Great article. Take pleasure in knowing at least one person who read this learned something new. I had no idea what Money Laundering actually meant before this other than it was something very illegal. Thanks!
You missed the one business that is almost always a front for money laundering: Strip Clubs
Since the patrons pay in cash as "tips" to the dancers, there's a lot of cash money coming in of varying amounts. Surveillance is useless as well as subpoenaing the water bill.
@Julie: Thanks for the added tax info! It's muchly appreciated.
@Justin: You're a smart guy, and I'm not going to try to pick a fight with you. Wise Bread readers value the commentary, and you have a lot to add. However, please refrain from the personal attacks. I've said it before, and I'll say it again: I am no longer in the business of financial planning. I am not trying to recruit business. I have no agenda. I am retired. And I have lots of dignity to go with it.
This is an interesting point that has been made a few times.....not having credit cards.
Any thoughts on this?
My own view is that there is no better way to establish a credit history than with proper use of credit cards. How else is the bank going to consider you for a mortgage, car loan, or other big-ticket item that is considered a necessity for which a loan is necessary?
Personally my use of credit cards in establishing a credit rating has been invaluable. I have avoided the need for security deposits when buying a car, gotten super-duper rates on large loans and mortgages, and other perks.
I would love to hear how credit ratings can be established without credit cards, or if it's even really that important after all. Let me know!
I just want to tell you how big drug lords launder their money here in Central America. Many of them do not have visas to travel to the US, so they prefer to have their money in local banks. This presents two problems:
1)How to bring back all that cash from the US? (Remember, to these guys one million dollars is chump change... and they mostly deal in 5-20 dollar bills)
2)How are you going to explain to the bank your one million dollar deposit... in small bills? There are laws that limit the amount of cash you can deposit daily to $500.
Well, the first problem is easily solved with the use of "mules", people who bring back money taped to their body for a small percentage. Many poor (or lazy) teenagers do this, and travel weekly to Miami to pick up the money. Some are caught, but many more make it.
Now, the second problem. How to deposit your cash in a bank? Some of them do many of the things you talked about (investing, real estate, open up a business etc.) But others do it this way:
1) Talk to people with established businesses.
2) Offer to "exchange" checks from their (legitimate) bank accounts for cash... plus 20% profit.
3) Take the checks to the bank and...
4) Voila!
So, the "legitimate" guys get 20% profit for "nothing" (they have to figure out what to do with all their cash... most of them reinvest it on their businesses).
Other crooks offer to buy you cars with a "discount". You tell them what kind of car you want (usually luxury cars), they go out and buy it for you from corrupt dealerships (at full price), and then sell them to you at 10-20% discount... but you have to pay them with a check. If they have any problems with your check... you know what will happen.
The point I am trying to make is that many of the biggest stores or real estate developments you see in Latin America, are funded by money laundering. The problem this arises is that we (the legitimate businesspeople) are not able to compete with them on an even level. How can you compete with "free" money?
This is just another unnoticed effect of money laundering.
I believe they have effectively closed the casino route. When you win at a casino and cash out, they not only give you your money but a W-2G. A copy of the W-2G is sent to the IRS just like regular W-2's. The IRS knows how much you win, where you won it and when you took possesion of your winnings. I saw one last year while doing someone's taxes.
...just live large overseas and never come back...except for visits...then stay in posh hotels and pay cash while you are here...
the irs gets the lion's share of tax revenue from the cubicle farm slave 'little people' anyway...they're not worried about your high rolling, greedy little mobster ass.
spam that wants you to receive a check, cash it, and send back the cash has nothing to do with money laundering (besides the fact that the resulting proceeds from the scammer probably need to be laundered)
these scams take advantage of the 'hardness' of different types of money. if i met you on the street, and wrote you a check for $100, would you give me $80 cash, and be on your merry way? you may think you're making $20. but then you would go to the bank and find out that the check was bad. i, meanwhile, would be spending the cash you gave me while cackling.
