anyone willing to explain it to me?
with all the talk re:Rush, I decided I really don’t understand what money laundering is.
Basic idea: You’ve got some money that you obtained illegally. You don’t want people to know that you got it illegally, since that’d get you in jail. But you do want people to know that you have money, because otherwise you can’t spend it. So you set up some fake business, and say that the money came from there.
i think it works thus:
you have some dirty cash you need to clean.
you have a legitimate company.
you make believe that your company is doing rather better than it is.
you declare the dirty cash as legal takings of your legitimate holding.
voila!
We’ve been around this one before. There’s a lot of techniques and variations:
http://boards.straightdope.com/sdmb/showthread.php?s=&threadid=167444
From my post in this thread:
[quote]
Three reasons to launder money:
[ul][li]To conceal the origin and ownership of criminal proceeds;[/li][li]To maintain control of the proceeds;[/li][li]To change the form of the proceeds to reduce large cash volumes.[/ul]There are three main stages to money laundering (source: some ML training I had recently, and various websites):[/li][ul][li]Placement: getting currency into the financial system to convert illicit funds from cash straight into a financial instrument or a bank account; [/li][li]Layering: the movement of funds from institution to institution to hide the source and ownership of the funds, obscure the audit trail, and sever the link with the original crime; [/li][li]Integration: the reinvestment of those funds in an ostensibly legitimate business so that no suspicion of its origins remains and to give the appearance of legitimizing the proceeds.[/ul]As one website puts it, the objective is to get it out, cover it up , bring it back.[/li][/quote]
Techniques:
[ul][li]Placement: conversion of cash to other asset forms - traveller’s cheques, money orders, cashier’s cheques, [/li][li]Layering: often achieved through multiple electronic funds transfer (EFT) transactions through a series of offshore bank accounts. These, and similar transactions involving stocks, commodities and futures, take place in such high volumes and with a sufficient degree of anonymity that tracing criminal proceeds is not at all easy.[/li]Integration: examples - loans to (legitimate) off-the-shelf companies established in countries not known for their regulatory strictness or transparency; false or incorrectly valued transactions involving (legitimate) companies established in such countries; property purchases.[/ul]
wow! thanks for all the info!
but I’m having trouble understanding how this applies to Rush. They were saying on the news that he would take amounts of cash out of his account just under $10,000 so that the financial institution would not have to report it to the federal govt. Thus hiding the large amounts of money he was spending on drugs. Guess I don’t see how that fits under the catagory of money laundering as you all have so excellently defined it for me.
I don’t know the story, but it doesn’t sound like money laundering, just using techniques to conceal what the money’s being used for. Definitely dubious, but only loosely related to the “traditional” definition, maybe.
Try watching ** Office Space[/b}. It pretty much clears everything up. The hand motions from the Michael Bolton character really help, too.
The rap on Rush is a technical one. The way the laws are set up, any cash transaction over $10,000 at a banking institution must be reported to the Feds. It doesn’t matter whether the purpose of that transaction is wholly legitimate or not - there’s a blanket reporting requirement.
Now, if you intentionally keep a series of transactions just under that $10,000 limit, even if you’re not actually up to no good, that’s also a violation of the law, which says that it’s illegal to “structure” your transactions in such a way that you’re purposely circumventing the reporting requirement. It doesn’t matter what you’re doing with the money.
Rush, it’s alleged, withdrew several hundred thousand dollars over the years, always in cash amounts just under $10,000. That way, the withdrawals didn’t have to be reported. He maintains that the money was being used for things like renovating his house. Even if that’s true, it doesn’t matter - he was, it appears, purposely withdrawing the funds in such a way so as to avoid the reporting requirement. That, in and of itself, is illegal.
Of course, this begs the question: what kind of home renovation work requires payment in crisp C-notes instead of by check?
Just read an interesting scheme in a true crime book, a bunch of biker/biker associates in Vancouver had a good internet porn business going. They decided to expand and got a gambling licence on a Carribbean island and set up an internet gambling site. They then sold franchises in the gambling site to their drug dealing pimping buddies for $100K each. They got careless though , and did a little too much of the internet gambling business in Vancouver, giving the cops grounds to raid them for violating local gambling laws. Some of these little gambling franchises had single customers losing up to $5,000,000 a year, some of them had gambling customers with huge losses who were identified as offshore companies. Generally a pretty obvious money-laundering scheme. If you have millions of dollars in dirty money to hide you don’t mind paying taxes to clean it. The same book told about a police operation against coke dealers in Montreal. They tracked them and bugged some apartments and there was a steady stream of guys with gym bags full of cash going into these places and the bugs picked up money-counting machines going steady for 12-14 hours every day. When the cops finally raided the best piece of evidence was a Zip disk of accounting records tucked under the carpet.
Depending on the transaction, the limit is actually $5,000.
Also, the Bank Secrecy Act of 1970 (the basis for the money laudering laws) has been amended quite a few times since. In fact, the USA Patriot Act now plays a part as well.
So technically, Rush Limbaugh could be charged as a terrorist under the USA Patriot Act (along with that Act’s penalties) for a conviction under the BSA, as amended.
Got a cite that the Federal Law is $5,000?
It’s still 10K the way we have been told in the coin biz.
And, it’s not just banking institutions that are required to file a form.
If you’re a used car dealer, and I come in to buy that nice Mercedes that is $10,500, and give you cash, YOU HAVE to report it. If you are a boat dealer, and I buy a boat for $11,000 cash, you HAVE to report it.
And the structuring element of spending mucho money over the 10k limit, as Early Out said, is spot on. We have to report you if you we suspect you of deliberately “structuring” your transaction to hide cash.