I think the real confusion was with the idea that the destroyed liquor could have been sold legitimately for profit. If I sell 100% of my inventory every night, I have not profited by setting aside certain bottles for laundering. Of course, a place will not sell 100% of its inventory, so the destroyed bottles are “extra” in the sense that they would otherwise have gone unsold.
Let’s say you just want to live a moderate upscale lifestyle - you “make” $290,000 a year. That means you have to buy and then deposit in Mexico 100 of these $2900 MO’s each year.
First, you must explain where this money came from on your tax return - gift, earned (why?) or asset withdrawal.
But you don’t have a $10M deposit in the Mexican bank so it can’t be withdrawal - plus, you MUST report large foreign asset holdings. The Mexican bank will cooperate with the feds (they have no choice) and will report that the money comes from those money order deposits, which the feds trace back to bought a bank near your home.
So you’re being paid for doing cybersecurity consulting for YoSoyRico.com in Mexico? Still, then the feds dig into that company. It has a bizarre source of income (MO’s from near you) and apparently does no other business. So again, unless it’s a front doing a decent amount of legitimate business, meaning another quasi-valid “front” business, you will also be caught.
Gift? From whom? I would imagine “gift” would ring the most alarm bells. Again, the feds will trace the money trail back to those MO’s. If you have a bunch of flunkies buying them, one or more will turn state’s evidence on you rather than go to jail.
You seem to think the feds will be stymied by a border. Almost every bank in the world now cooperates with the feds, and of course Mexican authorities, despite occasional corrupt officials, are fully cooperative with drug and money laundering initiatives. You too must disclose foreign holdings and accounts. Failure to disclose is a crime.
https://www.blankrome.com/index.cfm?contentID=37&itemID=3249
(bolding is mine)
As far as I know (which is about this far l l ), business aren’t required to have fancy electronic cash registers with time stamps. The bar/nightclub I was referring to was in a resort, selling overpriced booze legitimately and was a pretty popular place. During the summer season I wouldn’t be surprised if they were pulling in well over $5000 a night. Dump in a couple of thousand a night in dirty money and it adds up pretty quickly. Plus, I believe bars are exempted to some extent for reporting cash income. I imagine the increase in the use of plastic has hurt these schemes somewhat.
From what I’ve read about, nobody is “exempt” from reporting cash income. All cash deposits are recorded as such by financial institutions. Some businesses of course have regular large cash deposits - stores, restaurants, bars, etc. The thing that triggers IRS/Treasury questions is unusual cash deposits - one off, sudden changes, or “structured” apparently to avoid triggering reports. So a bar depositing $9,000 give or take every night? Normal. A bar deposits $3,000 a night and $35,000 one night? Banker will ask why. (Maybe it was New Years or Mardi Gras…) Bar deposits $3,000 each night and then jumps to $12,000 - maybe banker will ask why.
I think someone was talking about this in an earlier thread, but a bank is safer covering their ass by filing a SAR (suspicious activity report) than ignoring out-of-pattern activity. Apparently the vast majority result in no investigation. “Deposit - Joe got paid $12,000 cash for a roofing job.” As long as Joe does not do this every month, nobody’s suspicious.
Once this attracts the attention of the feds, then deeper analysis will come into play. Does the business (bar) have an unusually different cash to credit card ratio than other such businesses? Why? (Clientele?) Do they have the receipts for supplies to back up the sales amounts (where the liquor down the drain helps - purchase, empties) Maybe they’ll be suspicious enough to do more detailed investigation… stake the place out. There were 30 people in the bar a typical night, talking quietly, but the books reflect $12,000 worth of business. If each person drank $400 worth of shots, they should all be dead. So it’s dangerous to exaggerate receipts too much. And so on…
How effective is the “I went to Vegas and won a lot at the tables” justification?
So far, we’ve got bars, restaurants, vending machines as good fronts. What else tends to be popular?
I note that those businesses tend to 1) deal with the public in lots of small transactions, 2) sell common objects rather than services, 3) often have high markup on the goods sold. Am I missing anything else?
