# Would this be considered money laundering? **URL:** \ **Category:** In My Humble Opinion\ **Created:** [October 17, 2015, 6:48pm UTC](https://boards.straightdope.com/t/would-this-be-considered-money-laundering/734919 "2015-10-17T18:48:35Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Chefguy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/chefguy/32/138_2.png) [@Chefguy](https://boards.straightdope.com/u/Chefguy)\ **Post date:** [October 17, 2015, 6:48pm UTC](https://boards.straightdope.com/t/would-this-be-considered-money-laundering/734919/1 "2015-10-17T18:48:35Z")
Calling all lawyers! Oregon has approved marijuana sales. The problem these businesses have is that they are cash only, and those proceeds cannot be deposited in commercial banks because the banks are federally regulated and MJ is still an illegal substance, etc. The asshole\* who owns the dispensary on the next corner has started buying houses that come up for sale. I’m assuming that he is paying cash and will probably flip them, effectively getting rid of the drug proceeds. Does this amount to money laundering? What is the status of the money once the former homeowners have it? Are they then unable to bank the cash? Can they be pursued by the feds for abetting the money laundering or receiving proceeds of a drug sale? \*He’s not an asshole because he sells pot. He was an asshole before that, and remains an asshole, so lets not start down that road, okay? ---
**Author:** ![Annie-Xmas](https://avatars.discourse-cdn.com/v4/letter/a/ecc23a/32.png) [@Annie-Xmas](https://boards.straightdope.com/u/Annie-Xmas)\ **Post date:** [October 17, 2015, 6:54pm UTC](https://boards.straightdope.com/t/would-this-be-considered-money-laundering/734919/2 "2015-10-17T18:54:42Z")
I am not a lawyer, but I worked in New Jersey real estate for 26 years. Any cash used to buy a house has to be documented. The HUD-1 form, filed at each closing, shows how the money was obtained and how it was paid off. If the cash cannot be documented, it’s highly unlikely the sale will proceed. Anything remotely suspicious and the IRS and the Feds will come knocking on your door. ---
**Author:** ![TriPolar](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/tripolar/32/3008_2.png) [@TriPolar](https://boards.straightdope.com/u/TriPolar)\ **Post date:** [October 17, 2015, 7:12pm UTC](https://boards.straightdope.com/t/would-this-be-considered-money-laundering/734919/3 "2015-10-17T19:12:32Z")
It’s not money laundering, at least it’s not at the state level, because the money isn’t proceeds of a crime. That’s what money laundering is, taking money that was obtained illegally and pushing it through a legitimate enterprise as if it were obtained legally. So you invest in restaurant and take the $10,000 you made from hijacking a truck and you inflate your restaurant receipts to show an additional $10,000 in income, and that money is disbursed to you as a profit. But if the money was obtained legally then it can’t be laundered. ---
**Author:** ![even\_sven](https://avatars.discourse-cdn.com/v4/letter/e/dfb087/32.png) [@even\_sven](https://boards.straightdope.com/u/even_sven)\ **Post date:** [October 17, 2015, 7:51pm UTC](https://boards.straightdope.com/t/would-this-be-considered-money-laundering/734919/4 "2015-10-17T19:51:01Z")
I don’t see how it is any more money laundering than it is to use the cash to buy a pack of gum. Is it actually illegal for the banks, or are they just preemptively tying to avoid any risks? ---
**Author:** ![don\_t\_ask](https://avatars.discourse-cdn.com/v4/letter/d/e68b1a/32.png) [@don\_t\_ask](https://boards.straightdope.com/u/don_t_ask)\ **Post date:** [October 17, 2015, 8:04pm UTC](https://boards.straightdope.com/t/would-this-be-considered-money-laundering/734919/5 "2015-10-17T20:04:28Z")
It isn’t illegal. One bank did set up to allow businesses to deposit in Oregon but decided that the overhead in conforming with federal laws wasn’t within their capacity. [MBank to Close All Cannabis Accounts](http://mjbizdaily.com/breaking-mbank-to-close-all-cannabis-accounts/) > [@](#): > > MBank, the small Oregon-based financial institution that has serviced the cannabis industry since last year, told Marijuana Business Daily that it will close all of its accounts with marijuana companies in the next two months. > > Jef Baker, the CEO and president of MBank, said the cost and time spent on compliance is too much for the Gresham, Oregon-based community bank to handle. The company – which quickly became one of the largest banks serving the marijuana industry – has about 70 to 75 accounts with cannabis businesses, Baker said. Most of them are in Oregon, though a few are in Washington State. > > “We just do not have the resources to manage the compliance necessary” to service the cannabis industry, he said. “This is not what we want to do, this is what we have to do. We got into this business to serve an underserved group and I wish we could still do that.” ---