these scams work on the same principle. when they send you the original check, you deposit it, and it appears to have cleared. but really it's just a matter of time until the deposit is reversed (when it finally gets to the issuing bank). this process takes a bit of time, regardless of what you actually see. meanwhile, you've sent your check out, they've sucked the money from the account, and gotten it into a 'hard form' - withdrawn it from the bank or whatever.
in a perfect world these things shouldn't happen, but the identity based banking system is incredibly entrenched and believes that its fraudulent behavior (acting as if the money is free and clear, but it is not) is acceptable. i don't know if you'd be able to argue your case in front of a judge (or if the banking industry has bought laws and judgments that allow them to continue this fraud). but in any case, it'd be a huge hassle, and you're not going to get something for nothing.
Of course, even if you get all your health care in emergency rooms, you're still probably getting better care now than you would have in the 1950s or 1960s. You certainly are if you have some common, serious illness like high blood pressure, heart disease, diabetes, cancer, or the like.
The best possible care of the 1960s would be considered malpractice nowadays.
You failed to mention those who live below our ill-concieved poverty line can't afford basic health care or a trip to the dentist. The percent of the average Joe's income that goes to rent is now 70%, whereas in the 60's it was somewhere around 30%. Living on or below the poverty line is not fun, no matter how you scrimp and save.
Those aren't examples of money laundering, they are flat out scams.
What happens with those is, the person, either with an awesome job deal or wants to buy your goods at $x above what you stated (usually consumer electronics). They send you a cashiers cheque to get cashed, you cash it, and then immidiatally withdraw the money and send it to them. Now, because its a cashiers cheque, the money should be avaiable straight away, unfortunatally, the cheque is fake, and it will take about 7-10 days for the banks to realise this. By this time, you would have given the money to the scammers, and the bank will want that money back, and they will want it back from you.
In the case where they are willingly overcharged for the goods, it works the same way, but you also send the item to them, as well as some of the 'difference' back, again, its money that doesn't exist, and the banks will want it back off of you once they find out its fake.
There are no banks in the Cayman (or most of the Caribbean) that you can entrust your money with that would ever accept any cash deposit unless you can show legal source of funds, and in Switzerland it can not be more then 20 kusd.
YANAL, and it shows. Yes, there are "lots of laws" that prohibit money laundering, but you didn't cite them, nor did you address topics such as CTRs, SARs, structuring, the dollar amount that is reportable to Customs on entering or leaving the country (it's $10,000), the criminal penalties associated with violation of the money laundering statutes, or how much it's going to cost for a lawyer to defend a federal money laundering charge. What's next? How to deal drugs? Burglarize a home?
I don't know how it produces the moist heat but it does. I made little pillows out of fingertip towels and my husband and son swear by these for there sinuses . My daughter uses it as a hot pack during that time of the month
Good article. I have two jobs and don't believe either one will last forever. As you said, people will tell you if you are on your way out. They can't help it. They just won't act the same around you.
BE CAREFUL with hydrogen peroxide on your teeth. If you use too strong of a solution, or leave it on too long, you can seriously damage or even destroy ALL your teeth. If the enamel on the outside of the tooth is eroded, your teeth will have to be removed!! I know someone that messed with exactly this formula and destroyed every tooth in her mouth!
Stick to the baking soda/peroxide toothpastes they sell in the drug store. These have been formulated to prevent irreversible damage. Ya, they aren't as strong or effective, but you get to keep all your teeth. Use all the home recipes you want on your clothes, but don't trust some random Internet video for your health, PLEASE!~!
Thanks for the tip, compressed air in a can worked great to take out a shopping-cart dent in the quarter-panel. Took three or four tries on a hot (85deg) sunny day (no hairdryer used, although I was ready to buy one just for this if it would work!) I used a 3M Dust Remover can from Staples, and it didn't use up more than a fraction of the propellant in the can. And no paint damage, not sure how it could do that unless you try to wipe off the ice crystals before they melt, or your can of air has a different propellant in it. Thanks again!
