Money Laundering

Singapore recently conducted an operation involving more than 400 police officers and arrested 10 people suspected in money laundering. The cash and assets confiscated are worth about 1 billion SGD (approx 736 million USD). This piece of news shocked many as it is one of the largest money laundering probe in the country.

Today we will talk about how money laundering works with a few examples. This post is not to teach people on how to do money laundering, for the actual money laundering process is more complex than what I will mention below. But the main idea is to educate my readers on what is happening and the meaning behind the things that we may see, that things are not so simple and not to fall into any potential traps.

Money laundering is essentially turning dirty criminal money into legal money. For example, if today Tom did a drug deal and earned $1 million. He cannot just walk out to the streets and spend that $1 million. He will raise suspicions on how he got the money. Was it through his salary? No, his salary is not that high. Is it through inheritance? No, his parents did not leave anything for him. In the modern day society, one does not spend openly if his money cannot be traced back to a legitimate source, for example a salary.

That is why criminals are often stuck with much cash but not being able to spend it. That is why money laundering is also a big business and why the government are trying to catch them. If money laundering is successful, these criminals can walk away and spend their money openly without any fear of consequences, leaving behind a trail of victims who will never get their justice. Depending on the source of the dirty money, certain money has to go through 1 or more laundering processes mentioned below.

Nightclubs And Pubs
The nightlife is an interesting and shady one, with people spending thousands or hundreds of thousands on a single night. Alcohol, dance, sex and all things unhealthy is in many ways, the temporary dream for many guys. But it is also a place where transactions can be masked and greyed out easily. A glass of Coca Cola cost $10, and the pub owner may say that there were 10000 glasses of Coca Cola sold that month. A bottle of Tequila may be sold for $180. But if split into ladies drink at $40 for 2 shots, then that bottle of spirit indeed can be used to generate much more profits under the name ‘ladies drink’. In short, nobody can really track what are your transactions. As long as you inflate your sales and then pay the taxes accordingly, the proceeds from your pubs are clean honest approved money. Hence, the cash from the dirty activities are ‘spent’ in the pubs and converted into legalised profits.

Going by this line of logic, it is now easy to see why there are certain shops without traffic but have managed to survive for years. Pretty sure most of us would have come across 1 or 2 shops like that. How about online shops who manage to sell stupid things at expensive prices? Or livestreamers who seem to have a lot of tips and gifts?

Investing Into Movies
Movies have been getting increasingly more expensive to make, with blockbusters trying to outdo each other in budget. But truth is, can the spending really be traced? For example, if I construct a grand movie set, then blow it up while filming the movie, how will anyone trace it? I can say I spent $20 million building the set, but as it has already been blown to smithereens, how can anyone audit if I really spent $20 or $2 million? With each movie’s budget higher than the other, does it not trigger an alarm bell why would anyone even spend so much just to film a movie?

In the end it does not matter whether the movie is profitable or not. If it is, all the better. If it is not, they would have already cleaned up a part of the money.

Art Pieces
Art is something very subjective. What is a masterpiece to a person may be trash to another. And that is why it is so valuable for money laundering. Unlike a desktop where the value can be determined easily from the specs of its parts, there is not really a standard to measure art. I can determine a piece of art to be at $1 or even $10 million. Who is to say I am wrong?

Striking The Lottery
Does it not seem strange that some people just have the luck to keep winning the lottery? While there is certainly luck in this world, there is certainly no consistent luck. Take for example, Tom really won a $1 million lottery. At this time, Jerry appeared and offered to buy his winning ticket for $1.1 million, offered in cold hard cash. To Tom, that is 10% more winnings, in cash no less. The only issue is that Tom cannot openly spend the money, but will have to slowly digest it in an inconspicuous manner.

Different people have different levels of tolerance for this dirty money. Some may be willing to trade in a $10,000 lottery ticket but not a $1 million ticket as the lower value ticket is more easily digestible. Now we expand it to the group level, where people from a triad or syndicate goes out to buy different lottery tickets of different values from different people. We now have a bunch of people having clean money from the blessings of the lottery.

We expand the logic further. Soccer matches and casinos are also very good avenues for the god of gambling to descend upon some common man.

Other Methods
Of course, those who know the topic of money laundering well can easily throw out a few other more effective methods. Unfortunately, not everything can be written out so clearly. Furthermore, these methods will not apply to the masses either for their own caution (being offered a higher price for the lottery ticket) or for their own general knowledge.

Money laundering is real, and we should take note not to be involved in it. Especially in this era of digitalisation, almost everything can be traced. Even if you use cryptocurrency.