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Old 06-23-2017, 10:11 AM
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How much of "business" is really money laundering?


I'm putting this in here because I'm not looking for a factual answer.

Background: I am not a business owner, I am an employee. Nobody in my family is a business owner, so I don't have any real life exposure to what that actually entails.

The question is inspired by a couple of thing. One is the stories of Trump investigations related to, and his documented history of paying fines, for money laundering. Second, once long ago I was casually conversing with someone about "how do all these little shops and restaurants and dry cleaners and what-have-you stay in business? They look like nobody is ever in there?" My friend replied, "Lots of them are just fronts for money laundering."

Now certainly, this was just 2 people BS'ing about nothing, but what he said always stuck with me. How much of what we pass on the street is really not the business that we think it is? How much is really there to provide a front for money flowing elseways, and they just need a set of books to pass it through?

I'm not expecting that anyone has real statistics. Instead, I would like to hear from the SDMB community about what they know about this subject from real life. Of course, I don't expect anyone to "name names", just anecdotal information and stories. Because it's something I know next to nothing about.

Last edited by Icarus; 06-23-2017 at 10:12 AM.
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Old 06-23-2017, 10:34 AM
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Keep in mind that many of these businesses may have other ways to make money than walk-in business. Many restaurants offer catering, and it could well be the majority of their business. Some types of shops also sell at festivals, and get more business from this than their regular store.
Also, some of the businesses you see may not make money, and are run as hobbies for the owner.
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Old 06-23-2017, 10:44 AM
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From what I've read, using a laundry shop (or similar Enterprise) for Money laundering is old-school, because FBI etc. know how much such a store should make, and huge variances set off alarms (and Software makes Monitoring and comparing much easier).

To launder big sums, real-estate Projects were used for a certain time.

If you look at the panama papers and similar scandals, it seems the current trend is just to build russian-nesting-dolls of companies, because after the 30th Company paying fees to the 31st, law enforcment or the tax Office just gives up and can no longer follow the thread.

Legal companies like Starbucks and Amazon have gotten infamous for using the nesting model, too, to get around paying taxes: so they make a few mililon Dollars per year, but pay 90% of that as "licensing fee" for the brand, because Company A owns the brand, but doesn't earn anything, and Company B rents the brand, while making the Money. So Company B pays a huge licensing fee (since the brand is obviously worth a lot, look at how much Money it's making!), which is counted as cost, so the net win is Close to Zero.
Company A, meanwhile, has its Headquarters in Ireland or elsewhere, where income from licensing is taxed with 1 % or similar.
Or Company A pays most of their income from the licensing fee into a charity (after taking hefty wages for the Managers), and the charity fund then gives Special Terms to People using their houses and so on.
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Old 06-23-2017, 12:45 PM
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Originally Posted by constanze View Post
From what I've read, using a laundry shop (or similar Enterprise) for Money laundering is old-school, because FBI etc. know how much such a store should make, and huge variances set off alarms (and Software makes Monitoring and comparing much easier).
Yep, in 20 years I only knew a handful of "fake business' that were fronts for Money Laundering. More often it is a successful business with lots of cash. And even that is passe.

More often if you see a business and you cant figure out how they stay open, one of more of the following is happening:

They got a great lease deal or own the building.

Retired and just doing it to keep busy.

Rich husband/father/whatever is subsiding them.
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Old 06-23-2017, 01:57 PM
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Retired and just doing it to keep busy.
What about: Self-employed, sucks at his Job, but too dumb to figure it out? (Probably the same Group of People who then complain that "my Business is failing because of Group X or law Y" instead of "my Business is failing because I'm a bad businessman").
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Old 06-23-2017, 02:05 PM
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What about: Self-employed, sucks at his Job, but too dumb to figure it out? (Probably the same Group of People who then complain that "my Business is failing because of Group X or law Y" instead of "my Business is failing because I'm a bad businessman").
Of course!
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Old 06-23-2017, 10:48 AM
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I've heard that the owners of some stores essentially make minimum wage when you consider all the hours they work, which is well more than 40 hours per week. The owner of the shop may work there every day from open to close. If there are other employees, they may be family members who aren't really getting paid directly. So it might not take too much business to keep a small, self-run shop open.
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Old 06-23-2017, 02:08 PM
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Originally Posted by boffking View Post
Keep in mind that many of these businesses may have other ways to make money than walk-in business. Many restaurants offer catering, and it could well be the majority of their business. Some types of shops also sell at festivals, and get more business from this than their regular store.
Also, some of the businesses you see may not make money, and are run as hobbies for the owner.
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Originally Posted by filmore View Post
I've heard that the owners of some stores essentially make minimum wage when you consider all the hours they work, which is well more than 40 hours per week. The owner of the shop may work there every day from open to close. If there are other employees, they may be family members who aren't really getting paid directly. So it might not take too much business to keep a small, self-run shop open.
Worked for a place like that. We did festivals, and shows, and flea markets, and a LOT of stuff that wasn't visible on our storefront. If we saw three customers a day, it was a busy day. We'd frequently go a week without making an in-shop sale. But show up at, say, the Kutztown Folk Festival, and we'd do massive business. Plus the owner was a real estate dude, and had a small brokerage. There were just two paid employees, and we didn't earn much.
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Old 06-23-2017, 03:28 PM
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I've wondered if the whole field of modern art is just a front for money laundering. It's something with little cost to make, it's worth lots of money, and the value is completely subjective. Sounds like a perfect way to move dirty money around. No, he didn't pay a million dollars for some paint splatters, it was for cocaine.
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Old 06-23-2017, 03:34 PM
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I've wondered if the whole field of modern art is just a front for money laundering. It's something with little cost to make, it's worth lots of money, and the value is completely subjective. Sounds like a perfect way to move dirty money around. No, he didn't pay a million dollars for some paint splatters, it was for cocaine.
That explains why Rembrants and Monets are so cheap.
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Old 06-23-2017, 11:03 AM
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Think of all the accountants who are involved in this, too!
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Old 06-23-2017, 12:36 PM
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Our office manager was walking back to work one day when he passed a small shop with an "Acme Office Supplies" sign.

