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?
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You’ve been stealing $20 notes from your father’s wallet for a few weeks, and now have quite a stash ($100) to spend at the toy shop. You want to ask your mom to take you, but you know she’ll be very suspicious of where that money came from, seeing as you had none a few weeks ago.
So you open a lemonade stand on the front lawn. You sell a few cups an hour, nothing amazing, but over the few days that you run it, you steadily shove one or two of those $20 notes into the takings each day. Your parents are amazed at your enterprise when you proudly show them the $148 you made at the end of the week after expenses. Of course, $100 of that is your stolen money, only $48 is “real” profits. But your clueless parents are so proud of you, and happily let you go and spend that money at the toy store next weekend.
And just like that, your $100 of dirty stolen money is now sparkly clean lemonade stand money.
People have the wrong idea about money. They tend to think if money can’t be proven to be from illegal activities, it’s totally fine.
But that’s backwards. Money is assumed suspicious unless you can prove you got it legitimately.
Most people never have to worry about that because their employer submits a statement that says “yeah, I paid them X in 2021” and the IRS says “aight” and it’s never an issue. That’s your W-2. Independent contractors know it can get a little more complicated than that, but they still have receipts which should add up to their total income for that year.
If things *don’t* add up, you can’t just say something like “I found it”, there’s actual laws for reporting “found” money officially. If you don’t use them, it’s tax fraud, and if you use them repeatedly for huge sums of money, well, it doesn’t take a genius.
That’s where money laundering comes into play. You’re not actually doing anything to the money itself, you’re falsifying a plausible “backstory” for how you got the money legitimately.
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