The big cartels launder money straight to the banks. Drugs are a huge business, 10% of global GDP by some estimates. The banks are all involved, they have to be. HSBC got caught laundering $670 billion. http://www.bloomberg.com/news/articles/2013-07-02/hsbc-judge...
There are other ways these days, at least in Germany with the massive explosion of sport betting offices.
So, the guy who wants to launder some money gives e.g. 1000 € to a low-level dude. This dude then goes to the betting office and places all day long 10 or 20 combo bets with 3 spares (i.e. 7 / 17 of the bets have to be won in order to win the total bet), and every sub-bet has a ratio of 1.01-1.10 profit (which means you're unlikely to lose, but you still have to know some basics, and you absolutely must distribute risk by betting small-ish amounts)... the dude gets to keep any winnings, and if he can provide the receipts, doesn't even have to cover losses to the launderer.
Another common method is to use gambling machines for small amounts. This again only works in Germany because our machines do not play with instant real money, but "points" - 1 point = 1 cent, and you can only transfer 20ct every 5 seconds, and only 80€ per hour. Needless to say, it sucks for the machine operator because a non-player is occupying the machine without generating losses (= income for the machine operator).
Source: worked for a long time in a pub/gambling hall located directly next to a betting office. Seriously, I've seen some weird stuff.
As for the question "how do the launderers find people?": easy, in the hood I worked the Bulgarians had quite a "monopoly", it were usually those who didn't find odd-jobs for the day that ended up with sitting around in betting offices, and for "how does a launderer prevent dudes running off?", well, you can imagine there's a load of violence and human trafficking involved, including threatening relatives back home, and outright selling of women into prostitution. It's sickening.
I've heard those little coin operated candy dispensers are often a front for some low level money laundering. They almost never actually make money otherwise. But it's really easy to buy an existing franchise with x number of dispensers for a few thousand dollars, enough to maybe conceal 5 or 6 figures of ill gotten gains.
I don't see how it is viable to launder through a restaurant
Some simple peer benchmarking of %cash vs %credit card transactions or looking at spend on produce vs revenue would likely show suspect operations quickly - I was talking to an auditor recently about similar benchmarking they do as standard but can't remember the context
Cash only businesses. Family, friends all eat there for free, like grandma's kitchen used to be. They gotta eat anyway, and it fills out a restaurant. The busier, the more you pad. Give options of top shelf scotches, etc... A guy is celebrating and wants table service, you provide that. Strip clubs, etc... Easy easy ways to either hide what's coming in, or pad what's coming in. Food trucks are brilliant for this, though stretching the definition of restaurant.
Peer benchmarking of %cash is a constraint, but there will be a natural range depending on clientele, so you can safely get away with mixing some cash into the business. The same goes for expenses vs revenue -- alcohol has a higher markup than food, for example.
Heck, you can launder money through restaurant without anyone in the restaurant knowing: Have people go in and buy a few hundred dollars of liquor at a time.
you could use an art gallery, you have normal customers walk into the shop and also have "mysterious" purchases of the more expensive items. you could also deliver it somewhere to store or destroy. then you buy more art from an unknown artist and put up in the shop at high prices. if the artwork becomes in demand you can then sell those items again legitimately (if you kept them in storage).
People don't usually pay for expensive works of art with bundles of $100 bills. In fact, this applies to pretty much all high-value transactions -- the probability of a purchase being made in cash decreases as the value increases.
Restaurants work well for money laundering because they handle a large number of small transactions -- thus they can plausibly have a high percentage of cash transactions.
Not a bad idea, but in the art world everyone knows everyone. It would become pretty noticeable after a while if a gallery is just a front.
Also has to be in the right part of town. If it is a Midwest Rustbelt suburb with Applebees and Burger Kings around and then an art gallery pops up selling post-modern art making millions a year in cash, it would stick out pretty well.
I'm Italian American, and there's definitely family rumors of distant cousins opening pizza shops in Chicago in the early 20th century to do this for mob activity.
Obviously, I cannot provide specific names nor attest to their veracity.
It is not just banks, just regular people in the neighborhood notice. If a restaurant sits almost empty, has a pretty bad menu and service yet seems to hang around for years, it just looks suspicious.
