Pardon my ignorance, but I always wonder how these money laundering kebab places work. We have some in my city too and they always leave me puzzled. If nobody eats there, how do they launder money? I'm probably daft/naieve but can't figure out the mechanics of money laundering when the business doesn't actually move any product.
The point is generally to recover cents on the dollar from money you can't otherwise use. Imagine you have a network of people moving illegal drugs. They collect money from their customers, and they need to pay it to you, the supplier. Arrange for them to eat a lot of food at your restaurant. Maybe they shout their friends. The money goes into the restaurant, and is mingled with other money. That money is used to pay costs for the business, but some of it is still profit. That profit, while less than the illegal input money, is _clean_ money, which is much more valuable because you can spend it without fear generally.
It's really just about making it harder for law enforcement folks to draw associations by looking directly at the bank accounts of several people they suspect are in cahoots. Or, in some cases, about making it harder to trace specific cash serial numbers or other instruments like cheques.
I recall reading of a crime outfit in Australia that would have the elders in their family take their illicit cash and use it to place an endless stream of bets on poker machines. By law they're required to return some high percentage, say, 75%, of the money put into them (the house keeps the rest). If you gamble tens of thousands in those machines, and you don't care about the losses, you get a reasonable expectation value back out as laundered winnings. In that case you don't even have to own the pub with the pokies, that's just how they work.
You don’t need them to eat kebab. Just put on your books that you sold a lot of kebab. Do it in cash. Buy some meat and throw it out if you want, and you’re fine.
they only throw out the meat on the books: mark it as unsellable and deduct it as shrink.
in reality it just goes home w/ the business owner and/or his people -- sometimes the same day as it's bought. drop off a couple kilos of unsold doner kabab meat to his mom who is retired, hand some out to uncle, etc.
it's hard to trace, and hard to ID -- just some random meat in an old lady's freezer, and may have already ended up in a stew or something -- and in theory should have been disposed of (in theory) anyway per health code regulations.
> If you gamble tens of thousands in those machines, and you don't care about the losses, you get a reasonable expectation value back out as laundered winnings.
Where does the laundering come into it? If the machine pays out in cash and you just walk away with it, you've gone from having a big pile of dirty money to having a slightly smaller pile of dirty money. You could declare that the smaller pile is all gambling winnings (off of a low base), but as soon as that gets audited you have to refer the auditor to the casino's security cameras and there you are spending a lot more than you got back.
You could ask the casino to make a formal declaration that your smaller pile of money is gambling winnings (maybe it's chips!), but why should they lie for you?
And if it is chips, you had to buy chips originally. How do you explain how you afforded those chips?
You are overthinking all this. This is not Al Capone investigation, tax offices are understaffed and petty negligence or even crime happens with tax returns very frequently. You think taxmen are going to investigate endless hours of video feed from some casino via court order for some 10k win claimed in taxes? Not sure if casinos even keep all video feeds for say 3 years since it takes time to actually file and process those tax returns.
If you are not big enough fish or have some bad luck, you can slip through quite easily. The key is to keep it down money wise, spread it across many places and random dates. You can't do big sums alone, hence the grandpas in parent comment.
Basically, small crime these days, at least in Europe, is not punished unless you literally steal from police personnel. And if you do it well you can hide bigger crime in sea of small crime.
Maybe AI could help with some of that, but I see often lack of any interest by police to even care that ie your 700 euro phone was stolen, even if you still know its exact location in specific house. No AI is ever fixing that.
You can say whatever you want if you assume you can't be audited. In that case there's no reason to play the slots at all. Your money will stay just as dirty in either case, but you'll have 30% more of it.
The problem I see with the casino "strategy" is that, as soon as you are audited, your story immediately falls apart. That's a terrible cover. Who needs a defense that can never be penetrated as long as it's never attacked? The idea of laundering is to say something that's difficult to disprove.
> You think taxmen are going to investigate endless hours of video feed from some casino via court order for some 10k win claimed in taxes?
If you have a thousand of them, yes. If you have one, it was a waste of your time and your money to pretend to launder it through slot machines.
Yep. A classic movement (at least on Spain) is buying winning lottery tickets.
You locate people that have winning tickets and offer them certain percent of money over the prize value. For example, if it's a 10K prize, you offer 12 or 13K. The ticket owner gets dirty money and avoids paying taxes on the prize (so they get 40 or 50% more than they would have got with the ticket). The other side gets clean money.
When dirty politicians get audited they find how "lucky" they are, having won lottery tens of times in a couple years or three. What an statistic oddity, huh? ;)
A bunch of computer games have had very restrictive rules about getting money back out of the game that other people have put in.
Because if you overprice something in a video game someone might buy it anyway. Because who’s to say the price didn’t spike high for some real world or in game event (like a holiday, a new challenge opening, or a voice actor died and everyone wants to dress like their characters). If you can turn the in game currency back and forth to hard currency, then you can sell a $5 item for $500 and walk away with 90-99% of the value (depending if the company charges a transfer fee).
<cough> Counterstrike skins and gambling websites <cough>
Except the joke there is, you never even have to pay out! Gift cards to various tradeable "assets" are a reliable way to launder money, or more directly, launder stolen credit card details into usable money.
