Even though cash is falling out of favor in general, one area where cash is still used almost exclusively is in the lower income brackets. They often have to use cash due to the difficulty in with things like getting a bank account, fees charged by banks, and difficulty getting credit cards. They are either paid in cash or get cash from paycheck cashing services and then use cash for their day-to-day needs. I would expect that businesses which served that income segment would have a high percentage of cash business and could float in some illicit cash without being noticed.
That must depend on the city. I was looking to buy a laundromat some years back, and simply walked into the public water department office and asked to see the water bills for a year. Viola! (I had done that, too, for other investment properties.)
I ultimately didn’t buy the laundromat. The guy wanted far more than his tax return showed it was worth, and he said a lot of quarters could fall out of your pocket on the way to the bank. The whole offering was shady.
You mean the least profitable taxi company in the world.
I’m curious…
How did all that cash (literal, physical dollars) make its way back to the Central/South American drug kingpins?
The stories above show they had to literally bury money because they had so much.
How is it that the US was all over drugs coming in but you (almost) never hear about them catching money going out?
Loads of money is heavy and not easy to conceal. How do you get a $10 bill collected in LA and another in Portland and another in Seattle and another in Chicago and another in New York and so on times a million or more and collect them in one place and then ship it all back to South America (or wherever)?
I wonder if that scene in Breaking Bad was inspired by this story from 2007 about over $200 million found in a house during a drug raid in Mexico(there is a similar picture of giant stack of cash in the story):
I found a 2006 article entitled, “Money Laundering”. Highlights follow.
The Feds have been cracking down in a big way, and the effects of their efforts is wholly unknown. Businesses now subjected to money laundering controls include banks, “car dealers, casinos, corner shop money transmission businesses, jewelers, pawnbrokers, and certain insurance companies… pawnbrokers, telegraph operators, boat… and airplane sales.” No mention of car repair. Also non-bank financial institutions such as currency exchanges, check cashing, and money transmission. Much of the stated concerns involve terrorist funding, but this is mostly bunk since eg large bombs aren’t especially expensive.
Stamp dealers are not part of the enforcement regime (as of 2006), though they are sometimes involved in high-value transactions.
“The Swiss system also relies heavily on the integrity and responsibility of financial institutions to ensure compliance with national AML laws and regulations.” That is surely the best way to go about things.
One big ring broken up involved currency exchange operations crossing borders, real estate, a grocery store, and a designer bathroom store.
When I read how Uber 'magicked" their losses away, I was reminded of the Sov Cit thread:
We define Adjusted EBITDA as net income (loss), excluding (i) income (loss) from discontinued operations, net of income taxes, (ii) net income (loss) attributable to non-controlling interests, net of tax, (iii) provision for (benefit from) income taxes, (iv) income (loss) from equity method investments, (v) interest expense, (vi) other income (expense), net, (vii) depreciation and amortization, (viii) stock-based compensation expense, (ix) certain legal, tax, and regulatory reserve changes and settlements, (x) goodwill and asset impairments/loss on sale of assets, (xi) acquisition and financing related expenses, (xii) restructuring and related charges and (xiii) other items not indicative of our ongoing operating performance, including COVID-19 response initiative related payments for financial assistance to Drivers personally impacted by COVID-19, the cost of personal protective equipment distributed to Drivers, Driver reimbursement for their cost of purchasing personal protective equipment, the costs related to free rides and food deliveries to healthcare workers, seniors, and others in need as well as charitable donations.
All it needs is a reference to Maritime courts and fringed flags,
The best way to launder money is to be a big fish and launder a lot of it, and be supported by high-priced lawyers and accountants. They can keep the authorities at bay for years.
Everyone seems to think that an audit is the end of it. It is not. Challenge the audit notice, object to the auditor, when that fails 6 months later, start arguing over the scope of the audit. then two years later when the audit report comes out challenge the audit report. Most likely the Government will get sick of you and settle for a fine for some “technical violation”.
Hell, perfectly legit big businesses undertake lots of litigation over audits and tax assessments even when there is no suggestion they have undertaken any unlawful act.
I’d be interested in how often money laundering is the sole charge in any case. I suspect it is almost always an add on to more serious charges involving the origins of the laundered funds. Unlike a lot of folks in this thread, I don’t think it’s that easy to get a warrant simply based on a business taking in more cash than other businesses. There has to also be evidence that that cash is coming from a specific criminal enterprise.
Agreed. It seems much more likely that a money laundering front would be discovered because the police manage to connect known criminals back to the front, use that to get a warrant, then dig through the books - rather than spotting a suspicious business, investigating it, and THEN discovering crime.
