Laundering

Laundering has two common senses. In everyday language it refers to cleansing textiles, but in crime and finance discussions it also denotes the process of concealing the origin of illicit funds so they appear legitimate.

Laundering clothes involves washing textiles to remove dirt and stains, followed by drying, ironing, and finishing. Common methods include machine washing and hand washing, as well as dry cleaning for delicate fabrics. Detergents, water temperature, and care labels guide the process to protect fabrics and maintain color and texture.

Money laundering is the process of concealing the origins of illegally obtained money so it appears legitimate. It is typically described as three stages: placement, where illicit funds enter the financial system; layering, involving a series of transactions to obscure provenance; and integration, when funds re-enter the legitimate economy and appear ordinary.

Regulatory responses focus on preventing and detecting laundering. Anti-money laundering laws require financial institutions to perform customer due diligence (KYC), monitor transactions, and report suspicious activity. International standards, notably those set by the Financial Action Task Force, guide national rules and cooperation across borders. Penalties for money laundering can include fines, asset freezes, and imprisonment, and enforcement often involves cooperation among tax authorities, financial regulators, and law enforcement.

The term laundering reflects the idea of cleansing or masking, and its meaning varies by context. While clothes are cleaned through physical washing, money laundering involves complex financial schemes intended to obscure illegal origins, with legal frameworks designed to deter and detect such activity.