Money laundering is the process by which proceeds from which activities are transformed into seemingly legitimate funds?

• A. Drug trafficking, contraband, people smuggling, extortion, fraud and other activities.
• B. Official government revenue collection.
• C. Legitimate investments.
• D. Tax evasion only.

Answer: (A)

Money laundering involves turning money earned from criminal activity into funds that appear legitimate. The typical sources of those illicit proceeds include drug trafficking, contraband, people smuggling, extortion, fraud, and other crimes. These are the kinds of illegal gains criminals aim to disguise in the financial system. Official government revenue and legitimate investments are already legitimate funds, so they aren’t what money laundering targets. Tax evasion is criminal, but money laundering covers a broad range of crimes, not just taxes, and refers to the process of cleansing proceeds from those crimes.