Money laundering is a term used to describe the process whereby criminals conceal illegally acquired funds by converting them into seemingly legitimate income. While it refers to the proceeds of organized crime generally, it is now most often associated with financial activities of drug dealers who seek to launder the large amounts of cash generated from narcotic sales.
Conduct or acts designed in whole or in part to conceal or disguise the nature, location, source, ownership or control of money (can be currency or equivalents, e.g., checks, electronic transfers, etc.) to avoid a transaction that requires to be reported under the ruling laws or to disguise the fact that the money was acquired by illegal means, is another definition of money laundering.
To make money laundering simple: imagine that a thief robs a jewel. Now, if he sells the jewel on the market, the risk of his arrest would be high. So he will exchange it with carpets, home appliances and other stuff to disguise the original crime.

Money laundering empowers corruption and organized crime.

Organized Crime
In today's global economy, organized crime groups generate huge sums of 'dirty money' through drug trafficking, arms smuggling and financial crime.
The upsurge in organized crimes calls for immediate action by all countries to fight international crime groups. One of the most important forms of organized crimes today is money laundering.
Apart from its international nature, the fact that money laundering is organized, has made it more difficult to fight the crime effectively. That is, unlike ordinary crimes that usually end with the capture of a ringleader, organized crimes could continue with or without individuals even at their highest ranks.
Experts believe that the deeper dirty money gets into the international banking system, the more difficult it is to identify its origin. Because of the clandestine nature of money laundering, it is difficult to estimate the total amount of money that goes through the laundry cycle.
One financial impact about money laundering is that it leads to the exit of hard currency from a given country. Police would be unable to catch criminals red-handed, if they manage to launder illegal money inside the country and then take the equivalent amount out.
Technical Term
But why is money laundering used to describe this illegal act? The reason is that by laundering 'illicit money or property', the dirt is washed away.
This term became popular in the United States back in the 1920s, when mafia groups used to launder money from gambling, drug trafficking, prostitution and other crimes, injecting dirty money into the society.
Some believe that the term was brought into formal use during the Watergate scandal in the 1970s, when Richard Nixon was US president.
US financial institutions reportedly launder over $500 billion a year in dirty money. That is $5 trillion over 10 years.
This counts only criminal proceeds and does not include illegal transfers and capital flows from corrupt politicians and businessmen or tax evasion by offshore transnational corporations.
Internationally the figure is $1.5 trillion a year. Some say without this flow of illegal funds the US economy and the world economy would collapse.
In America, there are some banks that not only set up offshore accounts for their clients they also launder trillions of dollars through 'correspondence banking'. This means a bank opens a correspondence account with an existing US bank and through that account offers services, which are bookkeeping entries.

It is difficult to estimate the total amount of money that goes through the laundry cycle.

UN Role
The United Nations and the international community agree upon the gravity of threats posed by money laundering to the world economy.
By working to combat money laundering, the UN makes a crucial contribution to the fight against organized crime.
The Global Program against Money Laundering (GPML) is the key instrument of the United Nations Office of Drug Control and Crime Prevention in this task.
Through GPML, the UN helps member-states to introduce legislation against money laundering and to develop and maintain the mechanisms that combat this crime. The program encourages anti-money laundering policy development, monitors and analyzes the problems and responses, raises public awareness about money laundering, and acts as a coordinator of joint anti-money laundering initiatives by the UN with other international organizations.
Strategies include granting technical assistance to developing countries, organizing training workshops, providing training materials, transferring expertise between jurisdictions, conducting research and analysis and gathering data.
Bad for All
Every criminal needs to launder the proceeds of crime, but where organized crime, drug trafficking and corruption are involved, the consequences of money laundering are bad for business, development, government and the rule of law.
Because they deal with other people's money, banks (and other financial and professional institutions) rely heavily on a reputation for probity and integrity.
Banks need their good name to build business. A financial institution with a reputation for shady dealing will be shunned by legitimate enterprise. The prestige of even a major bank that is revealed to have assisted in the laundering of money can be severely damaged. Money laundering is bad for business.
An international financial center that is used for money laundering can become an ideal financial haven. An international financial center perceived to be opening its doors to drug traffickers' cash and organized crime will eventually fail to keep the accounts of major legitimate corporations because they fear tarnishing their own reputation by association.
Developing countries that attract dirty money as a short-term engine of growth can find it difficult, as a consequence, to attract the kind of solid long-term foreign direct investment that seeks stable conditions, good governance and which can help them sustain development and promote long-term growth. Money laundering is bad for development.
Left unchecked, money laundering can erode a nation's economy by changing the demand for cash, making interest and exchange rates more volatile, and by causing high inflation in countries where criminal elements are doing business. The siphoning away of billions of dollars a year from normal economic growth poses a real danger at a time when the financial health of every country affects the stability of the global market. Money laundering is bad for the economy.
Most disturbing of all, money laundering empowers corruption and organized crime.

In the 20-Year Perspective, which has been ratified by the State Expediency Council and verified by the leader, five comparative advantages have been cited for the national economy, the most important of which seems to be technology and promotion of knowledge.
Technology and promotion of knowledge can mark the starting point for economic development due to two reasons. The first must be sought in the relative intelligence of Iranians. The plain truth is that despite the lack of convergence, Iranians have proved on different occasions that they are intelligent people on an individual basis. In fact our obsession with individual accomplishments has hindered overall sustainable development and progress.

Free education is a constitutional right.

Iranians attach great importance to pursuit of knowledge. The most important item of expenditure in an Iranian family budget after food, clothes and housing is children's education. However, it is regrettable that productivity in the country's education system is very low and a large portion of government investment on this sector does not produce favorable results.
The root-cause of the ineffectiveness of the educational and research sector is that that it is run by the state. Such state domination does not leave room for educational reforms. Our children may learn the three R's (reading, writing, arithmetic), but they do not learn concepts such as entrepreneurship, value added, civil rights, peaceful coexistence, the importance of the rule of law and healthy competition.
Our children may learn many things in schools that they may never find useful in their entire lives, while they do not learn a lot that they need to deal with in their lifetime!

Children may learn many things in schools that they may never find useful in their entire lifetime!

The Constitution stipulates that the government should provide free education for all children and young adults. But there is no reason why the government should deny this right and also monopolize education. Today our education sector needs to become competitive more than ever before. At one time, the so-called private or rather non-profit schools offered higher quality education compared to state-run schools although they did not provide the opportunity for all Iranians to benefit from good education.
However, the excessive state interference in this sector has also marred education prospects. Despite our scientific system of higher education, the education field functions as if all students are academically on par. Such a system in the long run can cause frustration, as the talented individuals who could contribute in a bigger way, get bogged down with learning things that would never be of any value to them.