# How is money laundering detected and proven? **URL:** \ **Category:** Factual Questions\ **Created:** [June 24, 2016, 12:56am UTC](https://boards.straightdope.com/t/how-is-money-laundering-detected-and-proven/758194 "2016-06-24T00:56:13Z")\ **Posts on this page:** 20\ **Page:** 5
**Author:** ![CBEscapee](https://avatars.discourse-cdn.com/v4/letter/c/b19c9b/32.png) [@CBEscapee](https://boards.straightdope.com/u/CBEscapee)\ **Post date:** [June 29, 2016, 12:40pm UTC](https://boards.straightdope.com/t/how-is-money-laundering-detected-and-proven/758194/81 "2016-06-29T12:40:39Z")
> [@DrDeth](#): > > Try again for _what_? You are trying to deny Mexico is deeply corrupt? I am not saying that at all. How could you come up with that? I am saying you know nothing outside of your internet stories about Mexico. There is far more cartel money laundered in the US than there is here. And the only reason that the US isn’t lower on the corruption index is because your own politicians have legislated legalized bribery. How many of your politicians’ votes are controlled by large corporations or groups like the NRA? And they will not adopt campaign finance reform. It is all about money and not the best interests of your country. How many become high paid lobbyists when they leave politics? ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [June 29, 2016, 5:01pm UTC](https://boards.straightdope.com/t/how-is-money-laundering-detected-and-proven/758194/82 "2016-06-29T17:01:57Z")
> [@CBEscapee](#): > > … There is far more cartel money laundered in the US than there is here. And the only reason that the US isn’t lower on the corruption index is because your own politicians have legislated legalized bribery. > > … Don’t be silly. We learn all we know about Mexico from Hollywood thrillers. 😃 But seriously - of course the laundering is going to happen in the USA. Most of the cash from “retail” sales happens in the USA. Moving large sums of cash to a foreign country just doubles the risk - first you have to smuggle product into the USA, then you have to smuggle money out. Easier to do laundering in the local cities where the retail cash is collected. Besides, when you’re talking about that level of cash flow - a foreign bank consistently accepting large amounts of US cash will inevitably trigger alarms; a US bank, less so. Better to appear to be a rich Mexican company that invests in bars and pizza places in the USA. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [June 29, 2016, 5:03pm UTC](https://boards.straightdope.com/t/how-is-money-laundering-detected-and-proven/758194/83 "2016-06-29T17:03:56Z")
> [@CBEscapee](#): > > I am not saying that at all. How could you come up with that? I am saying you know nothing outside of your internet stories about Mexico. Nothing? Only 20 years with the Feds and 10 years in private Industry. I am a certified expert in the field. ---
**Author:** ![CBEscapee](https://avatars.discourse-cdn.com/v4/letter/c/b19c9b/32.png) [@CBEscapee](https://boards.straightdope.com/u/CBEscapee)\ **Post date:** [June 29, 2016, 6:27pm UTC](https://boards.straightdope.com/t/how-is-money-laundering-detected-and-proven/758194/84 "2016-06-29T18:27:03Z")
> [@DrDeth](#): > > Nothing? Only 20 years with the Feds and 10 years in private Industry. I am a certified expert in the field. What field would that be? ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [June 29, 2016, 6:43pm UTC](https://boards.straightdope.com/t/how-is-money-laundering-detected-and-proven/758194/85 "2016-06-29T18:43:10Z")
> [@CBEscapee](#): > > What field would that be? Money Laundering. ---
**Author:** ![CBEscapee](https://avatars.discourse-cdn.com/v4/letter/c/b19c9b/32.png) [@CBEscapee](https://boards.straightdope.com/u/CBEscapee)\ **Post date:** [June 29, 2016, 7:52pm UTC](https://boards.straightdope.com/t/how-is-money-laundering-detected-and-proven/758194/86 "2016-06-29T19:52:11Z")
> [@DrDeth](#): > > Money Laundering. Strange, your posts seem to contradict that. ---
