In the UK it is widely ‘known’ and accepted that the sweet shops and phone shops on places like the famous Oxford Street are fronts for money laundering. Can anyone explain to me what money laundering is and what these shops are actually doing? How do people know these shops are doing it? I don’t understand.
In: 1554
There may be multiple scams going on in them at any time, not just money laundering. The basic concept with money laundering is that if you somehow acquired some money but do not want to tell the authorities how you got that money you need to come up with a good excuse. Money laundering is basically coming up with an excuse for why you earn money. Cash only businesses are very good at this because the “customer” might actually be the owner paying with their illegally gotten cash.
For example a shop may buy candy and then sell it at a huge markup. Nobody wants to buy the candy at this markup but you still mark it as sold and then use the cash to fill up the till as if you sold a lot of it. On paper it looks like you made a lot of profit even if you are at a loss. Then you might for example run a “buy one get three” offer which brings your prices down to normal levels or even cheaper. When people buy candy you just put one of the three into the register and take the other two from the pile of already “sold” goods. Or possibly you register all three but then put in two of them as paid in cash, which you get from the stash of illegal cash.
In addition to variants of these you can also pay someone to give you a receipt that they sold you some cheaper candy. But in reality you buy real candy with cash. The import might help you hide the paperwork a bit better. You then sell the real candy for their full price but tell the authorities it is the cheap wares that you were selling for a huge markup.
In general these money laundering schemes are losing the owner money. Not only does it cost to own and operate these stores and even sell products at a loss but they also needs to pay taxes on this fake income. But the entire point is not to earn money but to make it look like the money you earn are legitimate so you can actually use it. The authorities will question someone without any income or savings who just bought a big house and fancy car. However if they can show that their high street candy shop is making crazy profits then everything looks to be in order.
Latest Answers