Interrupting the Wash Cycle

By Laura Spadanuta

When a business has a sharp increase in deposits, banks tend to pay attention to that. Sullivan says the banks are often the ones who give the heads up to law enforcement about potential illicit activity in small businesses.

New Methods

Money launderers, like all criminals, find ways to adapt to legal countermeasures intended to curtail their activities. “You can get out of the criminal business, which they don’t seem to like to do. Or you can get better at it, and that’s what they have done in spades,” says Turner.

Says Rijock: “When it becomes too difficult to work through the banks, they go to the Fortune 500 companies. When the Fortune 500 companies become too overregulated, they will go to the Ma and Pa [type companies]…. It’s like chess. They’re very good chess players.”

As anti-money-laundering reporting requirements have made banks a less attractive avenue, agrees Turner, launderers have moved to other types of businesses. And as large dollar transactions have become red flags, smaller increments have been used, he notes. “Fifteen years ago, you might have seen somebody moving millions of dollars at a time through a bank, now you’re much more likely to see somebody making purchases from a business in amounts of a few thousand dollars at a time,” says Turner.

And those nonbank businesses are more willing to be complicit in money-laundering operations because of tough economic conditions. So if a toy company gets approached by somebody who wants to hand over wads of cash for a large volume of teddy bears, the seller, who might have questioned that transaction in the past, will just go ahead with the sale, says Turner. “So, many businesses become involved in money-laundering activities not because they are criminal enterprises but because the economy has them running so tight that it’s very difficult to turn [those sales] down,” he says.



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