4 ms·

> the vast majority of money laundering happens with cash Can you explain that? How do I take my illegal gained cash and convert it into enough clean money to

by mabbo 6y ago

> the vast majority of money laundering happens with cash Can you explain that? How do I take my illegal gained cash and convert it into enough clean money to buy a house? And why can't anti-money-laundering laws and agencies stop that? > The vast majority of money laundering is for victimless crimes, including the consensual adult sales of drugs, gambling, porn, and prostitution There's two things here. There is not believing that these crimes should be crimes- and in that, you and I likely agree. But the other thing is whether criminals should be allowed to make money for doing things that are against the law. And I don't agree. If you think the laws should be changed, vote for that, fight for that, protest for that. But don't tell me that all criminals should be allowed to clean their money because some laws aren't just.

bigbubba 6y ago
Open a bar, pour liquor down the drain then say you sold it at a huge markup and they paid with cash. (This is not advice.)
- renata 6y ago
  Why wouldn't you just sell the liquor like normal? Extra profit on top of your ill-gotten gains.
  - __blockcipher__ 6y ago
    You need a paper trail of invoices, both of you buying sufficient supplies and having sufficient sales to customers to warrant those supplies. The amount of money you can launder in a given period of time is ultimately limited by how much real business you have. So if you need to launder an excessive amount of money eventually you’ll have to start metaphorically or literally pouring alcohol down the drain.
  - philwelch 6y ago
    You would, actually. But you need to somehow account for revenue above and beyond the amount of liquor you’ve actually served. So my hypothesis is that money laundering bars just pour stronger drinks than fully legitimate ones, or tolerate more “shrinkage” in general. (According to a bar manager I once knew, bars inherently have higher shrinkage than other businesses anyway; in bartending, you don’t get fired for stealing the occasional bottle or giving away free drinks to your friends because every bartender will do one of those, but if you do both you will get fired. I don’t consider this guy a reliable source, but it seems plausible; stevedores were notorious for liquor theft prior to the invention of shipping containers, so why not bartenders?)
tarboreus 6y ago
Say you have a big pile of cash you earned through illegal activity. Set up a brick-and-mortar business, say a cafe, and do the bare minimum to run it as a business. Then you say you took a lot of cash, report your earnings to the IRS, and buy your house. It's not really rocket science.
- Spooky23 6y ago
  The IRS isn’t stupid. They profile and audit those types of businesses at a higher rate. The real money in is stuff like real estate, which is pretty shady even when legit and much easier to buy and sell
  - philwelch 6y ago
    How does that work, though? Wouldn’t someone notice if you bought real estate and paid for it with a briefcase full of cash? Wouldn’t you still end up with a legal record of having purchased real estate with more money than you can explain from your declared, taxable income? There has to be some sort of angle for real estate to work.
    - mabbo 6y ago
      Not the person you're replying to, but I'm up the chain and interested in this topic. It's like this: I buy a house for $500,000. What a great deal. A year later, I sell it for $600,000. Hey cool, I made $100,000 profit. Of course, quietly I've handed the original seller a briefcase with $110,000 cash in it. The extra $10k was to keep his mouth shut, but in return I've converted $110,000 of dirty money into $100,000 of clean money. But maybe it's not just one house- maybe it's 10 houses. Maybe it's a huge mansion worth $5m (which I negotiated a great deal on at $4m). I'm not cleaning the full value of the asset, I'm cleaning some portion of it's value. What those other parties do with the dirty money is up to them, but it's easier to deal with smaller amounts of it, spread out, than it is to deal with one big pile of dirty money. Maybe they work construction as a general contractor and buy their supplies for jobs using cash, but get paid in clean money. Many hands make short work when it comes to cleaning money. All that said, every large purchase - homes, cars, boats, etc - leaves a trace. Financial Intel agencies get a report each time you move $10k or more. And if you move too much, too frequently, they start investigating- how come this guy bought 5 houses in 3 years, each one below market value? Sooner or later, someone under questioning by the police gives you up and then it all unravels.
deleted 6y ago
[deleted]
philwelch 6y ago
The best explanation of money laundering is this scene from Breaking Bad: https://www.youtube.com/watch?v=ez6xH-su2xI https://www.youtube.com/watch?v=ez6xH-su2xI Most money that people make illegally (selling drugs, etc.) is cash, because you can’t trace cash transactions. The problem is that it’s hard to use cash, and just depositing vast sums of money in the bank raises the obvious question of where the money came from. At some point, even if they can’t prove that the money came from anything illicit, they can prove that you aren’t paying income taxes on it, which is a federal felony by itself. So you need to operate a business that also deals largely in cash, slip your illicit cash into the businesses’ revenue, cook the books and make it look like the money came from your legitimate business and not your illegitimate one, and Bob’s your uncle, at least in theory. In practice, legitimate cash businesses are more and more rare as time goes on, and investigators are really good at noticing when some random nail salon or bar has a lot more revenue than they should. Also, don’t be stupid enough to operate your illegal business out of your legal, money-laundering front. Seattle used to have an extremely sketchy but extremely good cash-only teriyaki joint downtown, but they got busted for fencing stolen iPads after hours. Which explains a lot about why they never accepted credit cards, I guess, but they were a thriving teriyaki joint and I kind of miss them.
- mabbo 6y ago
  > So you need to operate a business that also deals largely in cash, slip your illicit cash into the businesses’ revenue, cook the books and make it look like the money came from your legitimate business and not your illegitimate one, and Bob’s your uncle, at least in theory. In practice, legitimate cash businesses are more and more rare as time goes on, and investigators are really good at noticing when some random nail salon or bar has a lot more revenue than they should. I actually worked for 8 months as an intern at Fintrac, Canada's financial intel agency. This was 14 years ago now, but back then they were actually pretty good at what they did, for a group with ~300 people. They just had analysts going through vast amounts of data manually, but with plans to improve the tooling, automate more. I can only guess at how far along they've come now. The reality is, if you're moving more money than you should you'll get it caught eventually. And the more you're moving, the more likely you are to be noticed.

