Ways to move/launder massive amounts of money.

Factual Questions
21

No.

However, there is such a thing as bearer bonds.

These are no longer issued because of their use in money laundering. What bonds are outstanding are difficult to get. Transactions regarding them tend to be scrutinized, and they can only be purchased with a full set of credentials.

Buying a bunch of these is about as subtle as wearing a ski mask into a bank, and a great way for for our little smuggler to demonstrate that trying to imitate what he sees in the movies is a great way to get an all-expense paid vacation at a Federal facility.

And wishbone, that tactic would still leave our collector having completed two or more highly suspicious and unusual transactions and with a pile of stamps worth 15 cents on the dollar.

If Manhattan gives permission and trusts in my discretion I’ll discuss the 3 or so basic ways money-laundering is accomplished today.

IMO, general knowledge of how this is attempted is the best way to prevent its occurence, and it’s certainly the stance embraced by the SEC and Federal Banking Committee to quell it (with excellent success, I might add.)

Of course I’ll respect Mod wishes in this.

If it’s much interest I’d offer to do a staff report as I’m knowledgeable in this area, or email my posts for Mod editing prior to posting.

22

And how do the Swedish lottery winners who’ve sold their piece of luck to the Fjord’s Disciples explain their cash?

Onward…

Off on a tangent perhaps. My first read of the OP didn’t call forth a scenario involving buying $50,000 worth of collectibles. I thought first of stamps as an alternative form of currency; i.e., I thought about someone purchasing $50,000 worth of good old first-class 34¢ stamps.

While individual stamps do retain their value pretty well, unless you had enough money to move to make it worth setting up a chain of grocery stores to move your cash around this way, this makes counterfeiting dimes look like a high margin enterprise.

Just thought we oughta consider all the angles.

23

Is that like a Strip-O-Gram or something?

24

Two minor points: Hawaii is of course a US state; electronic transfers from an island bank or branch to a mainland bank or branch will not be an issue.

The issue will come in getting either cash or electronic funds into the US banking system.

All $10,000 and up cash transactions must be reported by banks and other financial institutions; those stamp dealers in Hawaii will have to fill out the forms if they take the cash from the wrongdoer and then try to deposit it; if the authorities receive three forms in a short period from stamp dealers, they will know to investigate; the stamp dealers will tell the investigators where they got the money; a list of the stamps will be sent to law enforcement agencies and dealers and auction houses may be put on notice to watch out for them; the stamp dealers will learn caution to avoid falling under suspicion themselves in the future.

25

Just to reinforce what Scylla posted. I worked for a large bond transfer agent at one point. We were the ones that actually registered, redeemed, paid, issued, etc. the bonds for the issuing authority. IOW that fancy piece of paper came from us. Bearer bonds were probably about 10-15% of our volume. There are very few bearer bonds in circulation any more. A few old series are in private hands, but these mostly belong to older people who are living off the interest income. I’d say about 98.8% of bearer bonds are in institutional hands: depositories, institutional investors, etc., and the physical bond certificates don’t move. When they do change hands, they stay at the depository and the depository makes a notation in their records. Not only that, but any new bond series (except for some very limited issues) is in registered form. You just can’t go to the corner broker and ask to buy bearer bonds.

26

[QUOTE]
*Originally posted by Scylla *
**

They really aren’t a secret. I know very little on the subject but my first guess would be casinos; any operation where somebody can walk in and lose $250,000 in an afternoon with little or no record of his identity would be the ideal place to launder money.

In fact I just saw a movie(I don’t recall the name, but it’s new) where a lady would go in and buy $100,000 in chips, sit down at a table, make a five dollar bet, lose, then turn in all her chips for a cashier’s cheque from the casino. I also don’t recall the name for the practice but I know there is one.

My second guess would be some kind of non-profit organization, run by the money launderer; it is my understanding that non-profit organizations are allowed to recieve anonymous donations.

27

Wishbone, there is one huge problem with your casino scenario. If someone walks into a casino with an armoload of cash, buy chips, and turns them back in for a cashier’s check, their name has just been recorded. They were quite anonymous walking into the casino, but now their name is known to the casino’s bookkeeper and thence, the IRS.

28

Sewalk- Precisely. The money has now “originated” somewhere reasonably “clean”.

That’s what “laundering” is.

The person in the above scenario has $100K in… say drug money. He/she can’t deposit it, because that will be suspicious- where did it come from?

The cashier’s check from the casino, however, well… who’s to say the person didn’t win that money gambling, when he or she is audited next year?

Sure, they will have to pay taxes on it, but it’s otherwise “clean”- they can use it to buy things, they can deposit it, etc. It has a quasi-legal “point of origin”.

29

I know I don’t have to give your name if exchange a $20 bill for chips, is there a set amount where they require you to present identification?