**Author:** ![Chefguy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/chefguy/32/138_2.png) [@Chefguy](https://boards.straightdope.com/u/Chefguy)\ **Post date:** [October 17, 2015, 9:05pm UTC](https://boards.straightdope.com/t/would-this-be-considered-money-laundering/734919/6 "2015-10-17T21:05:33Z")
> [@even\_sven](#): > > I don’t see how it is any more money laundering than it is to use the cash to buy a pack of gum. > > Is it actually illegal for the banks, or are they just preemptively tying to avoid any risks? A pack of gum isn’t going to be resold. From **Tripolar** : > [@](#): > > It’s not money laundering, at least it’s not at the state level, because the money isn’t proceeds of a crime. That’s what money laundering is, taking money that was obtained illegally and pushing it through a legitimate enterprise as if it were obtained legally. So you invest in restaurant and take the $10,000 you made from hijacking a truck and you inflate your restaurant receipts to show an additional $10,000 in income, and that money is disbursed to you as a profit. But if the money was obtained legally then it can’t be laundered. So I’m guessing that the fed won’t be interested in what happens at a local level then? What happens when the original homeowner tries to bank the cash from the sale? Is a bank that’s not set up for that going to balk, or will they not even ask where it came from? If you go through a realtor, doesn’t the money have to be placed in an escrow account? ---
**Author:** ![robert\_columbia](https://avatars.discourse-cdn.com/v4/letter/r/e79b87/32.png) [@robert\_columbia](https://boards.straightdope.com/u/robert_columbia)\ **Post date:** [October 17, 2015, 9:33pm UTC](https://boards.straightdope.com/t/would-this-be-considered-money-laundering/734919/7 "2015-10-17T21:33:50Z")
> [@Annie-Xmas](#): > > I am not a lawyer, but I worked in New Jersey real estate for 26 years. Any cash used to buy a house has to be documented. The HUD-1 form, filed at each closing, shows how the money was obtained and how it was paid off. If the cash cannot be documented, it’s highly unlikely the sale will proceed. > > Anything remotely suspicious and the IRS and the Feds will come knocking on your door. It looks like form [HUD-1](http://www.hud.gov/offices/adm/hudclips/forms/files/1.pdf) is a _mortgage_ form. Its first box is “Type of Loan”, and I don’t see an option for “none”. Does form HUD-1 really still need to be filled out even if no loan is being used? I don’t see how it would even make sense to fill it out for a purely cash-up-front transaction. ---
**Author:** ![friedo](https://avatars.discourse-cdn.com/v4/letter/f/8edcca/32.png) [@friedo](https://boards.straightdope.com/u/friedo)\ **Post date:** [October 17, 2015, 10:43pm UTC](https://boards.straightdope.com/t/would-this-be-considered-money-laundering/734919/8 "2015-10-17T22:43:08Z")
> [@Chefguy](#): > > A pack of gum isn’t going to be resold. I have a pack of gum in front of me right now. I will put it on eBay. Am I laundering money? ---
**Author:** ![VinylTurnip](https://avatars.discourse-cdn.com/v4/letter/v/b2d939/32.png) [@VinylTurnip](https://boards.straightdope.com/u/VinylTurnip)\ **Post date:** [October 17, 2015, 10:45pm UTC](https://boards.straightdope.com/t/would-this-be-considered-money-laundering/734919/9 "2015-10-17T22:45:32Z")
Even if it is, how does that affect you? ---
**Author:** ![Chefguy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/chefguy/32/138_2.png) [@Chefguy](https://boards.straightdope.com/u/Chefguy)\ **Post date:** [October 17, 2015, 11:01pm UTC](https://boards.straightdope.com/t/would-this-be-considered-money-laundering/734919/10 "2015-10-17T23:01:22Z")
> [@VinylTurnip](#): > > Even if it is, how does that affect you? Are you addressing me? I’m just asking the questions because I’m curious about the cause and effect of states legalizing something that the fed has not. I’ve not said anything to warrant confrontation. ---
**Author:** ![Scribble](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/scribble/32/3317_2.png) [@Scribble](https://boards.straightdope.com/u/Scribble)\ **Post date:** [October 17, 2015, 11:10pm UTC](https://boards.straightdope.com/t/would-this-be-considered-money-laundering/734919/11 "2015-10-17T23:10:32Z")
Buying houses in cash isn’t money laundering, unless your neighbor is buying the houses in an attempt to disguise the original source of his income. Since growing wacky tobacky is legal where you are, he has no reason to hide how he earns his cash. It’s not illegal to keep your money somewhere other than a bank. AFAIK, as long as your neighbor is paying his taxes and declaring his income, he’s in the clear, even if all of his money is both earned and spent in cash. ---