by mabbo 6y ago

bigbubba 6y ago

Open a bar, pour liquor down the drain then say you sold it at a huge markup and they paid with cash. (This is not advice.)

renata 6y ago
Why wouldn't you just sell the liquor like normal? Extra profit on top of your ill-gotten gains.
- __blockcipher__ 6y ago
  You need a paper trail of invoices, both of you buying sufficient supplies and having sufficient sales to customers to warrant those supplies. The amount of money you can launder in a given period of time is ultimately limited by how much real business you have. So if you need to launder an excessive amount of money eventually you’ll have to start metaphorically or literally pouring alcohol down the drain.
- philwelch 6y ago
  You would, actually. But you need to somehow account for revenue above and beyond the amount of liquor you’ve actually served. So my hypothesis is that money laundering bars just pour stronger drinks than fully legitimate ones, or tolerate more “shrinkage” in general. (According to a bar manager I once knew, bars inherently have higher shrinkage than other businesses anyway; in bartending, you don’t get fired for stealing the occasional bottle or giving away free drinks to your friends because every bartender will do one of those, but if you do both you will get fired. I don’t consider this guy a reliable source, but it seems plausible; stevedores were notorious for liquor theft prior to the invention of shipping containers, so why not bartenders?)

tarboreus 6y ago

Say you have a big pile of cash you earned through illegal activity. Set up a brick-and-mortar business, say a cafe, and do the bare minimum to run it as a business. Then you say you took a lot of cash, report your earnings to the IRS, and buy your house. It's not really rocket science.

Spooky23 6y ago
The IRS isn’t stupid. They profile and audit those types of businesses at a higher rate. The real money in is stuff like real estate, which is pretty shady even when legit and much easier to buy and sell
- philwelch 6y ago
  How does that work, though? Wouldn’t someone notice if you bought real estate and paid for it with a briefcase full of cash? Wouldn’t you still end up with a legal record of having purchased real estate with more money than you can explain from your declared, taxable income? There has to be some sort of angle for real estate to work.
  - mabbo 6y ago
    Not the person you're replying to, but I'm up the chain and interested in this topic. It's like this: I buy a house for $500,000. What a great deal. A year later, I sell it for $600,000. Hey cool, I made $100,000 profit. Of course, quietly I've handed the original seller a briefcase with $110,000 cash in it. The extra $10k was to keep his mouth shut, but in return I've converted $110,000 of dirty money into $100,000 of clean money. But maybe it's not just one house- maybe it's 10 houses. Maybe it's a huge mansion worth $5m (which I negotiated a great deal on at $4m). I'm not cleaning the full value of the asset, I'm cleaning some portion of it's value. What those other parties do with the dirty money is up to them, but it's easier to deal with smaller amounts of it, spread out, than it is to deal with one big pile of dirty money. Maybe they work construction as a general contractor and buy their supplies for jobs using cash, but get paid in clean money. Many hands make short work when it comes to cleaning money. All that said, every large purchase - homes, cars, boats, etc - leaves a trace. Financial Intel agencies get a report each time you move $10k or more. And if you move too much, too frequently, they start investigating- how come this guy bought 5 houses in 3 years, each one below market value? Sooner or later, someone under questioning by the police gives you up and then it all unravels.

deleted 6y ago

[deleted]

philwelch 6y ago

The best explanation of money laundering is this scene from Breaking Bad: https://www.youtube.com/watch?v=ez6xH-su2xI https://www.youtube.com/watch?v=ez6xH-su2xI Most money that people make illegally (selling drugs, etc.) is cash, because you can’t trace cash transactions. The problem is that it’s hard to use cash, and just depositing vast sums of money in the bank raises the obvious question of where the money came from. At some point, even if they can’t prove that the money came from anything illicit, they can prove that you aren’t paying income taxes on it, which is a federal felony by itself. So you need to operate a business that also deals largely in cash, slip your illicit cash into the businesses’ revenue, cook the books and make it look like the money came from your legitimate business and not your illegitimate one, and Bob’s your uncle, at least in theory. In practice, legitimate cash businesses are more and more rare as time goes on, and investigators are really good at noticing when some random nail salon or bar has a lot more revenue than they should. Also, don’t be stupid enough to operate your illegal business out of your legal, money-laundering front. Seattle used to have an extremely sketchy but extremely good cash-only teriyaki joint downtown, but they got busted for fencing stolen iPads after hours. Which explains a lot about why they never accepted credit cards, I guess, but they were a thriving teriyaki joint and I kind of miss them.

mabbo 6y ago
> So you need to operate a business that also deals largely in cash, slip your illicit cash into the businesses’ revenue, cook the books and make it look like the money came from your legitimate business and not your illegitimate one, and Bob’s your uncle, at least in theory. In practice, legitimate cash businesses are more and more rare as time goes on, and investigators are really good at noticing when some random nail salon or bar has a lot more revenue than they should. I actually worked for 8 months as an intern at Fintrac, Canada's financial intel agency. This was 14 years ago now, but back then they were actually pretty good at what they did, for a group with ~300 people. They just had analysts going through vast amounts of data manually, but with plans to improve the tooling, automate more. I can only guess at how far along they've come now. The reality is, if you're moving more money than you should you'll get it caught eventually. And the more you're moving, the more likely you are to be noticed.