What exactly is money laundering? I understand it to some extent. It's taking money earned through illegal activity, investing it a legitimate business, and in turn getting back clean money. But what if that "illegal money" is used to pay for services? Have you not met the elements of money laundering because the money was spent, or in other words, the money was not returning to you in some form?

If you use illegally obtained money to pay for services it just means you have used illegally gained money to pay for services, that is not laundering. If you buy things with illegally gained money, you may fall under a RICO statute and the assets purchased may be subject to confiscation. Money laundering is a term used when illegal traceable money, via serial numbers or other markings, is funneled through a legimate business so it cannot be traced back to its illegal recipient. In a nutshell that all money laundering is -once it laundered the crook can now spend the laundered money without raising any red flags.