Do the laundry effectively!

What is money laundering?

Money laundering is the process in which illegally obtained money gets integrated into the financial system. This process hides the origin of the money and makes it “clean” to spend it freely.

Why is it important to wash it?

It’s important to wash it to save the money in safe places like bank accounts, to move the money more quickly around the world and to NOT raise suspicion around authorities while spending high amounts of money without having to justify its origin.

There are many methods to wash it effectively, so in this newsletter I’ll briefly explain to you some of the most popular methods.

The three phases of money laundering are: placement (depositing money into the financial system), layering (moving money through complex transactions to make it difficult to trace), and integration (getting 'clean' money into the financial system to be spent without raising suspicion).

1. The Smurf method

It consists of dividing large amounts of money into several smaller transactions, below the limit of $10,000, to prevent banks from reporting to the authorities and thus avoid raising suspicions about the origin of the money.

Bad thing about this method is that you’ll need lots of bank accounts, meaning lots of people involved; And you don’t want too many people involved.

2. Through businesses that handle a lot of cash

This method consists of mixing illegal money with legitimate money generated by businesses such as bars, restaurants or laundromats. These businesses, by handling large amounts of cash, make it difficult to identify the proportion of illegal and legal money, which allows money to be laundered in a surreptitious way.

The main risk is that the reported profits are not consistent with the type of business. If an empty restaurant reports large profits, or a laundromat with few customers reports excessive income, authorities can detect irregularities and begin an investigation.

3. Comerce based method

This method is used by criminal organizations to move illicit money between countries by buying and selling products at over-invoiced or under-invoiced prices. Money is 'laundered' when business transactions are made to appear legitimate, hiding the origin of the dirty money.

4. The Casino method

In this method, you buy casino chips with illegal cash, play a little, and then withdraw your winnings or request a check from the casino. To avoid raising suspicions, transactions are divided into several smaller purchases, using multiple casinos and games.

5. Avoid tracking

To avoid money tracking, shell companies and transactions in countries with strict banking privacy laws are used. Funds can also be moved across multiple countries and accounts, creating confusion about the origin and destination of the money. Always try to make as many obstacles and zig-zag ways as possible so that the origin gets lost.

Obviously, there’s a lot of work behind all these methods I’ve mentioned. This is just the main information, but if you are planning to do the laundry, I’d recommend you to research more deeply about this topic.

Stay hard.

-Samara B.