It’s almost always the other way around. Its money laundering scheme which causes the crime to be discovered.
It seems like junkyards would be good businesses for money laundering. They buy the cars for almost nothing but the individual parts can add up to a lot of potential income. They have lots of cash customers and individual sales can easily be in the hundreds of dollars. It might explain why there seems to be two kinds of junkyards I come across. One kind has all the cars orderly aligned in rows, grouped by make, and lifted off the ground for easy disassembly by customers along with a website listing all their available cars. The other kind has cars stacked and strewn randomly everywhere sinking into mud and surrounded by 4’ tall weeds and are almost impossible to pull parts from. I could never figure out how the messy junkyards stay in business, but illicit cash could be one answer.
Got an example?
Hm, and for a money-laundering business, making it harder to keep track of inventory would be a feature, not a bug.
To quote Goldfinger “Mister Bond - once is an accident, twice is coincidence, three times is enemy action.”
You take that $100,000 and deposit it in a bank. The feds get a report, and then another one, come looking. They find you evasive. They can take and freeze the funds while they spend a few years investigating and/or you cooperate. Or they watch/video your place, note that nobody matching the description came in that time for the next sale, and arrest you for lying to the FBI.
The whole idea is not to attract attention. Selling a painting at a huge profit, or selling your Florida properties for an unreasonable mark-up, is a way for your foreign business associates who have to pay for “services rendered” or “goods delivered” without having to explain why they are really giving you a huge payoff. They also have already gone through the trouble of laundering and legitimizing their money before they pay you. Ivan in the “Russian Oil Business” really admired your von Gogh.
This is standard. I believe there was a Law & Order a few years ago where random Latinos were wiring money to relatives in Colombia etc. - usually a few hundreds or small thousands. Again, this is a great trick until it attracts attention and the other problem is volume. And of course, every one of 100 Latinos can identify who approached them and gave them money - so the question is, does their fear of having their head cut off by you outweigh their fear of being deported, since they are likely illegal aliens? Once the deportations start, nobody will want to cash your money.
I recall reading something about 20 or 30 years ago mentioning the Treasury or someone was tracking the serial numbers of big bills when they showed up in banks (i.e deposits). I can’t find any info on it now, but it was a weapon in the cartel wars. I gathered from the description at the time that they had a number of points in banks all over the country to scan serial numbers.
Again, yes, the whole point is not to attract attention, and if you should happen to, avoid making it too obvious.
But the good cars at first have to come from a dealer - so someone has to be unrolling that wad and either buying a car (explain the big roll) or keeping it safe and making payments from it.
It’s hard to imagine someone manager of a business - assuming they make the nightly deposits, tally the cash register receipts, etc. and don’t notice the business and cash don’t even come close to matching. Or someone else is doing all the bookkeeping and all they do is unlock the store, and hand over the cash register trays each night?
Still - someone has to do it. A good busy McD’s - probably one of the very busy businesses in town - might do $10,000 a day normal sales. Assuming you double that for your front business -likely to attract attention - Then you can launder say, $3,650,000 a year. I would imagine cooking the books - buying inventory to throw away, throwing it away, etc. -would be a full-time job (7 days a week or split between 2 minions. What do you have to pay these minions, keeping in mind good help is hard to find and sticky fingers are always a temptation?
In truth, my wife’s McD would do $3,000 or less on a slow day - so likely not in the $3M ballpark. You might launder say $1M a year once all the bills and minions were paid. Again, every shady person who is part of the game is a liability.
Actually, laundering coins was the hardest part. I’d help my wife by laundering the donation boxes where she was manager, maybe every 2 months. The drive-thru donation box was worst; people would throw garbage, fries, gum, etc. in there. There was a bright light above, so all night long insects would crawl into it and be trapped. We’d wash the coins in a colander, then sort them and roll them. All this for maybe $300 a time, over $100 of pennies (back when Canada used pennies). OTOH, they went straight back into the store as change, and the equivalent bills were put in the charity fund.
Yeah, we were on vacation there the month after. They cleverly did not print enough bills. Many places, especially Delhi, the ATMs were more likely empty than not. If you saw a lineup outside an ATM, it meant the thing had just been filled. It was easier in the smaller cities (Jaipur, Agra).
The most bizarre thing was that to exchange old bills for new (meant to flush out the underground cash economy) you needed a bank account. So less rich foreigners who were backpacking ended up begging - in India!! - because they could not find enough people willing to take old bills in exchange.
