What are the Different Types of Money Laundering?
Money laundering is a way for criminals to hide the cash proceeds of their illegal schemes. There are several ways to do this. They include using shell companies, small bank deposits, and regular, consistent bank deposits.
One of the most common ways to perform money laundering may be creating a shell company or business. This type of business is usually set up so that it is difficult to monitor cash flow. Businesses that provide services instead of selling physical goods may be able to circumvent the need to provide receipts or reports of money gained and spent. The business would typically be one in which accepting cash as a form of payment is not uncommon. Examples may include mechanics, landscapers, or hairstylists.
Instead of creating a shell company, an alternative for money laundering may be to invest in a legitimate business, such as a casino or bar. The launderer can combine his illicit funds with the real income of the business or use the company's bank accounts to conceal the funds.
Another method of money laundering involves making steady, consistent, legitimate deposits at a bank before the actual laundering occurs. This helps to establish a track record for the individual or business, so that when a similar amount of illicit funds are deposited, no suspicion is aroused.
Bank tellers are usually trained to be aware of very large deposits and withdrawals. In the U.S., for example, transactions involving amounts over $10,000 (USD) must be reported to the Financial Crimes Enforcement Network, or FinCEN, as “significant cash transactions.” To avoid such detection, it is generally a common money laundering method to make small deposits and withdrawals across several bank accounts. This method is sometimes referred to as “structuring” or “smurfing.”
Other money launderers may use offshore banks, or banks in other countries, to avoid detection in their own country. In years past, Switzerland was often considered an ideal source for storing laundered money due to its stringent secrecy laws. Due to pressure by the U.S. government, however, it is now easier to keep watch over transactions that occur at Swiss banks. Other banks that may be used in money laundering can be found in places such as Hong Kong, Aruba, Ghana, and other countries.
Rather than make deposits in legitimate banks, some money laundering schemes use "underground" banks. These banks are not investigated by the government, and leave no paper trail. Such banks must therefore operate on a trust system among those who use them. Two underground banks include the Chinese “fie chen” system and Pakistan's “hawala” system.
I was given money to me by a guy that he is with the lottery from a state he says he lives in. He sent it to me in my state and I had to send him a sum back. Before then, he said the rest was mine, and before then I was sent 2 cell phones and they had to go to one state and one had my number on it and the other one had a different state.
Then the one said where it was going to and when I sent it to the states he told me to send them, he sent me a blank check and I had to fill it out. It was money and I found out it never had his name on it and I shared my personal banking account and routing number and gave him my phone numbers and e-mail. Can I get him into trouble too, as well as I can to be into trouble for not doing as he asked me to do?
I have an e-banking account, so I actually have to do all my transactions at the ATM, and also I don't get personal checks (I could, but I would have to pay for them so I just don't bother), but if I ever need to send a check, I will just go to Wal-mart and get a money order. It's really easy; I just give cash and get the money order.
Then there have been times where I decided not to send the payment so I just made it out to myself and deposited it into my own account. That seems like a way you could get cash into banks, but I don't know -- my account is usually overdrawn.
My sister is currently working for a person who lends money to employees with ATMs. She found out that the money she lends to people was not taxed. Is is illegal? If so, what is the offense?
@ Fiorite- The Government actually makes it easy for people to get around this type of dilemma. You can still legally claim the money without being in violation of any money laundering compliance laws. The person would simply need to file a schedule C for business income and file under the broad category of artist/performer. These categories are very broad, and as long as you are paying taxes on the earnings and the earnings are legal the person should be fine. I am not a personal tax attorney, but I went to college, and I used to have a roommate who was a dancer.
I know there are many different money laundering rules and regulations, but I have a question about how to claim money that was earned legally at a job that someone does not want on a background check. Say for example someone is an exotic dancer, but is also a student trying to become a lawyer. The simple way to keep it off the background check is to give the club a fake name, but how does a person make that money legal in the eyes of the law without claiming the tag exotic dancer? How do you pay taxes on the money without raising flags for money laundering?
I had a friend who worked at a bank and she said it was common for the bank to track and report transactions for two or three thousand dollars instead of the customary ten thousand. She said it has been that way since the new laws on terrorism were formed a few years back. I don't know if this is some type of secret law, but I assume that someone trying to launder less than ten thousand dollars can be equally as detrimental to society. Someone only trying to clean $5,000 could cause a lot of problems when the money laundering is for terrorist financing.
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