I'm a fan of Andrew Tobias from way back. I happened upon one of his first books, Getting by on $100,000 a Year and Other Sad Tales back when it was new--back when $100,000 was a lot of money--and found it hilarious. This book is almost as funny, and a lot more useful.
Thanks for the discussion and I'll know we'll learn even more from you about mutual funds and other investment strategies and tactics in the future.
I'll add some to the conversation by saying that if you hold the mutual funds (or other types of investments) in a U.S. tax-deferred account (IRA, 401-k, etc.) then you don't have to pay taxes on the pass-through capital gains and/or dividends. Also, the scenario can occur in a taxable account that the mutual fund declines in value but the shareholders still have to pay taxes on capital gains (the manager may have sold one of many stocks at a profit but experienced an overall decline in value for the basket of stocks).
"Given enough time, good fund managers, and a good financial planner keeping an eye out for you, you can reach your financial goals without having to watch the stock ticker every day."
What can I say to that? First of all, no one should be watching the stock ticker every day unless they're a day trader which should eliminate 99.99% of us. Watching the market on a daily basis will only result in the investor making irrational decisions due to the potential volatility the market can experience in a short period of time.
Next, no one here should need a financial planner. People that are reading these personal finance blogs are already ahead of the game. They should be smart enough to thoroughly research any financial moves before they make them. It's really sad that you keep writing about this considering YOU are a financial adviser. Have some dignity and stop using this site to try and recruit business.
Oh, and saying that index funds aren't diversified is just plain wrong. All the popular funds are very well diversified and produce excellent returns over the long haul. Plus, like you said, they won't eat you alive with fees like an actively managed fund will do. Even Warren Buffett agrees that index funds are the way to go for the common investor.
Great article. Take pleasure in knowing at least one person who read this learned something new. I had no idea what Money Laundering actually meant before this other than it was something very illegal. Thanks!
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You missed the one business that is almost always a front for money laundering: Strip Clubs
Since the patrons pay in cash as "tips" to the dancers, there's a lot of cash money coming in of varying amounts. Surveillance is useless as well as subpoenaing the water bill.
@Julie: Thanks for the added tax info! It's muchly appreciated.
@Justin: You're a smart guy, and I'm not going to try to pick a fight with you. Wise Bread readers value the commentary, and you have a lot to add. However, please refrain from the personal attacks. I've said it before, and I'll say it again: I am no longer in the business of financial planning. I am not trying to recruit business. I have no agenda. I am retired. And I have lots of dignity to go with it.
This is an interesting point that has been made a few times.....not having credit cards.
Any thoughts on this?
My own view is that there is no better way to establish a credit history than with proper use of credit cards. How else is the bank going to consider you for a mortgage, car loan, or other big-ticket item that is considered a necessity for which a loan is necessary?
Personally my use of credit cards in establishing a credit rating has been invaluable. I have avoided the need for security deposits when buying a car, gotten super-duper rates on large loans and mortgages, and other perks.
I would love to hear how credit ratings can be established without credit cards, or if it's even really that important after all. Let me know!
i never really know what money laundring was about. thx for the post.
There is really no need to save for the future, everything will be fine.
Hi,
I just want to tell you how big drug lords launder their money here in Central America. Many of them do not have visas to travel to the US, so they prefer to have their money in local banks. This presents two problems:
1)How to bring back all that cash from the US? (Remember, to these guys one million dollars is chump change... and they mostly deal in 5-20 dollar bills)
2)How are you going to explain to the bank your one million dollar deposit... in small bills? There are laws that limit the amount of cash you can deposit daily to $500.
Well, the first problem is easily solved with the use of "mules", people who bring back money taped to their body for a small percentage. Many poor (or lazy) teenagers do this, and travel weekly to Miami to pick up the money. Some are caught, but many more make it.
