Money laundering is a financial term that refers to the process of converting illegally obtained income into seemingly legitimate income. These illegal incomes may come from criminal activities, such as drug trafficking, smuggling, corruption, tax evasion, etc. Money laundering allows criminals to integrate their illicit income into the legitimate economy, thereby evading legal sanctions and tax regulations.

The process of money laundering usually includes the following steps:

1. Placement: depositing illegal income into the financial system, such as banks, credit card companies or other financial institutions.

2. Layering: Separating illegal income from its source through a series of complex financial transactions, such as transfers, purchasing financial products, investing in real estate, etc. These transactions are designed to obfuscate the trail of illicit proceeds, making them difficult to trace.

3. Integration: Re-injecting the laundered funds into the economic system to make it look like it comes from a legitimate source. This may involve creating fake companies, purchasing luxury goods, opening shell companies, etc.

Money laundering has had serious negative impacts on the global economy and society, including:

1. Eroding the country’s tax base, resulting in a reduction in fiscal revenue.

2. Destroy the stability of the financial market and increase the risk of financial crime.

3. Financing terrorism and other criminal activities, threatening social security.

4. Erode social morality and undermine public trust in the financial system.

In order to combat money laundering activities, governments and international organizations have formulated a series of laws and policies, including:

1. Establish an anti-money laundering legal system and provide for financial institutions and specific professions ( Such as lawyers, accountants, etc.) are obliged to identify and report suspicious transactions.

2. Establish financial intelligence agencies, such as the Financial Crimes Enforcement Network (FinCEN) in the United States, to collect, analyze and share anti-money laundering intelligence.

3. Strengthen international cooperation, including bilateral and multilateral agreements, to combat cross-border money laundering activities.

Despite the efforts of governments and international organizations, money laundering activities still exist. Therefore, continuing to strengthen anti-money laundering measures and international cooperation remains an important task for global financial regulatory and law enforcement agencies.