Which businesses/industries can easily and efficiently launder money? [closed]

Question

In a world roughly like ours, I have $millions per year, variable, in illegal income that I want to launder through a legitimate business.

1. I want to be able to scale the business up and down to fit cash-flow over months/years,

2. obviously I want to not waste too much in overheads (this is a lower priority), but it is critical that

3. if the authorities start to ask where the money ultimately comes from, the question can be plausibly answered or else be innocently unanswerable.

The most obvious business front, to me at least, seems to be a casino. (Arbitrary amounts of anonymous cash comes in, arbitrary amounts similarly paid out.) Another idea is something like diamond mining,(assuming I can easily and anonymously buy rough diamonds for cash), but this less preferable because it takes a large upfront investment.

What other businesses/industries are well-suited to this task?

Answer 1

Give me that Old Time Religion

Churches are your answer. Start a religion so you'll be tax exempt. Any real donations you get swap with the blood money, which then goes to actual charity work, building homeless shelters, food drives, etc. You'll generate good will, clean your money, and who would suspect? Plus, did I mention tax free, in the US at least.

Answer 2

Anything that launders money is going to make it look like legitimate income; so generally speaking you are going to have to pay taxes on it if you do this in the USA. There are better places to do it -- but a good and scalable way of laundering money is just through the use of legitimate casinos, sports books, etc. You will be playing the odds; you need an honest vendor (like a Vegas casino) and bet (yourself, or through flunkies) on the close to even bets. The casinos take cash, even stacks of hundreds, and give you chips. Put the money through the 50/50 grinder one time (pass/nopass on the craps table is the closest I think). I've seen \$5000 on the pass line. I have also seen \$10K bet on a single basketball game. The house edge is somewhere between 1% and 5%, a more than reasonable fee for laundering. On average you end up with what you began, minus that fee. But in chips. Which you can cash in. But you have to think like the casino itself: A big loss is not a big deal, you will balance it out in the odds in the long run.

So the business you are starting? Professional gambler. The con is, you pretend you win more than you lose.

If anybody asks where the money came from, you don't know, you've had it for as long as you can remember. Nor are you obligated to keep records of where you gambled when, or how much you won or lost: You may have to pay taxes on your fake "winnings" at the end of the year, but you are not required to provide any details of where or when you won it: Just that you won it, and it exceeds the taxable amount.

The point of laundering the money is so it cannot be traced back to you. At least in the USA, if the money is not marked or traceable by serial number, then you can just declare it as income and pay your taxes: The Fifth Amendment protects you from having to provide any specifics on how the money was acquired, including if it was illegal.

Another reason to launder it is to have a front, so no particular scrutiny falls on the criminal, but the professional gambling angle would cover that.

Answer 3

For your fictional setting, take some real world money laundering concerns. I trust that this is fictional, otherwise you'd be stupid to ask some random amateurs on the web ...

• A business which deals very much in cash. Lots of small payments, so it can be explained why there are few card payments. A real estate broker would have problems because most money moves by wire transfer. A small grocer would be better, except for the next point:
• A business where much of the value is added by manual labor, not by resale of goods and services which should have come with a paper trail. So instead of the grocery, where cash income must be balanced by real goods being moved, make it a hairdresser where workers bill fictional hours for fictional customers.
• Don't put the business in a back alley. To explain the high cash flow, it needs to be on high street. If the cops start a stakeout to actually count customers, presumably you'll notice.

Alternatively, place bets on non-rigged sporting events where the odds are roughly predictable. On the long run, over many modest-sized bets, the losses will remain affordable.

Answer 4

Open a bank

The best way to hide something illegal is to mix it in with something very legal. Essentially, you're mixing in a small amount of illegal items with a large amount of legal items. We can apply this principle simply enough. It seems that you have a large amount of money, probably in the form of cash. Where can you find a lot of cash? In a bank.

Therefore, the simplest choice is to open a bank. Wait a while and accept plenty of legitimate accounts from ordinary, law-abiding citizens. Then all you have to do is set up a bunch of smaller accounts; this is called smurfing. Better yet, use a large system of agents - unknown to each other, known only to you - who open accounts in their own names. Put in a small bit of legitimate money, then add the illegal money, distributed widely. Each agent keep some of the money, and you keep some. Everything looks legitimate, and if one agent is caught, it may be hard to find the others.

