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Every single business can be a vector for money laundering. From cash laundromats to high end technology, if the launderer owns the business then it has potenti

Every single business can be a vector for money laundering. From cash laundromats to high end technology, if the launderer owns the business then it has potential. I would estimate the government catches somewhere in the ballpark of 0.00000001% of all laundering. Businesses also have zero incentive to stop this activity as long as they get their margin.

ggm 4y ago
yes. but the cost side matters: if a criminal has $1,000,000 but can only recover $1,000 "safely" burning $999,000 then a method which returns $500,000 for burn of $500,000 is better, if riskier. "it depends"
- seibelj 4y ago
  I worked in an office next to an Uber clone that was clearly unsuccessful. Yet they had a significant Series A from a Russian oligarch, then got bought a few years later at something like 10x the Series A funding amount by a different Russian oligarch. There was a press release and a news story about how wonderful this was. This scheme was so clearly a laundering play, but everyone pretended it was some amazing exit. I'm confident the tech industry is full of these shenanigans, but I've never seen anything like this uncovered.
  - ggm 4y ago
    If they can offload on the market, this might be net lossless or lower loss at scale than other methods. I guess taking net company worth into a bank in Cyprus or something and using it as security to buy land, boats, whatever achieves the real outcome. Even if only some 1/nth can be collateralised
vintermann 4y ago
I have asked people who work with preventing money laundering how expensive it is, how much you get back from a launderer in clean money for every dollar you pay him in dirty ones. They have all estimated a 20-25% premium. That doesn't seem like it would be sustainable if only 0.00000001% was caught.
- seibelj 4y ago
  I think the difference is if you do it yourself vs. trust a third party. The third party is charging a risk premium.
  - vintermann 4y ago
    And I'm saying if the risk was that small, they couldn't charge that premium.

ggm 4y ago

yes. but the cost side matters: if a criminal has $1,000,000 but can only recover $1,000 "safely" burning $999,000 then a method which returns $500,000 for burn of $500,000 is better, if riskier. "it depends"

seibelj 4y ago
I worked in an office next to an Uber clone that was clearly unsuccessful. Yet they had a significant Series A from a Russian oligarch, then got bought a few years later at something like 10x the Series A funding amount by a different Russian oligarch. There was a press release and a news story about how wonderful this was. This scheme was so clearly a laundering play, but everyone pretended it was some amazing exit. I'm confident the tech industry is full of these shenanigans, but I've never seen anything like this uncovered.
- ggm 4y ago
  If they can offload on the market, this might be net lossless or lower loss at scale than other methods. I guess taking net company worth into a bank in Cyprus or something and using it as security to buy land, boats, whatever achieves the real outcome. Even if only some 1/nth can be collateralised

vintermann 4y ago

I have asked people who work with preventing money laundering how expensive it is, how much you get back from a launderer in clean money for every dollar you pay him in dirty ones. They have all estimated a 20-25% premium. That doesn't seem like it would be sustainable if only 0.00000001% was caught.

seibelj 4y ago
I think the difference is if you do it yourself vs. trust a third party. The third party is charging a risk premium.
- vintermann 4y ago
  And I'm saying if the risk was that small, they couldn't charge that premium.