What methods are used to launder money?
Suzanne Wells Updated June 25, In the internet and electronic banking age, laundering money can be done online through legitimate websites like eBay. There are common scams on eBay that suggest laundering money, but let's take a look at how money laundering worksexactly what it is, and why it exists. Definition According to Investopedia : "The process of creating the appearance that large amounts of money obtained from serious crimes, such as drug trafficking or terrorist activity, originated from a legitimate source.
Let's say Jim and Nathan are involved in selling illegal drugs and have a huge cash flow coming in. It is dangerous and foolish to keep cash lying around, so they need a way to get the cash into a bank without looking suspicious. The banking industry is required by the government to report any cash deposits to the IRS.
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The bank can also report any suspicious cash deposits, such as frequent large amounts of cash or customers keeping large amounts of cash in a safe deposit box.
These IRS reports exist so that illegal operations can be detected, and to ensure that businesses are paying taxes. Any large amount of cash or frequent large cash deposits are usually not obtained legally.
Jim and Nathan open a legitimate business where cash routinely flows in such as a restaurant, nail salon, car wash, ice cream shop, coffee shop, or gas station. These businesses are called a "front" for money laundering.
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So when Jim and Nathan submit cash deposits to the bank every day from their legitimate businesses, they add a little extra cash from their drug sales to the deposit bag, and their dirty money from drugs gets mixed in with the "clean" money from the legitimate restaurant or nail salon. This is where the term money laundering comes from.
Little by little, the dirty money money cleaning the internet its way to the bank mixed in with money from the other businesses.
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So the dirty money appears to be clean. How Money cleaning the internet Works on eBay Money laundering schemes have made their way to the internet. Online sales are tracked.
- How Money Laundering Works on eBay
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So some sales on eBay can stay under the radar, so to speak. One way that unscrupulous people are trying to transact with dirty money is to set up fake listings on eBay.
It looks like a real transaction, but the price is usually astronomically inflated for the type of item, and the sales price does not make sense. Rather than create a transaction with cash, Jim tells his customer he will set up a listing on eBay for a particular item at a very inflated price.
He will then send a link to the item to the client. This is called a "prearranged sale. Also, eBay money cleaning the internet its fees and Paypal gets its fee of 3 percent.
Black money scam
Jim ships a box of rocks or some insignificant item to the client's address and no one is the wiser. The transaction takes place, the money has changed hands, the illegal goods are delivered, and all of this is done under the radar. Why Launder Money on eBay Millions of items are sold on eBay every week, and some legitimately sell for hundreds or thousands of dollars. So it is rather easy to blend into the crowd and successfully pull off illegal schemes on the world's largest online marketplace.
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- By Investopedia Updated Oct 13, Money laundering involves three basic steps to disguise the source of illegally earned money and make it usable: placement, in which the money is introduced into the financial systemusually by breaking it into many different deposits and investments; layering, in which the money is shuffled around to create distance between it and the perpetrators; and integration, in which the money is then brought back to the perpetrators as legitimate income, or "clean" money.
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- Black money scam - Wikipedia
The adage "if it looks too good to be true it probably is" holds true here. If you are searching completed listings and see something that doesn't look right, it probably isn't. Do further research, such as learning more about the seller and the item being sold, and look at the law of averages. There could be much more to the story than you are seeing on your computer screen.
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- First contact[ edit ] Typically the scammer will send out thousands, if not millions of e-mails to known and random e-mail addresses, hoping for a few replies.