Dirty Docks

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Lore & Background

In the past, the term 'money laundering' was applied only to financial transactions related to organized crime. Today its definition is often expanded by government and international regulators such as the US Office of the Comptroller of the Currency to mean 'any financial transaction which generates an asset or a value as the result of an illegal act,' which may involve actions such as tax evasion or false accounting. In the UK, it does not need to involve money, but any economic good. Courts involve money laundering committed by private individuals, drug dealers, businesses, corrupt officials, members of criminal organizations such as the Mafia, and even states. In United States law, money laundering is the practice of engaging in financial transactions to conceal the identity, source, or destination of illegally gained money. In United Kingdom law, the common law definition is wider. The act is defined as 'the process by which the proceeds of crime are converted into assets which appear to have a legitimate origin, so that they can be retained permanently or recycled into further criminal enterprises'.

In Their Own Story

While existing laws were used to fight money laundering during the period of Prohibition in the United States during the 1930s, dedicated anti-money laundering legislation was only implemented in the 1980s. Organized crime received a major boost from Prohibition and a large source of new funds that were obtained from illegal sales of alcohol. The successful prosecution of Al Capone on tax evasion brought in a new emphasis by the state and law enforcement agencies to track and confiscate money, but existing laws against tax evasion could not be used once gangsters started paying their taxes. In the 1980s, the war on drugs led governments again to turn to money laundering rules in an attempt to track and seize the proceeds of drug crimes in order to catch the organizers and individuals running drug empires. It also had the benefit, from a law enforcement point of view, of turning rules of evidence 'upside down'. Law enforcers normally have to prove an individual is guilty to seize their property, but with civil forfeiture laws, money can be confiscated and it is up to the individual to prove that the source of funds is legitimate to get the money back. This makes it much easier for law enforcement agencies and provides for much lower burdens of proof. However, this process has been abused by some law enforcement agencies to take and keep money without strong evidence of related criminal activity, to be used to supplement their own budgets. Civil asset forfeiture has been harshly criticized by civil liberties advocates for its greatly reduced standards for conviction, reverse onus, financial conflicts of interests arising when the law enforcement agencies who decide whether or not to seize assets stand to keep those assets for themselves, and violation of separation of powers and due process. The 11 September attacks in 2001, which led to the Patriot Act in the U.S. and similar legislation worldwide, led to a new emphasis on money laundering laws to combat terrorism financing. The Group of Seven (G7) nations used the Financial Action Task Force on Money Laundering to put pressure on governments around the world to increase surveillance and monitoring of financial transactions and share this information between countries. Starting in 2002, governments around the world upgraded money laundering laws and surveillance and monitoring systems of financial transactions. Anti-money laundering regulations have become a much larger burden for financial institutions, and enforcement has stepped up significantly. During 2011–2015 a number of major banks faced ever-increasing fines for breaches of money laundering regulations. This included HSBC, which was fined $1.9 billion in December 2012, and BNP Paribas, which was fined $8.9 billion in July 2014 by the U.S. government. Many countries introduced or strengthened border controls on the amount of cash that can be carried and introduced central transaction reporting systems where all financial institutions have to report all financial transactions electronically. For example, in 2006, Australia set up the AUSTRAC system and required the reporting of all financial transactions. With the surge in digital assets in the late 2010s, there has been a noticeable rise in money laundering and fraud tied to cryptocurrency. In 2021 alone, cybercriminals managed to secure US$14 billion in cryptocurrency through various illicit activities. It has been suggested that the expansion of the cryptocurrency trading created new avenues for 'secrecy-seeking capital' from the 2010s onward, when money laundering and tax evasion through tax haven jurisdictions became more difficult, following various international policy initiatives for example within the OECD and the European Union. Chinese organized criminal groups have become the principal money launderers for drug cartels in Mexico, Italy, and elsewhere. In the U.S., Chinese money laundering networks drove over US$312 billion in illicit money from 2021 to 2024, according to the Financial Crimes Enforcement Network. The East and Southeast Asia regions have become areas of major concern for money laundering. The United Nations Office on Drugs and Crime noted in a 2019 transnational organized crime assessment that threats arising from organized crime in Southeast Asia were becoming more deeply integrated within the region itself, as well as with neighboring and connected regions. As the region's illicit economies expanded and evolved, including the growth of the synthetic drug industry, casinos and economic zones in the region's border areas became important hubs for money laundering. Sites such as the Golden Triangle Special Economic Zone in Laos have been identified as hotspots for money laundering and various other types of transnational crime. Other high risk sectors for money laundering include commercial banks, securities companies, currency exchange shops, money transfer service providers, insurance companies, real estate agencies, and the trade in valuable materials such as art, antiquities and wildlife products. As these industries have grown, the presence and sophistication of money laundering operations has too, creating a backdoor for organized crime to launder illicit funds into the global financial system. Casino junkets operating from Macao emerged as a major facilitator of money laundering, as has the more recently established online gambling industry. The rise of the cyber-enabled fraud industry across Southeast Asia, especially in Cambodia, Myanmar, Laos, and the Philippines, has given rise to new platforms providing guarantees and facilitating the laundering of funds through app-based channels. One such case is that of Huione, a Cambodia-based operation that blockchain analysis firms have identified as one of the leading actors in this space. Blockchain analytics firm Elliptic described Huione as the 'largest illicit online marketplace to have ever operated'. Global law enforcement has begun to respond to the threats posed by such platforms, and in May 2025 the U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) issued a finding and notice of proposed rulemaking (NPRM) pursuant to Section 311 of the USA PATRIOT Act that identified Huione Group as a financial institution of primary money laundering concern, seeking to sever its access to the U.S. financial system. Reuters identified Cambodian businessman Hun To, cousin of Prime Minister Hun Manet, as one of the directors of Huione Pay.

Reader's Guide

Money laundering typically involves three steps: The first involves introducing cash into the financial system by some means ('placement'); the second involves carrying out complex financial transactions to camouflage the illegal source of the cash ('layering'); and finally, acquiring wealth generated from the transactions of the illicit funds ('integration'). Some of these steps may be omitted, depending on the circumstances. For example, non-cash proceeds that are already in the financial system would not need to be placed. According to the United States Treasury Department: 'Money laundering is the process of making illegally-gained proceeds (i.e., 'dirty money') appear legal (i.e., 'clean'). Typically, it involves three steps: placement, layering, and integration. First, the illegitimate funds are furtively introduced into the legitimate financial system. Then, the money is moved around to create confusion, sometimes by wiring or transferring through numerous accounts.'

Did You Know?

• The successful prosecution of Al Capone on tax evasion brought a new emphasis on tracking and confiscating money, but existing laws against tax evasion could not be used once gangsters started paying their taxes.
• HSBC was fined $1.9 billion in December 2012 for breaches of money laundering regulations.
• BNP Paribas was fined $8.9 billion in July 2014 by the U.S. government for money laundering violations.
• In 2021 alone, cybercriminals managed to secure US$14 billion in cryptocurrency through various illicit activities.
• Blockchain analytics firm Elliptic described Huione as the 'largest illicit online marketplace to have ever operated'.