Remembering that he was getting low on some items, he went inside. Here's what he described:

A bare room, with an old metal desk and chair, plus a metal shelf with a couple of packages of typing paper and some pencils.

Guy in a rumpled black suit, sitting in the chair, feet on desk.

Our OM asks, "Do you have some hanging file folders?"

"Nope. Fresh out."

OM: "No problem, can you order some for me?"

"Nope."

OM: "Well, how about ...."

"Nope."

OM: "Oooo-kay, then... thanks." as he edges out the door.

You tell me, was this an office supply store or what?

Last edited by Murph1111; 06-23-2017 at 12:37 PM.
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Old 06-23-2017, 01:27 PM
constanze is offline
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Originally Posted by Murph1111 View Post
Our office manager was walking back to work one day when he passed a small shop with an "Acme Office Supplies" sign.

Remembering that he was getting low on some items, he went inside. Here's what he described:

A bare room, with an old metal desk and chair, plus a metal shelf with a couple of packages of typing paper and some pencils.

Guy in a rumpled black suit, sitting in the chair, feet on desk.

Our OM asks, "Do you have some hanging file folders?"

"Nope. Fresh out."

OM: "No problem, can you order some for me?"

"Nope."

OM: "Well, how about ...."

"Nope."

OM: "Oooo-kay, then... thanks." as he edges out the door.

You tell me, was this an office supply store or what?
Once fanfic in the Lord Peter Wimsey verse (the Interbellum British detective written by Dorothy L. Sayers) has Harrite (LPW's wife) and a spinster friend, searching for a Christmas gift, stumble into an "Antiques shop" that's dusty and the owner behind the Counter is very very unfriendly.
Once outside, Harriet wonders how such a dusty, almost-empty shop with such unfriendly manners, stays in Business. Her spinster friend, (who has worked several fraud cases for LPW at this Point) observes many men entering the Business and suggests that it's a front for illegal gambling/ betting, and the owner wanted to drive the women away to avoid discovery.
  #14  
Old 06-23-2017, 01:45 PM
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Quote:
Originally Posted by Murph1111 View Post
Our office manager was walking back to work one day when he passed a small shop with an "Acme Office Supplies" sign.

Remembering that he was getting low on some items, he went inside. Here's what he described:

A bare room, with an old metal desk and chair, plus a metal shelf with a couple of packages of typing paper and some pencils.

Guy in a rumpled black suit, sitting in the chair, feet on desk.

Our OM asks, "Do you have some hanging file folders?"

"Nope. Fresh out."

OM: "No problem, can you order some for me?"

"Nope."

OM: "Well, how about ...."

"Nope."

OM: "Oooo-kay, then... thanks." as he edges out the door.

You tell me, was this an office supply store or what?
There was a lighting store I used to do business with. I imagine a lot of people thought it was a front for something. You hardly ever saw anyone there and they didn't seem to really like retail customers.
But they were very successful and made tons of money. They quoted and filled lots of large orders for lighting packages for apartment complexes and office buildings.
They just kept the store because the manufacturers that they had wholesale agreements with wanted them to display products.
They eventually dropped the retail store but maintained the space as a wholesale showroom.

So maybe this office supply place has deals with large businesses and drop-ships tons of stuff. Maybe they don't really care about selling a box of folders.
Or maybe they are a front for something. Or maybe jus a sucky business

Last edited by Ann Hedonia; 06-23-2017 at 01:46 PM.
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Old 06-23-2017, 05:56 PM
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You tell me, was this an office supply store or what?
Maybe a few years ago somebody forgot their purse.
  #16  
Old 06-23-2017, 05:10 PM
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Originally Posted by Icarus View Post
The question is inspired by a couple of thing. One is the stories of Trump investigations related to, and his documented history of paying fines, for money laundering.
For the sake of clarity, the fine you cited was not against him or paid by him. His involvement with the Taj Mahal was minimal by that time.
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