Now, the second problem. How to deposit your cash in a bank? Some of them do many of the things you talked about (investing, real estate, open up a business etc.) But others do it this way:
1) Talk to people with established businesses.
2) Offer to "exchange" checks from their (legitimate) bank accounts for cash... plus 20% profit.
3) Take the checks to the bank and...
4) Voila!
So, the "legitimate" guys get 20% profit for "nothing" (they have to figure out what to do with all their cash... most of them reinvest it on their businesses).
Other crooks offer to buy you cars with a "discount". You tell them what kind of car you want (usually luxury cars), they go out and buy it for you from corrupt dealerships (at full price), and then sell them to you at 10-20% discount... but you have to pay them with a check. If they have any problems with your check... you know what will happen.
The point I am trying to make is that many of the biggest stores or real estate developments you see in Latin America, are funded by money laundering. The problem this arises is that we (the legitimate businesspeople) are not able to compete with them on an even level. How can you compete with "free" money?
This is just another unnoticed effect of money laundering.
Damn! Now I'm depressed.
I believe they have effectively closed the casino route. When you win at a casino and cash out, they not only give you your money but a W-2G. A copy of the W-2G is sent to the IRS just like regular W-2's. The IRS knows how much you win, where you won it and when you took possesion of your winnings. I saw one last year while doing someone's taxes.
...just live large overseas and never come back...except for visits...then stay in posh hotels and pay cash while you are here...
the irs gets the lion's share of tax revenue from the cubicle farm slave 'little people' anyway...they're not worried about your high rolling, greedy little mobster ass.
spam that wants you to receive a check, cash it, and send back the cash has nothing to do with money laundering (besides the fact that the resulting proceeds from the scammer probably need to be laundered)
these scams take advantage of the 'hardness' of different types of money. if i met you on the street, and wrote you a check for $100, would you give me $80 cash, and be on your merry way? you may think you're making $20. but then you would go to the bank and find out that the check was bad. i, meanwhile, would be spending the cash you gave me while cackling.
these scams work on the same principle. when they send you the original check, you deposit it, and it appears to have cleared. but really it's just a matter of time until the deposit is reversed (when it finally gets to the issuing bank). this process takes a bit of time, regardless of what you actually see. meanwhile, you've sent your check out, they've sucked the money from the account, and gotten it into a 'hard form' - withdrawn it from the bank or whatever.
in a perfect world these things shouldn't happen, but the identity based banking system is incredibly entrenched and believes that its fraudulent behavior (acting as if the money is free and clear, but it is not) is acceptable. i don't know if you'd be able to argue your case in front of a judge (or if the banking industry has bought laws and judgments that allow them to continue this fraud). but in any case, it'd be a huge hassle, and you're not going to get something for nothing.
Of course, even if you get all your health care in emergency rooms, you're still probably getting better care now than you would have in the 1950s or 1960s. You certainly are if you have some common, serious illness like high blood pressure, heart disease, diabetes, cancer, or the like.
The best possible care of the 1960s would be considered malpractice nowadays.
You failed to mention those who live below our ill-concieved poverty line can't afford basic health care or a trip to the dentist. The percent of the average Joe's income that goes to rent is now 70%, whereas in the 60's it was somewhere around 30%. Living on or below the poverty line is not fun, no matter how you scrimp and save.
Re: Little Earth
Those aren't examples of money laundering, they are flat out scams.
What happens with those is, the person, either with an awesome job deal or wants to buy your goods at $x above what you stated (usually consumer electronics). They send you a cashiers cheque to get cashed, you cash it, and then immidiatally withdraw the money and send it to them. Now, because its a cashiers cheque, the money should be avaiable straight away, unfortunatally, the cheque is fake, and it will take about 7-10 days for the banks to realise this. By this time, you would have given the money to the scammers, and the bank will want that money back, and they will want it back from you.
In the case where they are willingly overcharged for the goods, it works the same way, but you also send the item to them, as well as some of the 'difference' back, again, its money that doesn't exist, and the banks will want it back off of you once they find out its fake.
