03:44,570 which had a positive effect on prosecuting major criminal operations, 69 00:03:44,570 --> 00:03:46,880 like drug traffickers. 70 00:03:46,880 --> 00:03:49,901 However, a legal shift has raised concerns 71 00:03:49,901 --> 00:03:53,930 involving privacy and government surveillance. 72 00:03:53,930 --> 00:03:55,852 Today, the United Nations, 73 00:03:55,852 --> 00:03:57,411 national governments, 74 00:03:57,411 --> 00:03:58,992 and various nonprofits 75 00:03:58,992 --> 00:04:00,932 fight against money laundering, 76 00:04:00,932 --> 00:04:06,031 yet the practice continues to play a major role in global crime. 77 00:04:06,031 --> 00:04:08,816 And the most high-profile instances of money laundering 78 00:04:08,816 --> 00:04:11,803 have involved not just private individuals, 79 00:04:11,803 --> 00:04:17,207 but major financial institutions and government officials. 80 00:04:17,207 --> 00:04:20,101 No one knows for sure the total amount of money 81 00:04:20,101 --> 00:04:22,832 that's laundered on a yearly basis, 82 00:04:22,832 --> 00:04:29,736 but some organizations estimate it to be in the hundreds of billions of dollars.