What is money laundering?

And why exactly is there a need for it? I assume it’s because banks write down the serial numbers of all those bills stacked nice and neat in the vault, and if someone robs the bank (or whatever), they can be tracked down.

So how is it generally done? It seems that a fake business is a popular way to do it, can someone give some specific examples of money laundering?

Money laundering is required when you make a lot of money from an illegal business venture, typically all cash. And you have to explain where this money came from to law enforcement agencies.

So, you create businesses that seem to have generated that money, and pay taxes on it. Specific examples aren’t hard to think up or find on the web, I’m not sure if disclosing specific plans is allowed here.

(Here’s one example, not with marked money, with drug money.)

Joe owns a t-shirt shop. Bob sells crack. Bob and Joe become business partners. Bob gives money to Joe. Joe claims he made the money selling t-shirts. Bob and Joe live happily ever after.

That’s pretty much it. Crook and Legit Businessman work together. Crook gives Legit the money. Legit declares it, pays taxes on it, and kicks back a large percentage to Crook, usually as an investor’s dividend, but sometimes in consultant’s fees or even contract labor costs… something that doesn’t look too suspicious if the FBI suddenly decides to subpoena your books.

And Legit is freed from the hassle of making his lousy T-shirt business pay for itself, because he’s sharing in Crook’s excellent profits from his drug business.

The business in question has to be a business that handles a lot of CASH, though. If you open a grocery store, you are likely to be handling a lot of your business in credit cards and checks.

Candy stores are better for money laundering, because children don’t use anything but cash. Then the trick becomes explaining to the IRS how and why your candy store pulls in five million big ones a month.

Better alternatives include vending machine businesses (because ALL vending machines use nothing BUT cash) and casinos.

The FBI recently busted a big ring of money launderers who were using those little deli ATMs. The great thing about this scheme is you didn’t need to have the delis in on the plot. Just buy an ATM and pay the shop owner a small commission to put your ATM in the store. Fill it with drug money. People come and use the ATM, withdrawing the drug money, and nice clean electronic bucks get moved your accounts.

A casino would be great - don’t have to explain why the candy store made millions but only bought 100 lb’s of sugar/month.

  • unless the candy man sells 1oz bars for a grand each

I saw a program about a fancy hotel that would wash visitors money.

5 replies and no “Office Space” reference yet? :smiley:

Money laundering is still money laundering regardless of the scale, you can do it in a casino or on a hotdog stand, still it is the process of turning “Dirty” money into “Clean” money.

There are loads of other ways though to reintroduce the money, a big one is Real Estate and Credit Cards at the moment, but also people buy things like premium bonds foreign accounts.

If there was one good of way of doing it i suppose everyone would do it, but fines for not reporting it int he uk can be upto 14 years in prison and unlimited fines, dont know how much i would want to be involved if say i owned a casino.

Another kind of laundering is political. If Alvin has an interest that Senator Bob has not been treating well, Alvin can cultivate channels through which money can travel to Calvin, who is running against Senator Bob. Alvin can run money through several private citizens at their maximum rates. He can also create storefront public action groups, which can fund TV spots against Senator Bob in the last weeks of the campaign. By the time anyone figures out who paid for calling Senator Bob a liar and a thief, Calvin has trounced Bob. The federal election committee, a year later, announces no laws were broken, to any unusual degree. Senator-elect Calvin and staunch ally Alvin are golfing buddies.

Note that no political parties were named, and the names were chosen in alphabetical order. Any resemblance to actual people is a crying shame. If you feel I’ve maligned your candidate, perhaps you protesteth too much.

Money laundering in casinos is generally refering to players, not casino owners–who are usually large corporations or Steve Wynn. The idea is pretty simple:

Go in with, say, 20 grand. Bet 100 bucks 200 times on any even money bet. You can reasonably expect to walk out with 95% of what you came in with, or 19 grand, squeaky clean.

Casinos and the IRS picked up on this little scam. It would be exceedingly risky to actually try it, as you’d be busted before getting your chips redeemed, not only landing you in jail, but also 20 grand poorer.

Really? What law is being broken?

Whatever law you broke getting the 20 grand that necessitates the 20 grand being laundered.

Real estate is NOT a good way to launder money. Any transaction over $10,000 has to be reported. If you are putting a lot of cash down on a house and can’t show where you got it, the government will come knocking. “I saved it in cash under my matress” won’t work if you report $30K a year.

A former employee of ours had a friend who put $25K on a house. All cash in a little Tower Records bag. Said former employee wrote three receipts for smaller amounts to avoid any questioning.

Friend got busted later for his credit card scheme, and employee got fired. Friend also lost house because he allowed friends to stay there while he was in prison, with the understanding that they would pay the mortgage.

There’s no honor among thieves, and what goes around comes around. Friend still has a $373K credit card debt on his credit report, which always raises eyebrows.

even lessthan $10K transactions may be reported if there is some funny business like lost of $9500 deposits.

Another way to launder money at a casino, although it’s harder to pull off now than in the past, is to convert a large sum at the cashier from cash to chips. Play a few games. Return to the cashier with most of your chips, and get a check in return. Head to the casino next door. Repeat.

Great. We’re telling folks how to commit a crime on the SDMB. Me thinks this thread will be closed shortly.

Don’t give the mods ideas, elmwood. :wink:

I heard there were huge money laundering deals with chicken farms. Terrorist-funding. The first link i found(Alternet.org) seems to cast doubt on the 60 minutes story I saw.

And the next google link found is ‘how to launder money’ for the first half of the page. http://www.orlingrabbe.com/part33.htm

Fair warning: any attempts to use a casino to launder money will likely result in:

  1. Being blacklisted from that, if not all, casinos.

  2. IRS audit

  3. Investigation by the feds, though the 9/11 fiasco may still have their attention diverted

The question of “what did you do illegal” isn’t really a concern of the casino. They can ban you and contact authorities on a whim, being private establishments and all.

This was all precipitated by the organized crime division of the FBI in the 90s. No cite, but if pressed I might be able to dig something up. I think it’s a “better safe than sorry” deal.

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]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.

Fun story.

Back in Panama a guy (I sorta know him) was picked up years ago leaving the port with a shipping container half-full of photographic chemcials and half full of twenty dollar bills.

He runs (ran?) a chain of photo-developing stands in Panama. The shipping container came from Miami.

Anyway, it was like eight million in US Dollars (or perhaps Panamanian Balobas). What is the penalty for smuggling eight million into Panama? Nuthin’.

But this guy really ought not to return to the US for a long time. Lots of people want to talk to him.

Now consider…

Someplace in Miami is a guy who will give you eight million in dirty cash in exchange for (let’s say) six million in clean cash (actually a check). No contracts, no receipts, no lawyers.

Let’s think here, eight million in twenties is 400,000 bills.

“Pull your truck around to bay six, I’ll have the guys forklift the money in.”

An impressive story.