There are no banks in the Cayman (or most of the Caribbean) that you can entrust your money with that would ever accept any cash deposit unless you can show legal source of funds, and in Switzerland it can not be more then 20 kusd.
Here is a better way. Don't have any credit cards.
YANAL, and it shows. Yes, there are "lots of laws" that prohibit money laundering, but you didn't cite them, nor did you address topics such as CTRs, SARs, structuring, the dollar amount that is reportable to Customs on entering or leaving the country (it's $10,000), the criminal penalties associated with violation of the money laundering statutes, or how much it's going to cost for a lawyer to defend a federal money laundering charge. What's next? How to deal drugs? Burglarize a home?
The problem I see with laundering money is that you first have to somehow make any to begin with. Heh.
I don't know how it produces the moist heat but it does. I made little pillows out of fingertip towels and my husband and son swear by these for there sinuses . My daughter uses it as a hot pack during that time of the month
Good article. I have two jobs and don't believe either one will last forever. As you said, people will tell you if you are on your way out. They can't help it. They just won't act the same around you.
Is the grammar nazi gone?
BE CAREFUL with hydrogen peroxide on your teeth. If you use too strong of a solution, or leave it on too long, you can seriously damage or even destroy ALL your teeth. If the enamel on the outside of the tooth is eroded, your teeth will have to be removed!! I know someone that messed with exactly this formula and destroyed every tooth in her mouth!
Stick to the baking soda/peroxide toothpastes they sell in the drug store. These have been formulated to prevent irreversible damage. Ya, they aren't as strong or effective, but you get to keep all your teeth. Use all the home recipes you want on your clothes, but don't trust some random Internet video for your health, PLEASE!~!
Thanks for the tip, compressed air in a can worked great to take out a shopping-cart dent in the quarter-panel. Took three or four tries on a hot (85deg) sunny day (no hairdryer used, although I was ready to buy one just for this if it would work!) I used a 3M Dust Remover can from Staples, and it didn't use up more than a fraction of the propellant in the can. And no paint damage, not sure how it could do that unless you try to wipe off the ice crystals before they melt, or your can of air has a different propellant in it. Thanks again!
I'm a fan of Andrew Tobias from way back. I happened upon one of his first books, Getting by on $100,000 a Year and Other Sad Tales back when it was new--back when $100,000 was a lot of money--and found it hilarious. This book is almost as funny, and a lot more useful.
Thanks for the discussion and I'll know we'll learn even more from you about mutual funds and other investment strategies and tactics in the future.
I'll add some to the conversation by saying that if you hold the mutual funds (or other types of investments) in a U.S. tax-deferred account (IRA, 401-k, etc.) then you don't have to pay taxes on the pass-through capital gains and/or dividends. Also, the scenario can occur in a taxable account that the mutual fund declines in value but the shareholders still have to pay taxes on capital gains (the manager may have sold one of many stocks at a profit but experienced an overall decline in value for the basket of stocks).
"Given enough time, good fund managers, and a good financial planner keeping an eye out for you, you can reach your financial goals without having to watch the stock ticker every day."
What can I say to that? First of all, no one should be watching the stock ticker every day unless they're a day trader which should eliminate 99.99% of us. Watching the market on a daily basis will only result in the investor making irrational decisions due to the potential volatility the market can experience in a short period of time.
Next, no one here should need a financial planner. People that are reading these personal finance blogs are already ahead of the game. They should be smart enough to thoroughly research any financial moves before they make them. It's really sad that you keep writing about this considering YOU are a financial adviser. Have some dignity and stop using this site to try and recruit business.
Oh, and saying that index funds aren't diversified is just plain wrong. All the popular funds are very well diversified and produce excellent returns over the long haul. Plus, like you said, they won't eat you alive with fees like an actively managed fund will do. Even Warren Buffett agrees that index funds are the way to go for the common investor.