The history of money laundering
Whilst we are an exciting online competition platform, our ethos here at Winzum covers a lot more than that, and it is actually community spirit that we are most passionate about. We want to create a genuine online competition community you know, and the best way to do that is to fill our blog with all kinds of informative things to help you lovely lot out.
One of the main areas in which we all need to be careful is with financial crime, something that has led us to explore the history of financial fraud [a history of financial fraud], amongst other things. Money laundering is also something that can be particularly dangerous if you get wrapped up in it; today we’re going to take a look at the history of it.
Ancient forms of money laundering
If you have read our previous article on the history of financial fraud you probably won’t be surprised to know that money laundering also existed back in the ancient world. For example, historians have uncovered evidence that Chinese merchants almost 3000 years ago engaged in basic money laundering techniques.
In these feudal societies merchants were afraid that the rulers would take any assets that had been required through trade, and they therefore came up with multiple ways to hide them. But there was just one problem: how do you convert this into non-concealed wealth? The answer is money laundering!
Money laundering in the US during the prohibition
During the 1920s prohibition era in the US, money laundering was a very common and necessary thing for the numerous bootleggers selling alcohol on the black market. In fact, this is where the modern form of money laundering really took off, which just proves that illegalising things is not always the most sensible idea to combat crime…
The famous Chicago gangster Al Capone is actually credited with inventing the term “money laundering” back then, as he used laundry businesses across the city as a fake front for the illegal money he was earning by smuggling alcohol across the border.
The drug trade and 20th century money laundering
Amazingly, money laundering was only seen as a relatively minor offence in the early-to-mid 20th century, with drug dealers often able to access their assets and profits after completing their jail sentence. This all changed in the 1980s, however, with Ronald Reagan’s famous “War on Drugs”.
As a result the US Money Laundering Control Act was passed in 1986, which made money laundering a federal crime for the first time. Other countries very quickly followed, and before too long money laundering was a very serious crime all over the world.
21st century cyber money laundering
As the 21st century has rolled through and the Internet has become much more of a presence in everybody’s lives it has also made money laundering much harder to detect. These days cyber criminals can use various different online services in order to launder their cash, and we all have to be very vigilant.
In fact, this is one of the reasons we mentioned money laundering in our article on financial crime [The various examples of financial crime to be aware of], because these days it’s easy to get unwillingly wrapped up in it. Take the popular game Fortnite, for example, a platform increasingly used by criminals to launder their money through the “V-Bucks” currency system used on the game.