Here's how Money Laundering is done

I just read this article from PQ Magazine, it is really interesting and creative about how the money laundering is being done when you know the loopholes.... Read what Paul Merison has to tell you, you'll know how it's done!

Paul Merison looks at how society in general and accountants in particular can help combat money laundering – and stay on the right side of the law

HERE'S HOW IT IS DONE:-
Last night I stole $25m from a bank, all in coins – because coins have no serial numbers on them so they cannot be traced, unlike banknotes. I am a criminal, and society needs to catch me. So let’s see if we can design some laws, regulations and procedures to stop me and put me behind bars.

Lesson 1 Society should put rules in place to make sure that whenever someone opens a bank account, they are required to explain the source of their money. Now that I know I will be asked annoying questions, maybe I won’t go to a bank. I will just go and pay for everything in cash. A bit annoying to carry it around with me, but at least I won’t get caught.

Lesson 2 Businesses should not accept cash payments for any large purchase. OK, I need a bank account then. But the bank will ask where I got the money, and I don’t really want to tell them that I stole it. I need a cover story. I know – I will set up a company. Then I can put the money into the company bank account, a little bit at a time, and say I am selling my products. I will have to spend money on an office, buy some equipment, and even sell real products just to make it look like a proper company. Then all I need is a few fake sales invoices, pass the cash into the company bank account, then pay myself dividends at the year end.
Actually, buying and selling goods is complicated – maybe a service sector company is better. I know – a launderette! Everyone pays in coins, so I can gradually put the coins into the machines and say that customers came and washed their clothes.
My profits will be taxed, which is annoying, but if my launderette can turn $25m of ‘dirty money’ into $10m of ‘clean money’ that I can spend easily, that is not a bad result.

Lesson 3 How can accountants try to help find the crooks? Accountants and auditors can play a vital role, using some business common sense (and some analytical procedures).
Go and visit this launderette and see how busy it is – does this match the sales figures they are reporting? Do the washing machines look like they are being used as much as the sales figures suggest? Are they getting repaired much, or being replaced? Or do they still look brand new?

Of course, I am a clever crook, so if I know you are coming to visit I will arrange for some of my friends to be doing their washing – and I will run the machines all day long so that they start to look old and heavily used. And if you say anything that makes me think you suspect me, I can create some more fake evidence, or just run away.

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