Yes. For a long time, Canadian debit fees were usurious (as opposed to just highway robbery, now). Stores that typically did trivial transactions either did not do debit or had signs “No debit under $5” or “25¢ fee for debit under $10”. CC charges were worse at up to 4%. No surprise convenience stores didn’t want the cost. 40¢ bank charge on a $1.75 coffee? If most register amounts were under $10 it made no sense to sign up for CC and debit.
This is why the American state troopers like to pull over older cars and make up a pretext to search. Guaranteed the guy who doesn’t have the credit rating to get a card, wants to hide his money from debt collectors, works for cash and does business in cash whenever he can - this guy on a road trip will have several hundred dollars in cash that the troopers can seize under Asset Forfeiture, using the pretext “must be proceeds of crime”. No need to charge the person, just relieve him of his cash. Being on a road trip, odds are the guy couldn’t afford to come all the way back to fight the system, and could not afford a lawyer. In one instance in Texas, the couple was threatened that if they did not sign the receipt saying they were voluntarily surrendering their “drug” money, their accompanying children would be sent into the foster system while they spent the weekend in jail. Canada at one time issued a warning about travelling the interstates with large amounts of cash because the police would “steal” it.
Back in the 1800’s, and even the early 1900’s, pay envelopes full of cash were handed out every Friday. (Hence the old saying “The eagle shits on Friday”) Robbing the pay office or payroll cash en route to a big business used to be almost as popular as robbing a bank. But there’s security, simplicity etc. in direct deposit, and those that don’t, use cheques. The risk of theft was offloaded to others.
I remember an old-timer telling me about one factory town - they went to direct deposit, probably in the early 70’s. Then a lot of the workers had to explain to their wives why they were being paid so much more - they couldn’t stop at the bar to drink and gamble away a substantial portion of their pay every Friday night.
(I remember having this discussion with the guides in Egypt - nobody used a bank account, everything was done in cash. The idea that all my money generally went into and through bank payments and credit cards was weird to them. Similarly, when we were in Tibet, we paid the tourist agency with Visa. Then when we checked out of the hotel, our guide had a huge wad of 100-Yuan notes (about $32 each) for the tour company to pay our hotel bill. I assume trust and billing had not fully arrived in some areas. )
Ditto Lou Mitchell’s - when we were planning to meet a friend for brunch there on a trip to Chicago, 3 different people sent us there and they all reminded us “But they only take cash!”. I don’t recall if there was an ATM there. Lombardi’s Pizza in NYC is also cash-only, but they have one of those freestanding ATMs onsite. I’ve never used it, as those are insecure as well as encumbered with steep fees.
I have no clue if either place takes advantage of it to, er, undercount their profits. Both tend to be quite crowded though - so they are definitely not purely fronts.
The Man from Ironbark (australianculture.org)
The barber man was small and flash, as barbers mostly are,
He wore a strike-your-fancy sash, he smoked a huge cigar;
He was a humorist of note and keen at repartee,
He laid the odds and kept a ‘tote’, whatever that may be,
And when he saw our friend arrive, he whispered, ‘Here’s a lark!
Just watch me catch him all alive, this man from Ironbark.’
You probably meant 1900’s and early 2000’s? Every second Thursday. Sedan would come in with some guards to check out the situation, then the armoured truck would follow and they’d lock the gates. This to prevent somebody entering the pay office early, then driving a getaway car out the gates. Ask me how they knew…
On the original topic: we did some work for a Foreign Exchange business that was later closed by the police. People come in and give you cash money, and you give them less cash money in a different currency, and the difference is profit. If your currency flows are balanced, there is no change in inventory, and profit is almost completely unrelated to staff, rent or other costs.
I’m not an expert but I wonder whether this would still work for any significant amount of money?
Casinos are only random at the micro level that the average gambler sees (that’s the whole trick). At the macro level, the odds of all of the games are known and at a large establishment, the win ratios would be extremely close to what those known odds would predict.
At a large casino and assuming everything is tracked, you should know pretty precisely how much profit you will make from a given turnover.
But the amount of money that’s made by the casino (and lost by the customers) is a function of the amount of customers. The percentages will remain constant but a casino that has two thousand customers a week will earn twice as much money as a casino that has a thousand customers a week. And if a casino actually had a thousand customers but claims it had two thousand - and declares an amount of earnings appropriate to the latter figure - it’s going to be tough to disprove their claim. It’s not like a restaurant where you can check the amount of food that was purchased and determine if it was enough to feed that amount of people.