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.
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‘Money laundering’ refers to a practice where money acquired illegally is made to appear as though it were acquired legally.
So, for example, drug dealers run a business (sometimes completely fake, sometimes real) and manipulate its records so that money they made selling illegal drugs appears to have been made as profit from the legal business.
It’s a metaphor: “dirty” money becomes “clean”.
If criminals don’t do this, they’ll accumulate lots of money that they can’t account for and law enforcement and tax agencies will start asking awkward questions. That’s actually how they caught Al Capone – not by finding clear evidence of his participation in violent crime, but by charging him with tax evasion as he tried to conceal the existence of the money he had from his criminal activities.
If a shop doesn’t attract enough profitable business to make a profit and stay open, yet it remains open, people will often suspect that it’s being run for the purposes of laundering money. Proving that a business isn’t actually doing enough business to keep from going bankrupt is hard, though, especially because many businesses have trouble when starting or operate at a very narrow profit margin.
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