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Squillions: How money laundering won

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Re: Squillions: How money laundering won

#161

Post by margalabargala »

cucumber3732842 wrote: post #155
margalabargala wrote: post #108

Earlier quoted context omitted.

Because the legal system in most Western countries is set up that the seller bears liability for laundering money if they accept duffel bags of cash for a car without the same documentation a bank would require.

This is absolutely not true in the US. Are you trying to tee up one of those "the US is not a developed country" type quips that are popular around here? A dealership may take issue with it but a private party accepts no liability by taking cash.

Firstly, I said "Western" not "developed", you need to calibrate your quip detector lest you become what you dislike.

Secondly, while it's possible to construct a private party transaction in the US where this is fine, if the person spending the duffel bag acquired the money illegally, you the seller are liable if you should have known. "Willful blindness" when accepting illegal proceeds makes you liable too. See 18 U.S.C. § 1957

Maybe I misspoke by saying you would be liable for laundering specifically, but certainly accepting that money is a crime if you have any reason to think it was ill-gotten. And that's a huge risk that no one wants to take on.

Re: Squillions: How money laundering won

#162

Post by AnthonyMouse »

alberth wrote: post #135

> I haven’t even mentioned gold, which is used all the time in criminal transactions, let alone cryptocurrency, the single biggest recent innovation in money laundering . Curious how that line is received within the HN crowd.

It seems pretty obvious that cryptocurrency can be used to transfer funds. The question is whether this is actually an innovation or just method #373453 of doing the thing that was always possible a million other ways.

Suppose someone has a million dollars in cash and wants to turn it into "clean" money in a bank account, or transfer it to another country. They pick any goods with a high cost to weight ratio and a third party sale value close to its store price, list them on any marketplace for a competitive price in the country they want the money to end up. When someone orders it from them, they use the dirty money to buy one at any retailer, ship it to buyer, get paid in clean money. When operating at scale they could even get the wholesale price for the goods and be turning a small additional profit from the operation.

What does cryptocurrency add to this? Maybe slightly lower overhead or setup time? If it didn't exist, would they actually be prevented from laundering the money?

Re: Squillions: How money laundering won

#163

Post by AnthonyMouse »

drmathias wrote: post #62
bradley13 wrote: post #60

First off, money laundering does not require cash. So the premise is a bit strange. Second, I submit that money laundering should not be considered a crime at all. Monitoring it (for example, banks required to report large cash transactions to the government) just leads to mass surveillance of innocent people. Transferring money from A to B - why should that be a crime? The point of anti-money-laundering laws is that…

AML laws enforce monitoring so that legitimate businesses have to block or report activity, assisting law enforcement in tracing said criminal activity. It's the most effective way. As the famous saying goes: follow the money. You're correct on the privacy implications. It's shocking how much data AML monitoring companies have collected about you, there's more data points than any single person could think up. These…

> It's the most effective way.

Its effectiveness is shockingly poor and rounds to zero:

https://www.tandfonline.com/doi/full/10.1080/25741292.2020.1...

Re: Squillions: How money laundering won

#164

Post by AnthonyMouse »

Gigachad wrote: post #49
Cthulhu_ wrote: post #44

Earlier quoted context omitted.

I've mainly seen it in small businesses - e.g. food vendors - but instead they charge extra for using electronic payment methods. Also to offset the costs they're making on offering it I suspect, but it does encourage people to pay with cash.

A card tx fee of around 1% is common. At 10% it’s tax evasion.

If you sell items for $5 and the card charges e.g. 2.9% + $0.30, that's >11%.

On top of that, merchants carry the risk of chargeback fraud or stolen cards, and in some industries that can be another double digit percentage by itself.

Re: Squillions: How money laundering won

#165

Post by AnthonyMouse »

dhosek wrote: post #136
bflesch wrote: post #130

Earlier quoted context omitted.

Criminals are not afraid of the police but afraid of the IRS. Smuggling and selling prohibited goods is super easy, but then you suddenly have a shitload of cash but everybody knows you as an unemployed bum without career, and they would report you to authorities if they see you in a supercar. They need a cover story and career that allows them to "earn" money without raising any suspicion. As the other commenter sai…

Breaking Bad was another show that addressed some of the issues with Walt buying a car wash as a way to try to launder the drug money although the problem was that there was too much money (thus the 55-gallon drums of cash buried in the desert).

> the problem was that there was too much money

In real life, wouldn't they just open another car wash? Even in the show, Los Pollos Hermanos was a chain.

