How does money laundering works in a small business for a high profit criminal activity?

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How does money laundering works in a small business for a high profit criminal activity?

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Criminal organization has ill-gotten funds they don’t want to be traced. So they make a business for some service and record transactions for services that may never actually be provided. But they record these transactions to provide documentation that the money “earned” by the business was legitimate, even if it was actually obtained illegally.

For example, say they own a dry cleaning business. The business may record it did $10,000 in a day when in actuality, it did little or no business. However, the organization puts $10,000 of their ill-gotten funds in the bank under the business’ name, and thus if investigators try to look where this money came from, it appears as if it is simply profit from the business.

Also, if you have an in with the Lottery Commission, you can win the lottery like Whitey Bulger did a few times.

Say you’re a fairly high up distributor of illegal drugs. You earn $250,000 a year in cash. If you keep the cash in your house you’re a massive target for robbery. If you deposit it, that will raise real red flags with the bank, the police, and the IRS on where someone with no apparent job is getting so much money.

So instead, you buy a small business like a pizza place that has most of its income in cash. Then the cash you get from illegal activity like drug distribution you just claim as money earned by the pizza place. As far as the bank or IRS is concerned, you own a pizza place that earns $250,000 a year, and there’s no sign of anything illegal. (You might have to pay some taxes that way but it’s much safer than holding cash or depositing huge sums of illegally obtained cash with no explanation.)