Well, the tight controls on casino licenses indicate that casinos - another business that rakes in a lot of cash - are also a favourite for mob money laundering.
As for “I won it at the casino” - I have heard that the casinos have IRS agents wandering the floors just waiting to find people who hit the big jackpot, to ensure they get the government share. Any decent sized win will already be documented. Again, the problem is not disposing of that one-time $50,000 windfall. you just buy groceries and pay bar tabs with cash etc. for the next few years. The problem is consistently laundering a good income of, say, $300,000 a year. That will be hard to claim as a lucky series of sub-$1000 wins in Atlantic City; certainly the feds can check the legendary casino video footage. Even Monte Carlo is likely to tell the feds whether or not you won big; they have no reason to be your alibi.
Well, the tight controls on casino licenses indicate that casinos - another business that rakes in a lot of cash - are also a favourite for mob money laundering.
As for “I won it at the casino” - I have heard that the casinos have IRS agents wandering the floors just waiting to find people who hit the big jackpot, to ensure they get the government share. Any decent sized win will already be documented. Again, the problem is not disposing of that one-time $50,000 windfall. you just buy groceries and pay bar tabs with cash etc. for the next few years. The problem is consistently laundering a good income of, say, $300,000 a year. That will be hard to claim as a lucky series of sub-$1000 wins in Atlantic City; certainly the feds can check the legendary casino video footage. Even Monte Carlo is likely to tell the feds whether or not you won big; they have no reason to be your alibi.
The problem is - any story has to stand up to scrutiny, and with the feds, deep scrutiny is likely what you get.
Consulting.
Kind of a different breed of money laundering, and it breaks the rules we’ve been talking about so far. Consulting fees are often laundered bribes. Very little if any product (although they’ll often add things like “printing fees” to enhance legitimacy.) High hourly fees mean you can launder quite a bit of money all at once for a week of “consulting” work.
Fraudulent consulting is white collar money laundering.
I did think about that given the sums involved and the intangibility of the product (and sometimes the alleged benefits). It does require several accomplices who can credibly pay you large sums for consulting services.
It also means that they’ll be spending more money on the books than they really do. Is there some scheme which is complementary with money laundering i.e.: people who would benefit from claiming that they paid the money launderer money when they in fact did not?
You don’t go to jail for bribery. You pay the money - you’re just not paying it for actual consulting. You’re paying money for a vote or a contract in your favor. Those things are illegal to take and to offer money for. Record it as “consulting services” and everyone stays out of jail.
I was assuming you’re a Mexican national, working for the cartels. No taxes, no reporting from the bank.
You seem to assume quite a lot about México. Our accounts are monitored and we have strict reporting regulations and if our deposits are larger than we declare on our tax forms we will be audited by SAT, our IRS.
I’ve often heard that the art world is hugely mixed up in money laundering. Art is basically the ultimate in arbitrary and nonsensical value. If I buy a bar of gold, for instance, the authorities can easily check whether the price I claimed matches the market value for the product. Art is entirely in the eye of the beholder. A person might pay literally millions for any stupid bullshit if they think it is artistic, or it comes from a famous artist, or it was owned by a famous person at some point. There is no objective measure for what a certain piece “should” cost, so the authorities have no way to assess what price is legitimate.
(And not to rag on artists, but I’ve seen some pieces of art that I would pay someone to throw away get sold for tens of millions of dollars. So I can see why it would be attractive to money launderers.)
But art and consulting are ways to pay bribes, or pass someone money. The person who wants to pay you presumably has a pile of legitimate money in the banking system already. (BTW IIRC congress and senate members are not allowed to get consulting fees and even their speaking fees are strictly controlled?)
The problem with illegal activities (bookmaking, drugs, protection racket, armoured car heist, whatever) is that you end up with the proverbial pallet of cash bills. This is what money laundering is for - convert this into seeming legal income in a bank account. If you can dream up a way, so has the IRS. Most methods are hard to do on a regular basis and will attract attention, and/or require an army of dupes and possibly a compliant financial institution, because somewhere you have to deposit thousands of dollars a month into a bank. This might work if you’re the Mexican cartel and can threaten low-level employees, but even then, any institution south of the US border consistently moving large sums of US dollar bills is going to attract the attention of two federal governments. At that point, they don’t have to prove money laundering - they just follow and seize all suspicious money - freeze bank accounts - until a proper accounting can be done by the involved parties.