This does open up plenty of possibilities down the road. The repeal of the Glass-Steagall Act allowed investment banking and commercial banking to come together again, so you might be able to use the funds for legitimate investments through your bank.

Answer 5

The best (IMHO, of course) way is to set up one or more companies working for the State, mainly in construction and maintenance.

You can easily win contracts bidding lower than other "legitimate" companies because you don't really want to get money from there, You want to pay with "black money" as much as possible, while getting back very clean money directly from the mint itself.

Viability of this scheme depends on how strict controls are on the way You pay Your workers, but in most places they will accept a steady trickle of "tips" not showing in official registers (and they know they would lose a lucrative job if slip).

AFAIK this is actually used in many, very real, countries.

Answer 6

Rock Band.

Grab some random musicians/singers. Throw together a band.

Become their manager.

Bands are expected to have a messy economy. Books, what books? We have this suitcase full of cash. Not sure where it came from. Probably the place we played last week. Or was it this week? Springfield, I think, not sure which state.

Answer 7

Anything where lots of untracked money goes in is a suitable business, better yet if the actual work of the front company can be hidden away.

A good example is the Breaking Bad series (if you haven't seen it, do so :-D ), where the main character, Walther, uses a car wash as a money launder for the money he earned on his & his partner's methamphetamine sales.

A Car wash is potentially a good front, as you can easily pad a few extra customers on the monthly reports. Nobody (not even the IRS) can prove or disprove (without constant supervision of the front business) that laundering is taking place...

Now, in any case, you'll need clean money to start the business (eg. a bank loan, or any clean income source.), and you'll need the following:

• A person to run the business day to day
• A number of people to come in with dirty cash
• A way (or a number of ways) to have the dirty cash flow into the register (eg. useless car paraphernalia, fake antiques) and possibly a way to recycle these wares.
• To attrach REAL customers (the more the better, in order to hide your own "customers")
• A location where REAL customers will visit (Opening a massively successful carwash in Bumfuck, Indiana (population: 3) will most probably turn on a light at some of the Acronymic Agencies out there)
• A Scapegoat (Your Plan B)

We'll use Walther White's car wash as the first example:

1. I want to be able to scale the business up and down to fit cash-flow over months/years,

Most businesses, including before mentiontioned car wash can scale up or down... In this case, you can open other departments elsewhere. This is relatively easy with, say a car wash or a pawn shop... You can upscale or downscale your work force or warehouse as you go along.

With a casino, this is more difficult, not only do these places have A LOT of overhead (security, teller and dealer pay, not to mention power and operatin costs), but you cannot scale the business in the same way (you always need security, tellers and dealers for the business to run)

However, there's no way to do this quickly without waking suspicion... crooked or not, a business needs to be handled with care if it's to be successful.

2. obviously I want to not waste too much in overheads (this is a lower priority), but it is critical that

Again, this is a matter of common sense. At best, you need to have your business going well, or need to get there quickly.

One way is to invest in a business that is already going strongly, but here you'd have to aim for complete ownership. A popular way is to buy up assets and warehouse stock from businesses that have filed for bankruptcy (which can be done quite cheaply), and opening something new from that. A third way is to "buy" permission to use an existing operation from another crook, however unsafe this may be.

Walther's car wash employs only his wife (Skyler) and a few guys for customer service. Most supplies are bought bulk and are relatively cheap (car soap, water, car paraphernalia)

3. if the authorities start to ask where the money ultimately comes from, the question can be plausibly answered or else be innocently unanswerable.

Any business where most people use cash for their transactions, you can get away with "most our customers use cash". Cash CAN be tracked (provided coins/notes have serial numbers), but you CANNOT track everybody along the chain like you can with account transactions or credit cards.

As long as you process the cash normally (write it down as customer sales, and go to the bank with it as normal (ie. NOT suddenly depositing $500 grand for your little shop) and filing it properly with the IRS), the IRS & co. cannot prove or disprove where the money came from...