**Author:** ![TriPolar](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/tripolar/32/3008_2.png) [@TriPolar](https://boards.straightdope.com/u/TriPolar)\ **Post date:** [October 17, 2015, 11:37pm UTC](https://boards.straightdope.com/t/would-this-be-considered-money-laundering/734919/12 "2015-10-17T23:37:38Z")
> [@Chefguy](#): > > So I’m guessing that the fed won’t be interested in what happens at a local level then? Don’t know really, but considering the can of worms that opens up it’s not likely to be tested anytime soon. > [@](#): > > What happens when the original homeowner tries to bank the cash from the sale? Is a bank that’s not set up for that going to balk, or will they not even ask where it came from? If you go through a realtor, doesn’t the money have to be placed in an escrow account? I can’t tell you the law, but someone who is paid in cash for a legitimate exchange is in the clear legally, assuming they’re not part of the original criminal act, and a reasonable person would not assume the money was obtained illegally. However, they have to fill out forms indicating where the cash came from. And if they try to avoid that they could end up having the money seized by civil forfeiture. There’s a thread about that somewhere. I don’t know if the government can or will come after the money if it turns out be proceeds of a crime when the person paid has committed no crime. ---
**Author:** ![VinylTurnip](https://avatars.discourse-cdn.com/v4/letter/v/b2d939/32.png) [@VinylTurnip](https://boards.straightdope.com/u/VinylTurnip)\ **Post date:** [October 17, 2015, 11:54pm UTC](https://boards.straightdope.com/t/would-this-be-considered-money-laundering/734919/13 "2015-10-17T23:54:25Z")
> [@Chefguy](#): > > Are you addressing me? I’m just asking the questions because I’m curious about the cause and effect of states legalizing something that the fed has not. I’ve not said anything to warrant confrontation. You asked whether a specific person you know, whom you describe as a longtime asshole, is engaged in criminal activity. If it was meant as a general question about the law, then I’m sorry for having misread. ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [October 18, 2015, 12:03am UTC](https://boards.straightdope.com/t/would-this-be-considered-money-laundering/734919/14 "2015-10-18T00:03:30Z")
Now, I’m no law-talking guy, but here’s part the Federal statute that would control: > [@](#): > > (a)\*\*(1) Whoever, knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity, conducts or attempts to conduct such a financial transaction which in fact involves the proceeds of specified unlawful activity— > > (A)(i) with the intent to promote the carrying on of specified unlawful activity\*\*; or > (ii) with intent to engage in conduct constituting a violation of section 7201 or 7206 of the Internal Revenue Code of 1986; or > > (B) knowing that the transaction is designed in whole or in part— > (i) to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity; or > (ii) to avoid a transaction reporting requirement under State or Federal law, > > **shall be sentenced to a fine of not more than $500,000 or twice the value of the property involved in the transaction, whichever is greater, or imprisonment for not more than twenty years, or both**. For purposes of this paragraph, a financial transaction shall be considered to be one involving the proceeds of specified unlawful activity if it is part of a set of parallel or dependent transactions, any one of which involves the proceeds of specified unlawful activity, and all of which are part of a single plan or arrangement. So it seems to me that if this guy takes the proceeds of his business, which it clearly legal at the state level and not legal at the Federal level, and invests it somehow, and the proceeds of the investments have anything to do with continuing the illegal enterprise, I think a Federal case against him would be pretty open-and-shut. I have no idea what the case law is, but the phrase “promote the carrying on of specified unlawful activity” seems quite broad to me. But then, I’m no expert in these matters, and it seems that the Federal government doesn’t have an interest in getting involved in these kinds of cases, from what the newspapers tell me. ETA: and if the outcome of doing this is to be able to put the proceeds of the house sales in the bank, that also seems a pretty clear violation of (b)(i) and (ii). ---
