Can you give me an understandable example of money laundering? So say it’s a storefront that sells art but is actually money laundering. How does that work? What is actually happening?
In: 18668
Money laundering has 3 phases: placement, layering, and integration.
Art often falls into the layering and integration phase.
First step, placement – that means you need to get illegal money, often cash, into the financial system. Common ways to do this: cash intensive businesses (laundromats) and selling illegal money to someone at a discount.
Second – layering. Now you do a bunch of legit transactions to confuse the trail of money in the hopes of getting it out as legit funds. Let’s say you, a mobster, own an art gallery. You sell a piece of art worth garbage for $1 million and buy it with your newly “placement”ed money. Now you have legit art you can turn around and sell at some point for likely even more legit money.
Last – Integration: now you sell that art, you get money that’s absolutely legit and you pop it into your Schwab account.
This is a simplified version, but should help.
Source: I’m in finance.
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