money laundering
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Common Money Laundering Schemes

money laundering
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Money laundering is a term used to describe a scheme that involves carrying out financial transactions of illegally obtained money to conceal the source of funds. In other words, it consists of using the funds received through illegal means to carry out legitimate businesses before depositing it.

For instance, John Doe – who works at an organization – steals a large sum of money from the organization. To ensure that the bank doesn’t detect John’s transaction as suspicious, he breaks the money into smaller amounts and deposits it at a different period. Thereby, he ensures the money goes undetected. However, there are various other ways money laundering schemes occur.

Money Laundering: Ways By Which It Occurs

There are various ways money laundering occurs in our society. Nevertheless, some are more common and have more severe punishment than others. Some of the money laundering techniques include:

Cash-intensive business

This occurs when a business that legitimately transacts large amounts of cash regularly uses its accounts to deposit money obtained from business earnings and illegally-obtained capital.

This type of scheme is rampant in service-based businesses such as parking buildings, strip clubs, car washes, or other firms with relatively low variable cost. Often times, it is difficult for banks to know if the cash is dirty or not. By owning a business that involves transacting a considerable amount of money, you could be falsely indicted for money laundering.

Real estate laundering

This scheme occurs when an individual illegally gets money to purchase real estate property and then sells it off. Thus, it uses this act to make the proceeds from this transaction look legitimate.

Of course, the profits realized from this transaction will be considered entirely legal because it involved exchanging value. Nonetheless, it will be taken as an act of money laundering because of the source of the money.

Trade-based laundering

Another form of laundering is through trading. This type of scheme is similar to embezzlement. It occurs when invoices or business documents are altered to conceal the origin of “dirty” money.

Simply put, it involves increasing or decreasing the amount on an invoice meant for a business transaction to disguise the movement of money. Just as in cash-intensive business, trade-based laundering is difficult for banks to suspect.

Smurfing

This is also referred to as “structuring,” It is said to occur when a large amount of stolen cash is broken down into smaller, less suspicious amounts, which are then used to purchase money orders or cashier’s checks.

The advent of peer-to-peer marketplaces has made this scheme easier to conceal stolen funds. This could take place in the form of “dirty” money moving to online merchants, which are then passed through legitimate payment ecosystems.

Casino laundering

By extension, casino laundering is when an individual spends illegally obtained money in a casino. Here, the individual purchases chips with the stolen funds, gambles a small amount for a while, then turns the chips back in for cash, and claims all the money as gambling winnings.

Gambling winnings are regarded as legal and mostly received in cash. Though some might want to view gambling winning of “dirty” cash as legal, it is considered money laundering in the court of law.

How To Protect Your Business Against Money Laundering

Credit cards

As a business owner, you have to be extra careful with the use of prepaid credit cards. If you notice customers are making large purchases on prepaid cards, consider this a red flag. Many launderers use prepaid credit cards to disguise their stolen money.

Know your customers

As a business owner, you should document the source of large purchases. Take note of regular customers who are making multiple larger transactions. You may be at more risk, especially when it is unusual.

Educate your team

There are various forms by which money laundering occurs. It is, therefore, essential to educate yourself and your team about the tactics that they happen. Fudging invoices, overestimating, and other means may be employed to hide dirty money.

Money Laundering In Houston

Money laundering is a serious crime that can have severe consequences for you, such as hefty fines and prison sentences. You might have been a money mule without your prior knowledge. If you are facing charges for money laundering, you need experienced legal counsel to protect your rights. Vinas & Graham PLLC have won cases in both state and federal courts, and have the knowledge and tools to defend you.

Contact us on 713-229-9992 or online to schedule a consultation. Follow us on our Facebook page for more information about our law firm.

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