That's actually pretty common. Every community has at least one or two businesses that don't look very busy, but the owners have managed to hang on for 10+ years. Could they be laundering money? Sure. They could also just be operating by the skin of their teeth. Or they could have made their money in real estate in a past life and are milking their savings. Or they could be in debt up to their eyeballs. Or they could have a rich uncle. I could go on...
There was a fruit and vegetable stand in Bensonhurst, Brooklyn, NYC (USA). Never seemed to do much business during regular business hours, but somehow managed to remain open 24/7.
If you're at the point where you're offering explanations as to the source of your cash, then it's too late. You're being investigated and that's what you want to prevent. Also, how do you sell BC for physical cash?
It wouldn't necessarily be quite that simple, but it does seem to me as well that BTC could potentially be used for money laundering, and could provide a reasonable cover.
Flip side of this are cash businesses (like restaurants) which are legitimate and the owner isn't reporting anywhere near the cash that they are taking in.
That's one way, another popular way (in Denmark at least) is to buy winning lottery tickets with dirty money and then legally cash them. Since it is not unreasonable for a person who has very little income to buy a lottery ticket, it won't be suspecious if they drive flash cars, etc.
Alternatively, if you need to launder money continuously, you can bet on sports, but buy more than one ticket, so that no matter what who wins you will have a winning ticket from which you can claim your recent money, should anybody ask.
Disclaimer: none of the above should be taken as legal advice or used for illegal purposes.
How do you find somebody to sell you a lottery ticket that won a lot of money ? And somebody who also trusts you ? Or do you buy a ton of tickets and do essentially the same thing as with sport betting ?
Mobster Whitey Bulger of the Winter Hill Gang did in fact do this in Massachusetts in the early nineties. The papers reported it at face value, I guess for fear of libel suits.
Restaurants,
Night Clubs,
Hostels,
Gym's ,
Casinos,
Spas,
Nail shop,
Food kiosks/carts/Trucks,
Transportation / Buses / Taxi / Small airlines,
Construction , roofing, lawn mowing ( Anything labor intensive where you pay labor with cash and overstate the profits)
And if you really want to launder big money... (Drum roll)
Online university! (get paid monthly by hundreds of "people" around the country for non existing classes)
That sounds a little high to me - sure, I'd bet it's around 50%, but there's plenty of other things going on, whether it be tax evasion, prostitution, fraud, etc.
Political corruption, for example, is common in the developing world - give your buddy the contract to build a road/dam/whatever, cut every corner possible or just completely fail to deliver, and if properly laundered, there's no way for the government to recover the funds.
And I don't know if anybody would go to the trouble of using a restaurant, but "asset protection" is a thing in wealthy circles, sometimes due to involvement in high risk businesses (porn, file sharing) or just being worried about an impending divorce.
Author did some basic research on ML & AML and has no real idea what they're talking about.
Flip side of all cash business is tax evasion; meaning the owner does not report all the gross revenue and the spends the cash in a way that it's not traceable back to them.
Another reason to have access to the cash flow of an all cash business is to launder counterfeit currency; aka someone gives you a $20 an the business gives them back fake bills for the change.
> meaning the owner does not report all the gross revenue and the spends the cash in a way that it's not traceable back to them.
Exactly. For example taking money and buying expensive restaurant meals or liquor is not traceable. Or jewelry (which can be sold later). Also having home renovations whereby paying part by check and the rest under the table is also not (easily) traceable. Or paying employees in cash. I also don't buy into the idea that in actual practice banks are going out and seeing how many customers they have at their place of business other than in a cursory way by chance. Also whether they are writing checks or not, small businesses often operate out of multiple bank accounts. They could be transferring the money to an account that they use to write checks or even legitimately making deposits into multiple accounts.
> Has technology made money laundering through a restaurant any easier?
> Actually, technology has made it more difficult to launder money. "Unless you’re using virtual currency such as Bitcoin, it isn’t easier today today than it was forty years ago," says Myers. "In reality, every bank has highly sophisticated software that can flag transactions much more easily than they could in prior years."
I don't see how Bitcoin would make it easy to launder money, since it's completely traceable and publicly auditable.
