I'm not sure how much people know about money laundering or anti money laundering.
So let's talk a bit about it.
What happens is that a crime organization usually conducts it's business using cold hard cash, the actual physical notes, cos it's hard to trace and it doesn't go through the banking system, so it doesn't attract as much attention.
It's like... an organization who runs illegal gambling dens. They collect their earnings in cash and pay their workers in cash, etc etc.
The problem with this is that when the boss wants to buy a house, he can't be bringing in $2 million in hard cash to someone and says, "Hey I wanna buy a house/car..."
(Legend has it that this was done before at a property show room in Singapore previously. Someone opened a car boot full of cash and paid for a property in cash.)
Usually, this is where money laundering comes in. They try to put the money into the banking system without attracting attention. Usually by incorporating an honest business and declaring large profits and happily paying tax. Cos they don't mind paying tax else they won't be able to use the money to buy big stuff.
So this is how money laundering usually works.
The problem is, money laundering also takes time, they can't set up a company overnight and start declaring $20 million profits and start paying taxes. That's going to raise red flags. So it's a long drawn out process taking years. And if they are taking in more illegal money, faster than they can clean it, then they end up with loads of physical cash which they have to store.
So when I hear friends/family/whoever talk about how silly it was for the organization/boss/person to have so much cash readily available...
What passes through my mind is... "Hello... friend, what makes you think they haven't?"
You see... people/organizations who are raided and found with stacks of cash are people who usually already have their operations in place.
(Either that or they are inexperienced and they really had no way to put their money into the system.)
But the people on the top, the boss of the organization, they probably already have a system to launder the money, get their money into the financial system, and buy all their big ticket items.
They already probably have already transported and hidden loads of physical cash in another country in a quiet building which they have bought under some other person's name.
The thing is... these stacks of cash that are usually found in their local residences is probably...
Just the working capital...
Most of the time, when I hear comments from people, they are thinking only from one direction, they think that the criminal organization/boss is only receiving the money. So they think, once the boss receives the money, they should quickly hide it in a quiet corner...
The thing is... most of these illegal activities also require payment. The organization needs to pay workers, bribe people, buy stuff, etc etc. It's an illegal business, but still a business nonetheless. So they still need to use the cash to do stuff. So they can't be hiding the money at the far corners of the Earth with no access to it. Simply put, the organization/boss still needs to use the cash.
It would be naive to think that they would be able to run their "business" with only a couple of thousand dollars. I have maybe $500 or less in my house at any point in time, cos most of my funds are in the financial system and I don't need to receive and pay out money for a business.
But these organizations/people are running a multi million dollar "business" which primarily deals in cash.
They can't be holding only a few thousand dollars in cash. They need a cash float of a few million dollars!!!
They take some money, they pay some money, they take more money, they pay more money.
We can't be using our normal way of living to analyze such situations.
The bigger their "business" the more cash they need to hold. It's just logical right?
Sometimes, it's very easy to look at a story from our own point of view and our own lifestyle and give a simple conclusion. But many times, we need to look at the story from the other side, and that's not so easy to do. Cos we don't see much of the other side, and neither do we know people from the other side who can tell us their story.
Just thought readers might be interested in such a topic...
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