**Author:** ![quimper](https://avatars.discourse-cdn.com/v4/letter/q/7c8e57/32.png) [@quimper](https://boards.straightdope.com/u/quimper)\ **Post date:** [June 29, 2016, 8:52pm UTC](https://boards.straightdope.com/t/how-is-money-laundering-detected-and-proven/758194/87 "2016-06-29T20:52:51Z")
Money laundering through bars, nail salons, and Lasertag arenas are all rounding errors compared to China’s trillion dollar ([estimated](http://www.bloomberg.com/news/articles/2016-01-25/china-capital-outflows-climb-to-estimated-1-trillion-in-2015)) yearly outflow. > [@](#): > > The Chinese company wanted us to represent it in a completely fake arbitration that it would lose so that it could then send $3.5 million to its own U.S. company so that — no doubt — in turn that US company could buy a house somewhere in the United States. [This article](http://www.chinalawblog.com/2016/02/getting-money-out-of-china-by-losing-in-arbitration.html) details just one of the thousands of ways the Chinese riches are getting their yuan the hell outta Dodge (and driving up housing prices in the process). ---
**Author:** ![Mean\_Mr.Mustard](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mean_mr.mustard/32/3865_2.png) [@Mean\_Mr.Mustard](https://boards.straightdope.com/u/Mean_Mr.Mustard)\ **Post date:** [June 29, 2016, 9:27pm UTC](https://boards.straightdope.com/t/how-is-money-laundering-detected-and-proven/758194/88 "2016-06-29T21:27:32Z")
I’m still trying to get past all that Stoli being poured down the drain. mmm ---
**Author:** ![Projammer](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/projammer/32/559_2.png) [@Projammer](https://boards.straightdope.com/u/Projammer)\ **Post date:** [June 30, 2016, 3:21am UTC](https://boards.straightdope.com/t/how-is-money-laundering-detected-and-proven/758194/89 "2016-06-30T03:21:23Z")
> [@friedo](#): > > You basically got it, but the point you’re missing is that the launderer _is_ the bartender. Criminals buy or start cash-intensive businesses precisely so they can use them to launder ill-gotten gains and make them appear legitimate. > > If you want to level up, you also buy the liquor store. **Then you can start generating phantom bottles for your phantom shots.** Until you get audited by some wise-ass forensic accountant. Mr. Friedo. You have sales records for 5 cases of Captain Morgan but receipts for purchasing only 1 case? Where are you getting your counterfeit untaxed liquor? While you could spoof up some extra receipts as well, you still have to make a money trail to match them and if you’re already under investigation, they’re going to compare your purchase receipts to your vendor’s sales receipts. ---
**Author:** ![astro](https://avatars.discourse-cdn.com/v4/letter/a/9dc877/32.png) [@astro](https://boards.straightdope.com/u/astro)\ **Post date:** [June 30, 2016, 6:00am UTC](https://boards.straightdope.com/t/how-is-money-laundering-detected-and-proven/758194/90 "2016-06-30T06:00:20Z")
> [@Mean\_Mr.Mustard](#): > > I’m still trying to get past all that Stoli being poured down the drain. > mmm There are people working for the county and the state whose jobs and promotions are dependent are policing and catching bar owners and entrepreneurs trying to skim like this. Plus you have everyone who ever worked for you and noticed how sketchy your operations are compared to the other places they worked. They get nabbed for anything serious unrelated to your business you’re going to be delivered up on a platter. Being on the down low is very difficult when there are other human beings involved at any point in the process. And as Dr Deth said “Or your ex-wife or ex-GF. Or your confederate who needs a deal, badly.” Also just as a heads up the IRS and State _know_ that at least 50%+ of bars and other non-franchise single owner enterprises are playing declared income games somewhere. They don’t have to call in CSI to crack the case. They really are just deciding if it’s worth their time to pursue x vs y. It’s fish in a barrel. ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [June 30, 2016, 12:45pm UTC](https://boards.straightdope.com/t/how-is-money-laundering-detected-and-proven/758194/91 "2016-06-30T12:45:07Z")