There are places where you can transfer your money, then they will mix it with other customers money, subtract a fee and send it out again. No real way to prove where your bitcoin came from.
Bitcoins can be made almost as anonymous as cash. Bitcoin wallets (accounts) are anonymous, and bitcoin launderers claim they can obfuscate transactions by mixing them with other transactions and sending them through complicated webs of temporary bitcoin wallets.
But bitcoin launderers aren't really money launderers. They conceal the source of your funds, but they don't create a plausible fake source. You still need to launder your money.
[+] [-] Synaesthesia|9 years ago|reply
[+] [-] nstj|9 years ago|reply
> HSBC was accused of failing to monitor more than $670 billion in wire transfers
I'm no Heisenberg, but laundering the annual GDP of Switzerland (USD665bn in 2015[0]) is probably outside the reach of a bank.
[0]: https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nomi...
[+] [-] imaginenore|9 years ago|reply
Our prosecutors are a f*ing joke.
[+] [-] digi_owl|9 years ago|reply
[+] [-] mschuster91|9 years ago|reply
So, the guy who wants to launder some money gives e.g. 1000 € to a low-level dude. This dude then goes to the betting office and places all day long 10 or 20 combo bets with 3 spares (i.e. 7 / 17 of the bets have to be won in order to win the total bet), and every sub-bet has a ratio of 1.01-1.10 profit (which means you're unlikely to lose, but you still have to know some basics, and you absolutely must distribute risk by betting small-ish amounts)... the dude gets to keep any winnings, and if he can provide the receipts, doesn't even have to cover losses to the launderer.
Another common method is to use gambling machines for small amounts. This again only works in Germany because our machines do not play with instant real money, but "points" - 1 point = 1 cent, and you can only transfer 20ct every 5 seconds, and only 80€ per hour. Needless to say, it sucks for the machine operator because a non-player is occupying the machine without generating losses (= income for the machine operator).
Source: worked for a long time in a pub/gambling hall located directly next to a betting office. Seriously, I've seen some weird stuff.
As for the question "how do the launderers find people?": easy, in the hood I worked the Bulgarians had quite a "monopoly", it were usually those who didn't find odd-jobs for the day that ended up with sitting around in betting offices, and for "how does a launderer prevent dudes running off?", well, you can imagine there's a load of violence and human trafficking involved, including threatening relatives back home, and outright selling of women into prostitution. It's sickening.
[+] [-] legitster|9 years ago|reply
[+] [-] Spooky23|9 years ago|reply
My grandfather used to get the shakedown from mafia affiliated jukebox and cigarette concession guys in his bars in the 60s and 70s.
[+] [-] mtkd|9 years ago|reply
Some simple peer benchmarking of %cash vs %credit card transactions or looking at spend on produce vs revenue would likely show suspect operations quickly - I was talking to an auditor recently about similar benchmarking they do as standard but can't remember the context
[+] [-] codesterling|9 years ago|reply
[+] [-] cperciva|9 years ago|reply
Heck, you can launder money through restaurant without anyone in the restaurant knowing: Have people go in and buy a few hundred dollars of liquor at a time.
[+] [-] Spooky23|9 years ago|reply
How much fish did you buy from the fish guy? Were those oranges $40/case or $75/case? How about the linen guy?
[+] [-] jlebrech|9 years ago|reply
[+] [-] cperciva|9 years ago|reply
Restaurants work well for money laundering because they handle a large number of small transactions -- thus they can plausibly have a high percentage of cash transactions.
[+] [-] rdtsc|9 years ago|reply
Also has to be in the right part of town. If it is a Midwest Rustbelt suburb with Applebees and Burger Kings around and then an art gallery pops up selling post-modern art making millions a year in cash, it would stick out pretty well.
[+] [-] Hydraulix989|9 years ago|reply
Obviously, I cannot provide specific names nor attest to their veracity.
