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The IRS on money laundering

Business owners and employees in Pennsylvania may benefit from learning more about how the Internal Revenue Service defines money laundering and investigates allegations of such fraud or illicit activity. The IRS describes money laundering as a financial transaction or activity intended to conceal money's source of origin. The funds being concealed are typically generated from illegal activity, so the records are manipulated to create the appearance of legitimate means.

The IRS is often the leading agency in money laundering investigations, which target violations of the Bank Secrecy Act and income tax laws. The IRS focuses on identifying people manipulating purported taxes due by hiding the source or accurate amount of profit generated from an illegal enterprise. According to the IRS, money laundering may be described as tax evasion in the act. The agency claims that criminals generating substantial income need to devise schemes in order to hide the profitable activities from the IRS.

Common strategies recognized by investigators include commingling the illicit funds with business activities, disguising the capital as loan proceeds or making it appear that it's generated from some other legitimate source. During the first week October 2014 alone, the IRS published sentencing updates on six money laundering cases. Among these defendants, one received almost five years in prison, one received more than 10 years and another received more than 20 years. These financial investigations often involve an intensive review of business, financial and real estate records.

People accused of committing tax fraud typically benefit from consulting legal counsel after investigators have made first contact. Lawyers may be effective in conducting an independent investigation in order to assess the credibility of the allegations. Criminal defense lawyers may be able to uncover enough information to develop a viable defense to counter the prosecution's assertions.

Source: IRS, "Overview - Money Laundering", October 22, 2014

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