White collar crime is a term used to describe a wide range of deceitful activities performed by businesses, employees and other professionals. According to FBI.gov, people who commit these crimes often violate others’ trust and use concealment after obtaining property or assets for their benefit.
Embezzlement and money laundering are often confused with one another, as they are both crimes involving financial fraud. Yet, there are key differences that can help distinguish these two different crimes.
Also referred to as a misappropriation of funds, embezzlement involves purposefully misusing, retaining or stealing funds given to employers by an employer or other entity. Although the organization gave the money willingly, people may use it for a purpose that was not intended. For example, an employee may take small amounts of money from an employer’s fund over time in hopes that no one will catch the missing funds, or they may use company money for their own personal benefit.
During money laundering, people obtain funds illegally through criminal acts or misleading schemes. In an attempt to mask the money’s illegal origins, criminals make it look like the funds are coming from different sources. They may also change the money’s form or filter it through other accounts. Money may be obtained through organized crime activities, such as:
- Illegal gun sales
- Drug trafficking
- Complex financial crimes
- Health care fraud
Once the money is obtained, it may filter through international trade, real estate, virtual currency, financial institutions or fake businesses.
It is important to know the differences between embezzlement and money laundering, as the consequences and defense are much different as well.