My light exposure to AML training touched on this. However, can someone give an example of how one really launders money? Wiki claimed the term came from the when the mob would use laundromat (cash business) to conceal the true source of illegally gained funds.
Laundering. To clean… No, uh, here it is. To channel money through a source or by an intermediary. Find yourself a drug dealer, or someone who used to be addicted to crack.
well i think this is how it works: lets say that someone has paid you $500K to kill someone. now you cant just deposit this in the bank because it will raise a red flag. you dont wanna keep it under the mattress either because you wanna buy the latest BMW and need to write a check. you cant pay them with cash. so you try and legitimize the cash by making it appear to be coming from a clean source.
At all investment dealers, we don’t allow cash deposits of above $500 or so. Reason being is that that cash must first be streamed through the retail banking system in some way or form by ways of deposit thereby creating a record for the financial investigations people to track and highlight any suspicions. The best way back in the day was to deposit cash in an account. Now because of these rules, you must launder it by owning an unprofitable or only slightly profitable business, whereby the number of customers and the services you provide are hardly trackable (ie. laundromat, coffee shop, “construction company”, pub, etc) and inject ill-gotten cash into it to make it look like its a very profitable business but not too profitable if you know what I mean. It all comes down to creating fake receipts for customers that cannot be tracked.
Read Fortune’s Formula ditch. You’ll learn about it there
MattLikesAnalysis Wrote: ------------------------------------------------------- > At all investment dealers, we don’t allow cash > deposits of above $500 or so. Reason being is that > that cash must first be streamed through the > retail banking system in some way or form by ways > of deposit thereby creating a record for the > financial investigations people to track and > highlight any suspicions. The best way back in the > day was to deposit cash in an account. Now because > of these rules, you must launder it by owning an > unprofitable or only slightly profitable business, > whereby the number of customers and the services > you provide are hardly trackable (ie. laundromat, > coffee shop, “construction company”, pub, etc) and > inject ill-gotten cash into it to make it look > like its a very profitable business but not too > profitable if you know what I mean. It all comes > down to creating fake receipts for customers that > cannot be tracked. Excellent explanation… You just made me wanna consider money laundering as a full time profession. Doesn’t sound too hard to do.
MattLikesAnalysis Wrote: ------------------------------------------------------- > At all investment dealers, we don’t allow cash > deposits of above $500 or so. Reason being is that > that cash must first be streamed through the > retail banking system in some way or form by ways > of deposit thereby creating a record for the > financial investigations people to track and > highlight any suspicions. The best way back in the > day was to deposit cash in an account. Now because > of these rules, you must launder it by owning an > unprofitable or only slightly profitable business, > whereby the number of customers and the services > you provide are hardly trackable (ie. laundromat, > coffee shop, “construction company”, pub, etc) and > inject ill-gotten cash into it to make it look > like its a very profitable business but not too > profitable if you know what I mean. It all comes > down to creating fake receipts for customers that > cannot be tracked. You raise a good point. How are funds, such as cover charges, at a bar audited? I would imagine it would be impossible to prove that 400 patrons instead of 100 patrons entered the establishment on any particular night. The nightclub business seems like an excellent shell company. I recall reading that the FBI and IRS raided Pure Nightclub in Vegas after catching on how bouncers get paid primarily from handshakes and so forth. I do audit the quickbook entries for partnerships and small businesses here at the CPA firm and it seems like the potential for ‘revenue/expense elasticity’ is great. Fortune’s Formula is on reserve at the library.
Getting a slew of ‘soldiers’ to deposit cash in the name of an obscure LLC under 10k (SRA threshold) is another way…although it can get expensive paying the soldiers and the LLC would would have to pay taxes (if it’s established in a state of the US). I also recommend Fortune’s Formula, not solely for the financial aspect but for entertainment. I used to read up on this stuff when I first got interested in finance and the stories I read involved high corporate titles and large institutions (USA and otherwise). This laundering game is like any other that involves strategy (only this game will land you in jail if you lose, but not necessarily bankrupt 
). Most launderers pay taxes in one way or another, so the motivation for officials to shut down operators isn’t exactly a top priority.
I am still waiting for bchad’s thorough dissection.
"I can’t believe what a bunch of nerds we are. We’re looking up ‘money laundering’ in a dictionary. " - Office Space
3 levels of money laundering: Placement Layering Integration The hardest step is the first one, getting the money into the system without suspicion.
ditchdigger2CFA Wrote: ------------------------------------------------------- > I am still waiting for bchad’s thorough > dissection. Bump
ditchdigger2CFA Wrote: ------------------------------------------------------- > My light exposure to AML training touched on this. > However, can someone give an example of how one > really launders money? > > Wiki claimed the term came from the when the mob > would use laundromat (cash business) to conceal > the true source of illegally gained funds. you can set up companies like HA consulting or Omerta construction, create your own invoices and register your illegal income as income coming into the business and use those businesses to open up your own chequing accounts loc’s whatever. the downside is you will be paying tax on some of your money, the upside is you wont have tons of cash lying around for waiting for someone to rob you. there are tons of different ways to clean money, this is just the most common way.
Casinos work well…or so I have heard.
Cash businesses seem great, for cleaning money or skimming it off the top. Run three sets of books, one real, one for tax, one for potential buyers.
These days, it’s possible to do lots of microtransfers, or run an eBay business. Who’da thunk that people would be so into paying $500 for old razor blades. Hey! They’re antique!
In some circles loans/bonds are used to launder cash. So you are a remote company that takes sells a zero coupon bond at par to “an invester” so you get a lump of cash (your own cash) at some time during the period for some strange reason your credit rating is strangley downgraded and as such the bond is sold on for a fraction of the price due to your mythical default risk. If you “buy” the bond (now a far below junk status) you have exited the transaction in a similar way to buying a reversing trade in options. Effectively you have paid a commision to an agent to do the leg work to get your cash through. I have been told that this does not work in all areas due to different reporting requirements etc… I don’t have detailed knowledge of this being used in the real world - but a conversation I had with somebody that works in the field said that he had seen something similar to above.