Money laundering made simple

Money laundering is done in a variety of different ways. A few of the methods, which we outline below include structured deposits, using banks and shell companies.

Structuring deposits

The Bank Secrecy Act of 1970 requires banks to report any deposits exceeding $10,000.01. This is not a problem for most of us, but it’s a big barrier to money-laundering criminals looking to rid themselves of some cumbersome currency. To work around this pesky law that attempts to deter money laundering, launderers will hire low-level lackeys to make multiple small deposits, either on different days or at various branches on the same day. It’s a complex, time-consuming way to launder money, and one that has been rendered even more difficult by computer algorithms that look for suspicious deposit behavior and raise an red flag when one is found.

Banks

Far more exciting and global in the practice of money laundering is the use of offshore and overseas banks. Nations like the Cayman Islands, Bahamas and Panama are very accommodating to criminals looking to legitimize their cash; these nations are unrestricted with regards to burdensome banking laws and anti-laundering procedures, which ultimately helps hide the launderers behind strict veils of secrecy. Opening accounts in a number of these offshore accounts allows launderers to move their money around and create a nearly impenetrable defense against curious investigators.

Some countries (China and Pakistan among others) have a history of well-established underground banks that have been accepting deposits from sketchy clients for centuries. They legally operate outside of the mainstream banking system and outside the control of the government. There is often no paper work, just the reputation of the principals involved. Of course, knowing that you will likely be tortured and killed if you misplace the money is a good source of collateral.