Requiring your henchmen to eat a lot of Kebab all the time is not at all a scalable money laundering scheme. It's also self-defeating since they will become fat and sickly from too much Kebab :-(
The more common thing that comes up in hypothetical conversations of the sort “you acquire $5M through less than legal means. How can you spend it?” is owning a bar.
Buying the liquor gets a bit fuzzy as to where the money comes from. But the bigger thing is you can have imaginary customers and either drink “their” alcohol, pour it down the drain, or use it for gifts and bribes, all while booking receipts for people who never came into the bar at all.
It’s not that the henchmen spend every ill gotten dollar in the restaurant, it’s that the restaurant looks busy enough for that level of revenue to look even remotely plausible.
While on holiday in South America, I visited a friend and we went out for drinks quite a few times, we visited different neighborhoods and at times I was really puzzled as to why this very "new" looking, gigantic, fully staffed bars were often completely empty, he clarified that those were likely laundering drug money.
> If nobody eats there, how do they launder money?
The laundered money is reported to the tax office as cash payments from customers. Add some fake invoices from meat suppliers to make your books look legit, and you have converted dirty money into clean, even taxable income.
This only works to a certain degree, though. If the tax office becomes suspicious, they will definitely use undercover people to count customers and meat deliveries over a few weeks. But if for example only 10% of your sales volume is fake, it is quite hard for the tax office to prove this. For smaller laundry volumes, you don't even need fake supplier bills, you can always just claim that you put a bit less meat on the kebap, etc. The general idea is to take advantage of the fact that even the tax office acknowledges that it is impossible to keep books accurate to the last penny in such businesses.
When I was a student I often ate pizza in a really nice Italian restaurant which later turned out to be a money laundering front for the Mafia. But the pizza was great!
You have money you can't explain to the IRS how you got it, that's dirty money. Now you use some clean money to buy a kebab shop. Every day you give your dirty money to the kebab shop, the kebab shop prints fake receipts. Now the IRS can be convinced the money came from cash in hand customers.
Does the IRS somewhat encourage dirty money to be taxed? I'm guessing they would prefer to have it highly taxed but perhaps getting some tax is second best.
In New Zealand "Income that is earned from illegal activities needs to have tax paid on
it." however they do try to deter money laundering, tax evasion and tax fraud.
In New Zealand it is getting harder to launder money because cash is not used as much as it used to be. Certainly a legitimate kebab shop should now receive the majority of their money as card payments. Few businesses here would have a majority of takings in cash.
Well yes, in the sense that Al Capone famously got nailed on not filing income taxes. But of course, if Al Capone had told the IRS that he got his money through extortion and illegal liquor, gambling and drugs or whatever it was he did then the IRS would gladly give that information to whoever was investigating him, so I don't think the IRS would profit much from it either way.
And I imagine card payments do make it harder, but the schemes just become more difficult, which might press on the margins a little. You could always buy your kebab shops overseas. Sell your drugs for Bitcoin, send the Bitcoin to Berlin, exchange them there for Euros, cash them in at your Kebab shop, and then wire them back to New Zealand, bam you're an international investor in the eyes of your government.
Just to be clear, it has been the law of the land that IRS is not allowed to share this information with criminal investigation. They realized how badly they screwed their revenue collection by “getting” Al Capone. To be clear, Tony Soprano files his taxes. It’s generally the smaller henchmen who don’t.
They already have the money, they just need a business as a facade to claim the money was earned by running the business. But you are right, eventually it would be suspicious if they only sold food but never bought the matching raw ingredients. That's probably why they now moved to barber shops - nobody knows or can prove you didn't cut the hair of the hundreds of people that were never there.
As an example of something similar happening, my family and I once went to a little village in the middle of Bulgaria to visit a family fried, and booked a hotel room for the week. This was a huge hotel, next door to another huge hotel, serving a village with a population of a few hundred people.
At one point our friend told us it was well known that both were owned by the local mafia. If you were to check the books you'd find the place was fully booked every day of the year and doing a roaring trade, while if you actually went and visited you'd find 3 slightly bemused looking English people and maybe a wedding party.
Although no one eats there, he declares 50 kebab sales, the purchase of a frozen kebab skewer and bread rolls, etc.
The raw materials will either be thrown away or sold on to another real restaurant. But to pass the checks, the purchases of raw materials must be consistent with the sales.
The 50 sales are made with cash from drug trafficking.
The simpler the activity, the fewer raw materials and the bigger the margins, the better. Amsterdam has its Nutella waffle stands, Berlin its kebabs, Paris its nail bars and massage parlours.
Ireland and the UK have Vape Shops, Mattress Stores, Internet Cafes, Sunbed Salons, Phone Repair Shops, and increasingly 'US Sweet Shops' for some reason (presumably high margin, low price shelf-stable inventory, no significant food safety or service regs for ambient goods storage, can be run by minimum wage staff.)
We can add the oriental carpet dealers to the list. I have a friend who lives next to one of these shops. He has never seen a single customer in 5 years and the prices displayed are just crazy. The shop goes bankrupt or changes owner every one to two years in order to complicate the financial controls, but it's always the same people inside.
The whole think must be a facade to justify rental income and declared jobs.
All cash transactions with essentially no/sloppy bookkeeping. Receipts optional. Money goes in, taxes are declared but it doesn't necessarily all add up. So they mix in some non clean revenue and it all comes out as income.
