Money-laundering is the act often associated with criminals who want to 'clean' their ill-obtained gains, and recirculate it into the legal economy, so that they can use such wealth without raising eyebrows.

Hence the term which refers to the money being 'laundered', so to speak.

It usually involves circuitous routes by which the money is injected back into the legal economy. Such money is disguised, either as returns from often dubious investments or through fictitious sales of retail outlets that act as fronts for the criminal enterprises involved.

For example, a cinema or restaurant that has nary a customer but show steady monthly sales on record. Or perhaps a low-risk investment scheme in a far-off foreign land that gives surprisingly high returns each month.

The monies to be cleaned are usually ill-obtained gains from illegal activities such as extortion, protection rackets, loan sharking, illegal gambling, theft and fraud. This is cash that cannot be openly spent, without the risk of the authorities looking into where it came from and investigating the persons involved.

Indeed, not all criminals have the power to close investigations, cause them to be derailed, or secure the unexplained departure of key regulatory or law enforcement officials. So, most would have to resort to not being caught laundering money.

This, is of course the 'blue-collar' definition of money-laundering for common criminals.

'White collar' version

There is also the 'white-collar' version for money-laundering, which concerns the same use of circuitous channelling of cash. But it is via creative accounting and errant 'friendly' bankers, whereby monies embezzled from funds and investments are funnelled out into unscrupulous hands.

This includes monies that are listed as losses or lost investment units that cannot be ascertained or tracked, probably after banking document requests by auditors and foreign request for investigation into fraud are rejected.

Tales which reek of the infamous Ponzi scheme perhaps? Where invested monies are used to defraud investors in a kind of a shell game, used to prop up an investment scheme with no real returns.

This is often to the detriment of the investors and stakeholders, who are left holding the bag and at times shouldering debts, whereas the unscrupulous ones escape scot-free with the funds that apparently went into their accounts without their knowledge.

However, there are some who would argue that there is a third type of money-laundering, which involves the use of circuitous routes to divert public funds into unscrupulous hands. Neither blue nor white collared, but perhaps what can be called 'grand theft'.

Often, it is said to involve initial public offerings (IPO), as well as investments or spending using public monies.

For example a company without real assets can be overvalued with the collusion of underwriters, inflating the value of its shares. The same shares will then be offered to institutional buyers, mainly funds that hold public monies.

The funds are then used by the powers-that-be to purchase the shares, regardless. Shares with value will later drop, once listed for trading, as such shares do not have strong fundamentals to begin with.

Something akin to what happened to Enron Corporation and its inflated values and numbers, which led to one of the biggest corporate collapses in history.

And while the company that issued the IPO became cash-rich, the people who bought these shares, or worse, the retail buyers, will almost overnight find themselves left with but half, if not less, of the value they paid for.

Similarly, the same goes for when the powers-that-be order funds that hold public monies to invest in dubious investments, often paying a premium for investments that are worth much less, no matter how high-flying their names may sound.

In either case, contributors to public funds, as well as the stakeholders, will be left holding the bag and shoulder future debts, while those responsible gallivant on holidays in private jets, all paid with public money.