**Author:** ![scootergirl](https://avatars.discourse-cdn.com/v4/letter/s/e99b99/32.png) [@scootergirl](https://boards.straightdope.com/u/scootergirl)\ **Post date:** [October 18, 2015, 12:30am UTC](https://boards.straightdope.com/t/would-this-be-considered-money-laundering/734919/15 "2015-10-18T00:30:50Z")
I live in Eugene, Oregon, where perhaps pretty soon you’ll be able to see a marijuana dispensary at every corner. It has not even been one month and they are sprouting up like weeds all over the city and our neighbor town of Springfield. This situation with the banks has been all over the news lately. This “asshole” that you mention here has just found a way to get around his (temporary) problem. I think that eventually the banks will welcome all dispensary owners and their money with open arms. I don’t think that what he’s doing is money laundering since the money was not acquired illegally…not anymore. ---
**Author:** ![Projammer](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/projammer/32/559_2.png) [@Projammer](https://boards.straightdope.com/u/Projammer)\ **Post date:** [October 18, 2015, 1:38am UTC](https://boards.straightdope.com/t/would-this-be-considered-money-laundering/734919/16 "2015-10-18T01:38:09Z")
I’m thinking that with the steadily increasing acceptance of marijuana as a socially acceptable vice the feds are going to avoid any high profile confrontations with public business people that would likely give the pro mj group even a minor boost. ---
**Author:** ![nearwildheaven](https://avatars.discourse-cdn.com/v4/letter/n/90db22/32.png) [@nearwildheaven](https://boards.straightdope.com/u/nearwildheaven)\ **Post date:** [October 18, 2015, 3:17am UTC](https://boards.straightdope.com/t/would-this-be-considered-money-laundering/734919/17 "2015-10-18T03:17:51Z")
> [@scootergirl](#): > > I live in Eugene, Oregon, where perhaps pretty soon you’ll be able to see a marijuana dispensary at every corner. It has not even been one month and they are sprouting up like weeds all over the city and our neighbor town of Springfield. This situation with the banks has been all over the news lately. This “asshole” that you mention here has just found a way to get around his (temporary) problem. I think that eventually the banks will welcome all dispensary owners and their money with open arms. I don’t think that what he’s doing is money laundering since the money was not acquired illegally…not anymore. Threadjack: A credit union has opened in Colorado to do exactly this. [http://www.thefourthcornercreditunion.com/](http://www.thefourthcornercreditunion.com/) ---
**Author:** ![Inna\_Minnit](https://avatars.discourse-cdn.com/v4/letter/i/5f8ce5/32.png) [@Inna\_Minnit](https://boards.straightdope.com/u/Inna_Minnit)\ **Post date:** [October 18, 2015, 5:20am UTC](https://boards.straightdope.com/t/would-this-be-considered-money-laundering/734919/18 "2015-10-18T05:20:05Z")
> [@scootergirl](#): > > I live in Eugene, Oregon, where perhaps pretty soon you’ll be able to see a marijuana dispensary at every corner. It has not even been one month and they are sprouting up like weeds all over the city and our neighbor town of Springfield. This situation with the banks has been all over the news lately. This “asshole” that you mention here has just found a way to get around his (temporary) problem. I think that eventually the banks will welcome all dispensary owners and their money with open arms. I don’t think that what he’s doing is money laundering since the money was not acquired illegally…not anymore. It is illegal on the federal level. Which is where banks operate in regards to the law. ---
**Author:** ![Lord\_Feldon](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lord_feldon/32/341_2.png) [@Lord\_Feldon](https://boards.straightdope.com/u/Lord_Feldon)\ **Post date:** [October 18, 2015, 5:27am UTC](https://boards.straightdope.com/t/would-this-be-considered-money-laundering/734919/19 "2015-10-18T05:27:10Z")
> [@scootergirl](#): > > I don’t think that what he’s doing is money laundering since the money was not acquired illegally…not anymore. Selling marijuana _is_ illegal in the United States. Only an act of the United States Congress can make it legal. That’s why the banks are reluctant to deal with this. ---
**Author:** ![scootergirl](https://avatars.discourse-cdn.com/v4/letter/s/e99b99/32.png) [@scootergirl](https://boards.straightdope.com/u/scootergirl)\ **Post date:** [October 18, 2015, 3:55pm UTC](https://boards.straightdope.com/t/would-this-be-considered-money-laundering/734919/20 "2015-10-18T15:55:27Z")
> [@Lord\_Feldon](#): > > Selling marijuana _is_ illegal in the United States. Only an act of the United States Congress can make it legal. That’s why the banks are reluctant to deal with this. I’m completely aware as to the reasons why. My point is that with time, **some** banks and credit unions will do business with them. A handful already is. In the mean time, finding ways to not sit on large sums of cash for these dispensary owners will be quite a dilemma, won’t it? And so they will turn to other ways - like this idiot in Portland did. [Next page](https://boards.straightdope.com/t/would-this-be-considered-money-laundering/734919.md?page=2)