Would this be considered money laundering? Hypothetical question?

OK I know this may be a weird question because I know chain letters do not work And my friend and I are not planning to get involved in one. But we just like to get into hypothetical discussions. He said that if he made $20,000 in a chain letter. He would deposit the money $100 dollars at a time in different branches. He also said that he would probably open up an account or two at different branches. By doing this in smaller amounts will make the bank less suspicious since as a law they have to report large deposits-such as $10,000 or more. By doing that he would avoid paying taxes to the IRS. He does not think this is money laundering since that type of money is usually associated with drugs and illegal gambling. However, I feel it is because chain letters are not legal.