Money laundering goes virtual? U.S. accuses Liberty Reserve of moving billions

Queena Kim May 29, 2013
HTML EMBED:
COPY

Money laundering goes virtual? U.S. accuses Liberty Reserve of moving billions

Queena Kim May 29, 2013
HTML EMBED:
COPY

It’s being called the largest online-money laundering prosecution in history. U.S. officials have accused Liberty Reserve of moving $6 billion for criminals involved in credit card fraud and Ponzi schemes by converting cash to virtual currency.

But before we get to the nitty gritty of today’s sting, let’s back up and explain money laundering.

Here’s a scene from AMC series “Breaking Bad” where a young, upcoming drug dealer is being schooled on the perils of making fistfuls of cash.

 

The easiest way for the tax man or law enforcement to nab you is to follow the money, says David Beim, a professor at the Columbia Business School.

“Money laundering is an effort to complicate and confuse and obscure the trail of money,” Beim says.

But criminals can’t park their money in banks, after all, banks are regulated by the government. And so it appears, criminals are turning to virtual currencies — which brings us to Liberty Reserve. The government is alleging that criminals exchanged their cash for virtual money through Liberty Reserve, which didn’t ask any questions, making the money virtually untraceable.  

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.  

Need some Econ 101?

Our new Marketplace Crash Course is here to help. Sign-up for free, learn at your own pace.