If you remember the series Weeds, they ran a bakery as a front for a while. However, it would have suffered from the same problem as the linked article - there was nowhere near enough customer traffic to justify the income. And of course, Hollywood thrillers notwithstanding, it’s very rare that the police do not eventually learn the people behind even a medium level drug distribution - everyone talks, they just need evidence to get them. Once they have a target, they start digging and “where’s the money?” is the first question. Fortunately, in a comedy, that is an irrelevant detail.
I read somewhere that the Secret Service and the DEA have a program to track serial numbers of all larger bills - 50’s and 100’s. They monitor where they last intersected a US bank. So if suddenly, say, regular amounts of $100 bills from one city - say, Chicago or Minneapolis or Buffalo - start appearing in shipments returning from a specific bank in Mexico, that will give them a starting point. Since a lot of businesses tend to deposit their receipts nightly, bills - especially larger denominations - probably circulate in and out of banks regularly. Plus, in the age of plastic, cash deposits for most businesses are probably way down.
The DEA has identified “cut off the money” as a prime means of attacking organized crime. yes, the lower-level pawns can survive on cash, pay $3,000/month rent for an apartment cash, pay your $1,000 car payment cash, pay your bar and restaurant bills cash, nothing close to $10,000 - but still, it’s hard to buy a Ferrari or a big mansion with cash.
So, if you aim to live like this (http://cdn.traileraddict.com/content/universal-pictures/brewsters-millions-1985-poster.jpg ) 2 or 3 orders of magnitude milder, you should be fine?
If someone decides to retire once he has a pallet of cash and live on that, would he have problems? Would investing in the stock market attract attention by itself?
Is the problem for most criminals that once they have 1 pallet of cash, they want another and another and that paying rent/mortgage on a good-but-not-luxurious place and car and paying ordinary bills isn’t enough for them, it has to be a villa and some sports cars?
most stock market investments, you buy stock through a broker. Rarely are brokers paid in cash - that would attract attention. They hold the stock for you, issue the necessary forms for income tax purposes (losses, capital gains, etc.) So there are two problems right there - attracting attention by paying in cash, or wandering into a bank to pay top up your account to pay your broker; and explaining to the IRS where you got the cash to invest in the first place. The faster your trickle in that pallet of money, the harder it is to hide it. If you have 50 bank accounts - well, IIRC you need your social Security number to open them, so that too might attract the attention of the IRS.
it may be a comedy, but Brewsters is the opposite of money laundering. The guy has a legit source of cash so the one problem he does not have to worry about is the IRS.
The problem still is - how do you afford a lifestyle without attracting the attention of the IRS? If you buy a Ferrari for cash, the dealer will tell their bank who gave them the cash when they deposit it, and it will be reported. Buy a car on credit and make time payments? Why would they give you credit if you have no visible income?
There was an old Burt Reynolds movie where he played a professional burglar. He had two methods of cleaning his money, both of which seem reasonable- first, he makes and sells scrap metal art from a roadside stand- which is perfect, because he can keep minimal records and who’s to say what someone paid or even who bought it? Second, he visits the track, ignores his losses and declares his winnings as gambling income.
Also, there was an NPR story several years ago about an FBI agent who went undercover posing as a money launderer. He recounts being contacted by a drug dealer who wanted to launder a million dollars. The problem was that the money was in one dollar bills, and filling most of his basement. He said he told the man to kill himself, because that money couldn’t be spent and couldn’t be cleaned.
And many of your bank employees are either in the pay of the cartels or will do anything they demand due to fear of finding the families heads in a bag.
Same with your Judges, Elected Officials and LEOs.
And, can we really blame them for the later? That’s pretty scary.
Transparency International’s most recent corruption perceptions index lists Mexico, at 95th, as the most crooked of all countries in the OECD club of industrialised nations.
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.