In your case (millions of dollars a year), your bunch of criminals would most likely have a small "network" of assorted money-laundering businesses. A variety of different businesses makes the system stronger; not only can they help with masking the illegal money traffic by conducting normal trade, the system will also be less susceptible for being shut down (like a chain of casinos or car washes). A varied portfolio of front businesses (especially when owned by different people) also gives your organization the possibility of using the locations for criminal purposes (say, for cooking meth), and another trump card for others in the network ("I didn't know")

(ps. not meant as an education in money laundering, only giving OP some options to work with)

Answer 8

Hotels, motels, etc.

Other businesses which create or resell a product, have a long paper trail of having to buy the ingredients, so it is easy to inspect how many products they could have manufactured.

However, if you have a large hotel, who can tell if 10 people or 100 people slept there last night? Yes, guests have to be registered nowadays, but it is easier to fake that than to fake shipments of raw materials.

Answer 9

A business that has high flow through and small profits would be ideal. The additional money would look from an accounting perspective as just a slightly better profit margin. Put a little work into fake invoices so there is a paper trail for the money and then do the tax accounting honestly and it would be hard to detect.

Even better if the business is largely cash, so having sackfuls of money show up wouldn't be strange. I read a crime novel where the bad guy used a car repair place in a poor neighborhood as the vehicle to launder his drug profits. From the outside, the place just looked like a well run small business that had built a loyal clientele. Actually the car repair part was not that great, but the drug profits were easy to surface through it. After that place got too small to deal with all the cash, the bad guy bought a car dealership.

Answer 10

International money transfer shops and coffee shops.

Both handle large amounts of cash, specifically for international transfer with not a lot of questions asked about where the money comes from or where it's going.

Unfortunately the police also know this and they used to get shut down as fast as new ones sprang up in their place when I was living in areas that considered it part of the traditional business.

Answer 11

Pay illegal workers.

Have a legitimate business where labor makes you money; like construction, resource extraction or menial service. A certain percentage of your workers will be expected to be illegal and to avoid official counts. Pay optionally in cash by the day and under report how many workers you have by about the same amount. On paper it just looks like your legal workers are efficient.

This might allow you to take advantage of the traditional profits of using illegal workers like underpaying, lack of benefits and lax worker condition standards. This also gives you a cover of sorts since there is an obvious reason for a money discrepancy (covering for illegal workers) that is often somewhat accepted in those industries.

Answer 12

Any cash only business would be a great way to start. You could follow the car wash example posed by JamesD but any business you could automate would work as well.

As a real world example I live above a launderette... wait I promise this is going somewhere!

The launderette is un-manned and automated, people walk up to a control point, put in coins and the washing machines start. I believe my landlord owns around 20 similar outlets around the city I live in and each one requires one staff member who comes to un-lock in the morning and cleans and locks up in the evening, probably paid minimum wage or near enough for 2-3 hours a day. The cash is collected by the landlord on a weekly basis. A similar business model spread over a number of sites could easily be used to launder money into "legal" income, sure there would be set up fees but once they are paid you're pretty much set up to just get the income provided by the business alongside your laundered funds.

As a rough example to estimate the viability of this:

1. Each spraff Laundry co. location has 12 washers and 12 dryers
2. Each washer or dryer costs 6 USD to run for 1.5 hours
3. spraff Laundry co. locations are open from 0600 to 2200
4. The launderette is open for 16 hours a day, with the machines running 1.5 hour cycles you can get around 10.6 cycles per day out of each machine. Let's round down to 10 to make things easier.
5. 12 washers and 12 dryers each running 10 cycles a day gives 240 cycles per day total.
6. 240 cycles per day * 6 USD per cycle = 1440 USD per day for one launderette.
7. Say you have 20 locations that gives you 28 800 USD of potential income per day.
8. Multiply by 364 days/year and spraff suddenly has 10.4 Million USD per year of cash revenue which he can explain in whatever way he wishes.

I think this could be a very viable solution to your laundering problems, it'll clean your clothes too.

Answer 13

To reuse am idea how about a car wash

http://breakingbad.wikia.com/wiki/A1A_Car_Wash

Cash payment, invent customers and push the money thorough that way :)