> [@quimper](#): > > Money laundering through bars, nail salons, and Lasertag arenas are all rounding errors compared to China’s trillion dollar ([estimated](http://www.bloomberg.com/news/articles/2016-01-25/china-capital-outflows-climb-to-estimated-1-trillion-in-2015)) yearly outflow. > [This article](http://www.chinalawblog.com/2016/02/getting-money-out-of-china-by-losing-in-arbitration.html) details just one of the thousands of ways the Chinese riches are getting their yuan the hell outta Dodge (and driving up housing prices in the process). Again, this is more like hiding bribery - the money is already legitimately bits in an electronic banking system - it’s just a matter of finding an excuse why it is entitled to move from A to B. The real trick to money laundering is taking illegal “retail” proceeds - very large piles of cash - and turning it into seeming legitimate bits in a bank’s computer. Somewhere, somehow, someone has to take cash and put it into a bank without triggering alarm bells. As I said, I’ve seen articles suggesting that between commissions and tricks like pouring good liquor down the drain, the net loss to turn cash legit can cost up to 50% of its value or more. The greedier you get, the more likely you will be noticed. Then it’s only a question of whether you seem big enough to be worth the time for the IRS… or if someone else (DEA, FBI?) wants to get you. ---
**Author:** ![MichaelEmouse](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/michaelemouse/32/101_2.png) [@MichaelEmouse](https://boards.straightdope.com/u/MichaelEmouse)\ **Post date:** [June 30, 2016, 4:19pm UTC](https://boards.straightdope.com/t/how-is-money-laundering-detected-and-proven/758194/92 "2016-06-30T16:19:13Z")
Besides Capone, are there a lot of big criminals who got caught because of money laundering? Did the police prefer taking that approach to get at the Mafia? ---
**Author:** ![friedo](https://avatars.discourse-cdn.com/v4/letter/f/8edcca/32.png) [@friedo](https://boards.straightdope.com/u/friedo)\ **Post date:** [June 30, 2016, 4:25pm UTC](https://boards.straightdope.com/t/how-is-money-laundering-detected-and-proven/758194/93 "2016-06-30T16:25:01Z")
> [@Projammer](#): > > Until you get audited by some wise-ass forensic accountant. Mr. Friedo. You have sales records for 5 cases of Captain Morgan but receipts for purchasing only 1 case? Where are you getting your counterfeit untaxed liquor? Sure. _Any_ laundering scheme will not withstand a little bit of scrutiny, no matter how clever you are at faking your records. Even if the forensic accountant can’t bust you, the mopes staking out your bar and counting the actual number of customers going in will. So like I mentioned, the goal is to fly under the radar as much as possible. But criminals are often greedy, and things start attracting attention. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [June 30, 2016, 6:33pm UTC](https://boards.straightdope.com/t/how-is-money-laundering-detected-and-proven/758194/94 "2016-06-30T18:33:48Z")
> [@MichaelEmouse](#): > > Besides Capone, are there a lot of big criminals who got caught because of money laundering? > > Did the police prefer taking that approach to get at the Mafia? Yes, indeed and “25 counts of wire fraud and money laundering” is a common thing to see. ---
**Author:** ![astro](https://avatars.discourse-cdn.com/v4/letter/a/9dc877/32.png) [@astro](https://boards.straightdope.com/u/astro)\ **Post date:** [June 30, 2016, 6:58pm UTC](https://boards.straightdope.com/t/how-is-money-laundering-detected-and-proven/758194/95 "2016-06-30T18:58:31Z")
> [@friedo](#): > > Sure. _Any_ laundering scheme will not withstand a little bit of scrutiny, no matter how clever you are at faking your records. Even if the forensic accountant can’t bust you, the mopes staking out your bar and counting the actual number of customers going in will. > > So like I mentioned, the goal is to fly under the radar as much as possible. But criminals are often greedy, and things start attracting attention. Precisely. There are experienced owners of similar businesses who can just look at your customer traffic for a few hours over the course of a few days and tell you very accurately within a few percent what your gross and nets should be for the year. You think the IRS can’t do the same thing? Beyond a certain threshold laundering is obvious. If the IRS knows that other pizza joints of x sq ft area in your county or city have between X and y sales (and they have this info) and yours are a bit high you can probably slide. You start claiming 2X or 3X sales over similar sized places they will want to know more. Laundering small chunks is a lot of work and a fair amount of risk and requires having a group of workers in your confidence. ---