[+] [-] rdtsc|9 years ago|reply
[+] [-] lj3|9 years ago|reply
[+] [-] finid|9 years ago|reply
[+] [-] buzzdenver|9 years ago|reply
[+] [-] function_seven|9 years ago|reply
[+] [-] tempestn|9 years ago|reply
[+] [-] gist|9 years ago|reply
[+] [-] wmf|9 years ago|reply
[+] [-] tomjen3|9 years ago|reply
Alternatively, if you need to launder money continuously, you can bet on sports, but buy more than one ticket, so that no matter what who wins you will have a winning ticket from which you can claim your recent money, should anybody ask.
Disclaimer: none of the above should be taken as legal advice or used for illegal purposes.
[+] [-] buzzdenver|9 years ago|reply
[+] [-] TheLarch|9 years ago|reply
[+] [-] clueless123|9 years ago|reply
Restaurants, Night Clubs, Hostels, Gym's , Casinos, Spas, Nail shop, Food kiosks/carts/Trucks, Transportation / Buses / Taxi / Small airlines, Construction , roofing, lawn mowing ( Anything labor intensive where you pay labor with cash and overstate the profits)
And if you really want to launder big money... (Drum roll) Online university! (get paid monthly by hundreds of "people" around the country for non existing classes)
[+] [-] Spooky23|9 years ago|reply
[+] [-] shalmanese|9 years ago|reply
[+] [-] misingnoglic|9 years ago|reply
[+] [-] rwmj|9 years ago|reply
[+] [-] hannibalhorn|9 years ago|reply
Political corruption, for example, is common in the developing world - give your buddy the contract to build a road/dam/whatever, cut every corner possible or just completely fail to deliver, and if properly laundered, there's no way for the government to recover the funds.
And I don't know if anybody would go to the trouble of using a restaurant, but "asset protection" is a thing in wealthy circles, sometimes due to involvement in high risk businesses (porn, file sharing) or just being worried about an impending divorce.
[+] [-] nxzero|9 years ago|reply
Drug trade is estimated to be 1% of the global GDP, but money laundering is estimated to be 2-5% of the global GDP.
[+] [-] nxzero|9 years ago|reply
Flip side of all cash business is tax evasion; meaning the owner does not report all the gross revenue and the spends the cash in a way that it's not traceable back to them.
Another reason to have access to the cash flow of an all cash business is to launder counterfeit currency; aka someone gives you a $20 an the business gives them back fake bills for the change.
Most interesting ML method I've heard of is book on hacking public databases to create valid fraudulent identifies to launder cash through: https://www.amazon.com/Baby-Harvest-terrorist-financing-laun...
[+] [-] gist|9 years ago|reply
Exactly. For example taking money and buying expensive restaurant meals or liquor is not traceable. Or jewelry (which can be sold later). Also having home renovations whereby paying part by check and the rest under the table is also not (easily) traceable. Or paying employees in cash. I also don't buy into the idea that in actual practice banks are going out and seeing how many customers they have at their place of business other than in a cursory way by chance. Also whether they are writing checks or not, small businesses often operate out of multiple bank accounts. They could be transferring the money to an account that they use to write checks or even legitimately making deposits into multiple accounts.
[+] [-] unsignedqword|9 years ago|reply
[+] [-] Spooky23|9 years ago|reply
Embezzlement and money laundering is pretty trivial and prevalent.
[+] [-] nstj|9 years ago|reply
A more appropriate title would be "Restaurant in foreign country is used for money laundering, US officials upset".
[+] [-] unknown|9 years ago|reply
[deleted]
[+] [-] Hydraulix989|9 years ago|reply
[+] [-] carbocation|9 years ago|reply
> Actually, technology has made it more difficult to launder money. "Unless you’re using virtual currency such as Bitcoin, it isn’t easier today today than it was forty years ago," says Myers. "In reality, every bank has highly sophisticated software that can flag transactions much more easily than they could in prior years."
I don't see how Bitcoin would make it easy to launder money, since it's completely traceable and publicly auditable.
[+] [-] Retr0spectrum|9 years ago|reply
[+] [-] unknown|9 years ago|reply
[deleted]
[+] [-] tomjen3|9 years ago|reply
[+] [-] Pitarou|9 years ago|reply
But bitcoin launderers aren't really money launderers. They conceal the source of your funds, but they don't create a plausible fake source. You still need to launder your money.
[+] [-] Neil44|9 years ago|reply