Why is money laundering necessary?
In: Economics
Clean money is money you can account for by legal activity. I work on my buddy’s car, he pays me, I pay tax on that (yup, you are supposed to), that money is clean.
Even money that might seem dirty might be clean, I go to the casino, toss everything on black, make a killing. Again, I can account for the legal activity that is associated with that money.
I sell a kilo of cocaine, after paying the supplier, I can’t account for the profits. At a small scale this won’t get noticed, but what about when I have suitcases of money? I need a method, usually a cash business like a laundromat (hence the term laundering) where I can disperse my ill gotten gains into legal gains.
Concrete contracts, art, auto shops, etc; all popular fronts for laundering money because it can be very challenging to verify that the work wasn’t done. For example, I can’t really tell that that laundromat *didn’t* do XXX in business, particularly if it is a legit laundromat and people are going in and out of there. You might have to look at the receipts for dry cleaning, then go find the customer and ask whether they truly had dry cleaning done. Otherwise, the record is what it is. Incidentally, falsifying business records is a serious crime for this reason, among others.
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