30

sorry, my name

31

Well the gangsters probably won’t buy the ticket from biggest winners rather than gather lots of wins between like 100-10000$.

32

So you just make several transfers of $9,999 each. :smiley:

33

wishbone, not to be harsh, but keep saying that word and I’m not sure it means what you think it means.

The problem that money laundering solves: If you make illegal money, you need to account for it. I.e. when the feds say, where did this $37M come from, you can’t say “I found it.” That’s what laundering is. It has nothing to do with exchanging one 20 dollar bill for a “clean” one.

Sure, on a one shot basis, you could launder $20k by doing what you described at a casino, and then telling the IRS you won the money. But that’s just one time. Say you’ve got $20k a month coming in. The getting lucky at the casino story doesn’t cut it on an ongoing basis.

I’ll describe the basic launder, in general enough terms to stay legal (I hope; if this is bad, manhattan, I apologize; edit away):

Basically, in addition to your illegal operation (say you’re selling cocaine), you open a legal operation. This legal operation does business in cash and brings in a lot of it. Let’s say it’s a Burger Barn.

Say the legal Burger Barn pulls in $50k per month, and you have expenses of $30k per month. Meaning you profit (and pay taxes on (50-30=) $20k/month.

Now, you take your ill-gotten $20k from the cocaine operation, and put it in the cash register at Burger Barn. So, it looks like you had revenues of (50+20=) $70k this month, but with your usual $30k of costs.

Now, your profit is (70-30=) $40k this month, which you pay taxes on and explain as profits from your restaurant.

A casino would actually be an excellent laundery, but that’s if you own the casino; being a patron doesn’t work.

34

What I have always thought the word “launder” meant was to make the money look as legitimate as possible, by either making a paper trail that is too long to track, or totally untraceable all together.

I read the “Tyson’s Tasty Tibits: Smack and Smile” thread when you originally posted it, so I get the basic premise of the Burger Barn laundering operation: Falsifying reciepts or expenditures to make it appear that the money laundered was profit recieved from Burger Barn paying customers. But can people get away with this these days? Wouldn’t an audit of the cash register reciepts leave a paper trail or is it too costly and time consuming for the IRS to conduct an audit on a fast food restaurant?

As for my post about casinos, I had meant to convey that, yes, it is easy for a casino owner to launder money(hence the movie, Casino), but I was then reminded of the movie where the patron used a casino to launder the money, in which case I believe the casino owner may have been aware or had even hired her. The two casino laundering descriptions ran together and may have been confusing.

35

I work in real estate, and all deposit monies on houses have to be accounted for, no matter what amount and how it’s presented. A $6,000 cashier’s check has to come with an explanation, and saying “Well, I had the cash money in my house” will get questioned. Several deals have fallen through because of this (in one case, $25,000 brought in cash in a Tower Records bag. The guy later went to prison).

Someone brought in $5,000 in loose five dollar bills in a Hefty bag. Greatest volume of money I have ever seen, but the deal went through. I’ve always wondered about that one.

On the other hand, you can rent a very expensive apartment, bring the money in cash, and nobody says a word. Not that I’m suggesting anything about people who rent very expensive apartments.

36

wishbone:

Your casino scenario doesn’t work either. The casinos cooperate with the IRS in keeping track of who the big winnes are, and beleive it or not, it’s not going tob e easy to walk into a casino with 100k cash and just hand it over for chips.

37

Also all transactions that seem to be structured to avoid the $10,000 reporting requirement must also be reported.

38

Bill H:

Yeah, the burger barn is one way of doing it, except the launder does not own the Burger Barn but usually is only an inverstor (albeit one with a controlling interest.) Secondly it’s usually not done with a profitable enterprise, it’s done with with one in trouble.

To keep a float, the owner partners with the launderer. He gets a cut which helps keep his business afloat. His plan is that he’ll do this for a while just to get back on his feet. The owner keeps the book and the responsibility and passes on a portion of his progfits to is silent partner.

The owner is what is known as a “scapegoat,” “fall guy” or “dumnbass.” You see, the launderers know that the I.R.S. is pretty sophisticated, and computer analysis of business returns will tell them that something’s wrong at this Burger barn with profit margins of 200%, while all the others in the area have profit margins of 15%. They’re going to audit, and it just ain’t possible to cook the books to make the math work to this degree.

The launderers of course know this, so they push as much cash as possible through the enterprise as quickly as possible. So what you end up with is a burger barn with expenses of 30k a month and profits of 500k.

The I.R.S. steps in to take a look, the owner goes to jail, and the launderers, usually in the form of a corporation now have clean money. Since they were only investors, and had nothing to do with the day to day running of the business, no proof of misdoings can be proven. It’s also hard to send a venture capital corp. to jail.

39

People wonder why I clamp down so quickly.

This is why.