1. Casino Gambling
What better way to launder money than declaring your winnings at a casino? Simply bring illicit cash, convert them into chips anonymously, play for a few rounds and turn the chips back with a receipt, claiming the final chip amount as winnings.
Whenever a very huge sum of cash is involved, the laundering process in the casino can be sped up using multiple players on a table. An example is when two partners play at the same roulette table, where one player bets on all reds and another on all blacks. As long as the outcome is not zero or double zero, one of the players wins the bet and the amount won from another partner becomes legit winnings. Again, losses will be hidden while ‘winnings’ will be converted back with receipts.
2. Mixing Funds In Legitimate Businesses
Another common way you can use to legalize illicit funds is by setting up various businesses that exist for the sole purpose of blending dirty money with legitimate incomes. While the companies set up are legal in nature and can operate like ordinary businesses, they can overstate their income, which comes from over-invoicing to allow inflow of ‘dirty’ money. Businesses that are on cash basis like nightclubs makes the inflow even more difficult to trace.
Shell companies that are set up without any significant assets or operations can also be used for money laundering. These companies simply create fake transactions similar to normal businesses to allow inflow of cash. The funds can be cycled in a few more companies before reaching your pocket as legitimate cash.
3. Smurfing Funds
Owing to banks that have anti-money laundering procedures, you face a barrier to transfer large amounts of money through banks. This is where you can try smurfing or structuring. This practice requires you to hire many short term employees to make multiple small deposit into multiple accounts in several cycles before ending up in your account again, either in offshore accounts or in shell company accounts.
This method might take some time to launder if the amount is huge as transfers are done in throughout multiple days to avoid suspicion. You also have to be meticulous enough to transfer those funds several times through foreign exchanges and conduct transfers to banks that maintain high levels of secrecy like the Swiss Bank.
4. Flipping in Real Estate
Money laundering makes use of wide networks to perform multiple transactions with different names and accounts. One example is allowing illicit money to flow through real estate transactions. You can purchase a property or land from a seller but understates the purchase value in paper. The seller then agrees to receive the difference between the actual purchase value and paper value under the table.
The purchaser then “sells” the property to another partner with a much higher value. The difference between the sale price and purchase price then becomes clean money earned from property flipping. It's important not to attempt this and always go the legal way and apply through a home loan
Money laundering has an immense impact on everyone in many ways. We ought to think that it has nothing to do with us, but this activity hurts the global economy badly. It funds and supports smuggling, human trafficking, drug businesses, and even weaponry purchase and aids transfer to terrorist groups. The processes are all done so effectively, often with the help of professionals like lawyers, economists and bankers without leaving a trace (in fact, these cases rarely ever get caught).
Smuggled items are sold much cheaper than those sold by legitimate businesses, thus destroying and hurting revenues. Illegal gains also effectively escape from taxes. The list of negative impacts goes on and on!
We may seem too powerless to combat this activity but what we can do is, at the very least, not supporting them in as many ways as we can. An immediate way is not to follow the tips in this article and prevent any practice of money laundering itself! We hope you enjoyed this article and stay tuned for more.