Re: Squillions: How money laundering won

#166

Post by antonymoose »

buran77 wrote: post #107
humoctopus wrote: post #94

Earlier quoted context omitted.

My business needs to insure cash that we keep at the shop in case we get robbed, but that amount is much much less than we pay in credit card fees. In other words, we would much prefer customers to pay with debit or cash.

What about the extra costs of handling cash, the practical effort to count it, prepare it for transport (including bags, counters, and so on), transporting to the bank, increased security, possibly more cash registers, counterfeit detectors etc.? Overall is it usually more expensive to take credit cards than cash or just in particular cases?

Buddy of mine runs a cash only bar and grill.

The costs to handle cash are fairly low. He bought one of those fancy cash counters like they have at the bank for a few hundred. He also bought one of those cheap little ATMs for perhaps $500 and charges $1 to take out cash. He keeps $2,000 on hand at all times between the safe and the ATM itself. Otherwise, he just stops by the bank two blocks down the street to deposit profits. As for security, well, they just carry concealed weapons.

The ATM paid for itself in the first month, presumably also the cash counter machine. Notably they did have one counterfeit $100 come through that they forgot to scan. I suppose that’s novel to cash although chargebacks on cards also do occur.

Re: Squillions: How money laundering won

#167

Post by AnthonyMouse »

tasuki wrote: post #122
UltraSane wrote: post #115

Earlier quoted context omitted.

Dirty means it comes from illegal activities. You need to create a plausible clean source of the money before you can safely spend it.

Then I don't understand how the money from the sale of the agricultural equipment is "clean". Surely someone can think to ask: "where did you get the money to buy all that agricultural equipment?"

The value of something depends on its condition.

Suppose a piece of equipment has a market value of $200k if it's working, but only half that if it's in need of major repairs. They go to a farmer and offer them $100k plus another $100k piece of equipment for the $200k one, but instead of listing it as a $200k transaction, they specify the condition of the expensive one as non-operational and list only the $100k in money. The farmer is happy because they get to write off a $100k loss on their taxes and get the other $100k piece of equipment off the books. The other party then claims to have repaired the $200k equipment even though it was never broken and sells it for $200k, thereby laundering $100k in dirty money.

This is why attempts to prevent money laundering have extremely low effectiveness. All you need is two parties, one of which wants to get something of value off the books, the other other of which wants to get clean money on the books. They engage in an on the books transaction and an off the books transaction at the same time, account for the value of the off the books transaction in the price for the on the books transaction, and agree on a reason for that to have been the price which is plausible but hard to verify.

Re: Squillions: How money laundering won

#168

Post by bhelkey »

SkiFire13 wrote: post #151
UltraSane wrote: post #117

Earlier quoted context omitted.

I use a credit card that I pay off in full every month and I get 2% cash back paid for by interest other users pay.

Most of your cash back money actually comes from fees that merchants pay. In the US and especially for credit cards with cash back those fees can be quite high, and unfortunately it's illegal for merchants to discriminate against credit cards with high fees.

> it's illegal for merchants to discriminate against credit cards with high fees

Do you have a source for this? Often times merchants don't accept American Express because it charges higher fees [1].

[1] https://www.bankrate.com/credit-cards/business/why-american-...

Re: Squillions: How money laundering won

#169

Post by gwbas1c »

AnthonyMouse wrote: post #165
dhosek wrote: post #136

Earlier quoted context omitted.

Breaking Bad was another show that addressed some of the issues with Walt buying a car wash as a way to try to launder the drug money although the problem was that there was too much money (thus the 55-gallon drums of cash buried in the desert).

> the problem was that there was too much money In real life, wouldn't they just open another car wash? Even in the show, Los Pollos Hermanos was a chain.

What became clearer the 2nd time around was that Walter White was a horrible criminal who's downfall was that he was greedy and didn't know when to stop.

Re: Squillions: How money laundering won

#170

Post by AnthonyMouse »

gwbas1c wrote: post #169
AnthonyMouse wrote: post #165

Earlier quoted context omitted.

> the problem was that there was too much money In real life, wouldn't they just open another car wash? Even in the show, Los Pollos Hermanos was a chain.

What became clearer the 2nd time around was that Walter White was a horrible criminal who's downfall was that he was greedy and didn't know when to stop.

The show is a show. Do the real life drug cartels "know where to stop"? They basically own some countries at this point.
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