**Author:** ![August\_West](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/august_west/32/18069_2.png) [@August\_West](https://boards.straightdope.com/u/August_West)\ **Post date:** [June 30, 2016, 7:02pm UTC](https://boards.straightdope.com/t/how-is-money-laundering-detected-and-proven/758194/96 "2016-06-30T19:02:28Z")
> [@DrDeth](#): > > Nothing? Only 20 years with the Feds and 10 years in private Industry. I am a certified expert in the field. Which organization provided your certification? What, exactly, is the title of your certification? > [@DrDeth](#): > > It’s funny, when I was working there in CA, there was one cute little car that sold for just under $10K. It was really popular among all the Dealers as they could buy it with cash. Was this before or after your 30 years of experience in money laundering? ---
**Author:** ![davidm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/davidm/32/225_2.png) [@davidm](https://boards.straightdope.com/u/davidm)\ **Post date:** [June 30, 2016, 7:19pm UTC](https://boards.straightdope.com/t/how-is-money-laundering-detected-and-proven/758194/97 "2016-06-30T19:19:15Z")
What about businesses that sell online services (as opposed to physical goods). You don’t have to show evidence of inventory, other than maybe bandwidth usage, which would be easy to fake. How do porn sites, for example, make a profit selling something that’s widely available for free? I suppose though, that it would be difficult to fake large numbers of small sales. Maybe it could be done if they accept Bitcoin. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [June 30, 2016, 7:27pm UTC](https://boards.straightdope.com/t/how-is-money-laundering-detected-and-proven/758194/98 "2016-06-30T19:27:56Z")
> [@August\_West](#): > > Which organization provided your certification? What, exactly, is the title of your certification? > Was this before or after your 30 years of experience in money laundering? ACAMs During. ---
**Author:** ![epbrown01](https://avatars.discourse-cdn.com/v4/letter/e/7ba0ec/32.png) [@epbrown01](https://boards.straightdope.com/u/epbrown01)\ **Post date:** [June 30, 2016, 7:33pm UTC](https://boards.straightdope.com/t/how-is-money-laundering-detected-and-proven/758194/99 "2016-06-30T19:33:55Z")
> [@md2000](#): > > The main problem, of course, is that as soon as you start feeding cash to the banks in any large quantity, they will file a report. The banks (and bank managers) are paranoid about being accused of complicity in money laundering; so better to file a report and let the Treasury decide if you’re worth investigating. After all, it costs the bank nothing. **Unless you have a very plausible source for your income that will assuage the bank manager, you will be flagged.** Nope. The paranoia about complicity means the bank files a report, regardless of what they think or even know. There’s no bigger nightmare than getting dragged into a case because a manager or employee didn’t report something because nice old Mr. D’Agostino was a good customer or you passed by their shop and saw how busy they were so didn’t think anything of it. “Report everything and let the Feds sort it out” is the mantra. Failing to report a SARs-worthy transaction is one of the quickest routes to termination. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [June 30, 2016, 7:36pm UTC](https://boards.straightdope.com/t/how-is-money-laundering-detected-and-proven/758194/100 "2016-06-30T19:36:04Z")
> [@epbrown01](#): > > Nope. The paranoia about complicity means the bank files a report, regardless of what they think or even know. There’s no bigger nightmare than getting dragged into a case because a manager or employee didn’t report something because nice old Mr. D’Agostino was a good customer or you passed by their shop and saw how busy they were so didn’t think anything of it. “Report everything and let the Feds sort it out” is the mantra. Failing to report a SARs-worthy transaction is one of the quickest routes to termination. Yep. “CYA SARs” are a big problem, brought on by inexperienced regulators. [Previous page](https://boards.straightdope.com/t/how-is-money-laundering-detected-and-proven/758194.md?page=4) [Next page](https://boards.straightdope.com/t/how-is-money-laundering-detected-and-proven/758194.md?page=6)