The hard part of money laundering

Say you have a business where customers pay in cash and so you inflate your sales in order to launder money. How much money can you really launder that way? Won’t it be immediately obvious that this business is making way too much for that type of business in that area?

Hey, Laser Tag is really taking off with the Millenials and they delight in the retro sensibility of cash-only payment! I have games running 24/7 in my collection of warehouses and abandoned malls. I defy you to prove otherwise!

Stranger

This thread makes me happy. I spent a fair amount of time idly daydreaming about how I would launder money while watching Breaking Bad. The puzzle side of getting away with criminal activity fascinates me sometimes. I adored Skyler for many reasons, one of which was that she was so much better at this stuff than Walt, or Saul for that matter. She was absolutely right about the car wash making the most sense for them. For me, the equivalent enterprise would probably be a bar. I waited tables and tended bar for years, but a restaurant needs lots of people to run, and it becomes harder to reconcile the numbers with so many witnesses. I could run a fairly “busy” bar with minimal help.

Aside from the cash payments and witnesses issues, you also need to account for inventory. If your business is primarily service-oriented, that’s less of an issue, but even for a car wash, you’d want to make sure you were ordering enough soap or wax or whatever to show your work on all those premium washes you claim to be selling. And then you have to dispose of it somehow. Liquor is easy enough to pour down the drain if you have to, but you can probably find a low-key way to make even better use of it.

In general, I doubt there’s a way to go from having little explicable income to laundering large amounts of money in a short time. You can probably best get away with pretending to run a number of businesses, each of which is slightly more profitable than it really would be as an honest enterprise.

Bars are good money laundering operations. I frequent a dive bar that never really is that busy but it is fairly well known among the people who work and go there that the owner is running his marijuana profits thru the bar. The quy owns several bars so I assume he uses all of them.

Actual laundromats are good for money laundering too. Lots of cash can run through them.

When I go to the laundromat, I put a ten-dollar bill in the change machine on the wall, get ten bucks in quarters and feed them to the washers and dryers. So in the most part, the money just loops within the building. I don’t see the opportunity to launder money (except in the literal sense).

And its all cash. Who is to say how many loads were washed that day? All cash that comes in (from the owner) that doesn’t actually run a machine is profit and shows as legit earnings. Same way the car wash in Breaking Bad provided legit income.

I think usually part of it is to be not very good at the actual business side.

“How does that place stay in business, I never see anyone in there?”
“Eh, it’s probably just a front.”

They do a lot of “internet” sales.

I see illegal marijuana shops set up in inner city Detroit right in strip malls. No one asks questions .

I suppose one can put an NFT up for auction and then have a stooge wildly overpay for it.

I’m no financial crimes expert, but I’d presume that the IRS knows what the typical revenue ranges for a laundromat should be in a particular neighborhood, and alarm bells ought to be going off if a laundromat in Ghettotown USA is pulling in >$1 million annually. Now if the owners of that place know what they are doing and don’t get stupid greedy, then yeah they could probably mask smaller volumes of cash flow without raising eyebrows.

Who says its in ghettotown? Who says its just one store? We are not neccesarrily talking Scarface sums of laundering either.

For a long time, barbers and hair stylists were pretty much cash-only. There was an old-style barber shop here that was widely believed to be a bookie joint. Given the hours it was open, the lack of customers, and the lousy haircuts the barber gave, I was inclined to believe it.

Given the number of washers and dryers in the location, there must be a maximum amount you can make if every machine is in use from open till close each day. If the claimed income is higher than that, obviously something is up. (And of course the electrical usage would have to be quite high.)

I have no idea whether the IRS has the staff to examine companies to this level.

Well now we’re getting into the weeds of the tax laws that’s beyond my pay grade. For example, if a person owns multiple stores, does he/she have to report the incomes for each one separately? Or can they all be thrown into one big lump under the umbrella of an LLC? Etc.

That sounds like a reasonable baseline the IRS would start from. Although like you said, the IRS is probably too understaffed to go after every ma-and-pa store, and they’d do better to go after the bigwigs who can actually afford to pay the outsized fines. Also, from my brief research it looks like in the USA, combating money laundering falls more under the purview of FinCEN, a bureau under the Department of the Treasury.

This is why organized crime likes to own casinos (besides the profits from the business). They’re great ways to launder money. Customers just walk in the door and give the casino money. If they came in and spent fifteen million, it’s easy to throw in a few million more. How can anyone prove if your customers lost fifteen million or twenty million? It’s not like you have to worry about showing the inventory balances or anything like that either. It’s the perfect way to convert illegal income into apparently legal income. And as a bonus, casinos are profitable all by themselves.

Organized crime syndicates certainly bankrolled the Las Vegas and Atlantic City casinos through the 'Seventies, but they ran them poorly as straight businesses and thus not good cover from the IRS or anyone else. Running casinos today is a heavily corporatized business that keeps thoroughly audited books, and while they might round a few corners to inflate expenses they’ve not laundering millions of dollars of cash because they’re far too valuable as revenue sources in and of themselves.

Money laundering today is largely done by moving money through a network of supranational ‘supplier’ corporations and through “offshore” banks that prevent ready traceability of funds, or through donations to ‘foundations’ that hire a lot of ‘consultants’ but provide little in charitable contributions. The actual ‘laundering’ of cash in significant quantities is impractical given the massive reduction in cash transactions at restaurants, retail businesses, et cetera and the ease of comparitive revenue analysis against similar businesses.

Stranger

I would think laundromats would make more money in lower-income areas since fewer people would have room/money/access for home laundry facilities. Everyone else has an apt that includes an in-unit or on premises laundry facilities or a few hundred bucks to put the stuff in your house, or you are a young (or not so young) professional or student/“student” who does laundry at your parents house.

A friend of mine used to date a guy from Canada. He was constantly griping about how Americans were destroying the Canadian economy by crossing the border to horde Canadian quarters they would then use in the US to save themselves literal pennies on the dollar. I can’t imagine the truckloads of coins that would have to continually stream back and forth between the 2 countries to accomplish this, to say nothing of the fact that you can really only slip what, one? Canadian quarter into a transaction at a time? It’d take me a lifetime to fraudulently spend 1,000 Canadian quarters, I’d think.

I’m guessing cash bars are also a great tax evasion business. Years ago, I went to a bar that was pretty popular and next morning realized the next day I’d forgotten to pay for the last beer. There was a long line, the bar tender was busy, he got me the beer and quickly dashed off before I could hand him $5. Being buzzed and euphoric, I consumed my beer without much thought to waiting around to pay the guy. But realized I still had cash in my wallet and remembered that mathematically, I shouldn’t have had any left. So I went back the next day to make good and they were like “Ah don’t worry about it.”

The change may loop, but unless you get a $10 bill back with your clean, dry underwear the bills do not loop. They have to go somewhere.