Perhaps, you are unaware but a business is a classic way to move money. Thus, we will uncover how to clean money through a business in this article.
You can set up a legitimate business with accountable profits but use it to launder. It is indeed classic because you have better control over your illicit money which quickly gets into the economy.
In the movies, you typically find businesses such as restaurants being used to launder money. They appear like small chain businesses with a few customers but more goes on in there than you think.
The same small business could be used to move illicit funds and quickly legalize them. The government never get to find out because, as mentioned earlier, these businesses operate legally.
To launder money is a tough one but if you are going to proceed with it, then you want to set up a brick and motor business. Other cash-intensive businesses you can think of for laundering money include taxi services, used car dealerships, laundromats, etc. However, a restaurant could be the way forward.
How Does Money Laundering Work Through a Business?
First, money laundering is illegal and involves concealing the source of your illicit money. The money you want to launder is causally known as ‘dirty money’ because you made it the illegal way. It could have been through drugs, human trafficking, or even stolen government funds.
To launder money with a business means you will establish a tie between an existing or newly established business and an organized crime. The crime will look incredible as it operates under the umbrella of the business you set up, which also prevents tangible data during an investigation. Of course, you will also record normal sales in the business.
As a money launderer, your aim is to take the dirty money from whatever criminal activity and inject it into the economy so it comes clean. Clean cash means the proceeds from illegal activities are now part of the system and are legally usable.
You can use the now-legal funds to buy properties, making it look like it is your business profit.
In essence, money laundering refers to a financial transaction that involves money from crime (dirty money) or that backs any unlawful activity.
How to Clean Money Through a Business
To launder money through a business is not at all difficult. You only have to be well-organized. The business must report inflated sales and look really genuine. Below are the steps to clean money through a business:
1. Have a business
The first thing you want to do is create a business or work with an existing business. You can also purchase an existing business and arrange it just as you would for any business.
As a drug kingpin, human trafficker, or whatever crime you indulge in, you do not want your staff to know what goes on in the business. Not even your waitress, suppose you start a restaurant, is worthy to know about the illicit side of the business.
It is preferable to use an already-existing business with employees. Starting a new business might hint government agencies to raise too many questions if an investigation happens.
Again, none of your employees must know what goes on in the business except the normal sales they manage to secure daily.
2. Use a rich business
The business you use does not have to have so much money on hand. It can be a business with a few customers walking in and out but that can have a bank account.
A rich business is an ideal business to launder money. You do not want to use a front company. A front company is a company that serves to disguise and conceal illegal financial activities but operates like a legitimate business.
Typically, a front company has no physical address, uses generic email addresses, its invoices does not mention owners, websites, etc., and it uses partial signatures, initials on invoices and contracts.
You need a business that the IRS or FBI will not suspect if they stop by. For example, if the IRS picks your business as their random target, they walk in and meet many customers walking in and out, they think your income is justified.
3. Take the dirty money to the bank
If you can take the dirty money to the bank without raising a red flag, then your money laundering using a business is successful.
For instance, after selling drugs, you want to convert the dirty money into clean. You have a business running, let us say a restaurant.
You collect sales receipts every day or weekly and make deposits at the bank. However, you mix a huge portion of the proceeds from selling drugs with the legitimate earnings from your business and deposit them in the bank.
Depositing the legitimate and illegitimate money in the bank will be something you do regularly. You want to ensure to keep the deposited funds within 10 percent of the same amount always so that the bank is not suspicious.
4. Legalized Laundered funds
You have beaten the bank now. They think that your business since it is a restaurant, for instance, can have so much cash in hand. They think the funds result from daily alcohol and food sales.
The deposited illicit cash is taxed or you use to buy properties, including cars, homes, etc. The illicit cash is now legal and nobody is suspicious because you own a business that generates real profits.
What Kind of Businesses Launder Money?
Businesses that are used to launder money are those with high volumes of cash. For example, used car dealerships, restaurants, laundromats, and taxi services.
Many money launders start restaurants to launder money because it involves high cash volumes. You do not need a business that uses wire transfer, cashier’s check or credit card, you will get caught. You need a business with lots of cash turnover so that the transactions are not traceable. This means you can report falsely and get away with it.
A restaurant is one such business with a high cash turnover. It is a cash-intensive business you want to start or buy one to launder money.
If you run a business like a restaurant and then take a large amount of money to the bank, it does not trigger a red flag. The bank can tell the money is coming from the restaurant business. Even the IRS cannot establish your true profit if you mix real sales proceeds with your dirty money well enough.
Nonetheless, a restaurant is not completely an oversight. For example, if you report that your restaurant is always a full capacity but the feds check in and no visits in a few weeks, it is a red flag. The feds will not listen to you.
Do Banks Report Money Laundering?
With technology, banks are able to intercept money laundering unless you use virtual currency such as Bitcoin.
Many banks use highly sophisticated software capable of flagging illicit transactions. Banks also use anti-money laundering units to constantly check financial violations in their respective institution.
A bank will typically cross-check names with what they have on OFAC (Office of Foreign Assets Control) lists. This list features organizations that have been questioned for money laundering in the past.
Also, a bank employee can detect a decent business suddenly booking more profits without using existing money to grow the business.
For instance, a bank can check if a business is writing much less to distributors despite being a million-dollar business. It is a red flag that leads to an investigation.
If you pay the vendors in cash, it is also making the bank suspicious and they will come at you. Banks do not want to be accused of aiding money laundering.
How Not to Get Caught Laundering Money with a Business
It can be difficult not to get caught laundering money with a business. The feds may not be the problem but the banks can be the major problem and the first to notice it. Again, banks do not want to be accused of aiding money laundering.
Most big banks and community banks know their customers. A bank can inspect your revenue when they have a relationship with you. If they are suspicious of your funds, they will check up on your business to know if the number of customers justifies the earnings.
Meanwhile, the money limit that prevents suspicion is $10,000. The Bank Secrecy Act mandates banks to file a report for withdrawals or deposits that exceed $10,000 in cash.
Therefore, to be a successful money launderer using a business, you must deposit or withdraw funds below $10,000. It can be $8,000 or $9,000 a daily in cash.
Unfortunately, your bank knows that you will try to bypass the system. So, if you try to make deposits of $8,000 and $9,000 per day, they will file a report.
Despite the many ways to avoid getting caught laundering money under a business, launderers still get caught.
Perhaps, going the old-fashioned way can keep you from getting caught with illicit money.
You can travel to the casino yard like Vegas with your laundered money. Buy and sell about $8,000 in as many casinos. This is a process of washing the money.