Fraud and Money Laundering: There’s More of It Going On Than You Think

If you have watched some recent TV shows, such as “Breaking Bad” or “Ozark”, then you know the foundation of the shows, besides the drugs, is how much money is made by selling drugs, illegal money, or “dirty money”.

Dirty money must be cleaned in order to spend it, hence the term money laundering.

If you are a criminal and make thousands of pounds off of an illegal activity, and try to spend it, certain flags are raised.

You cannot just go into a bank and pay in £10,000, or travel with large sums of money through airports, or pay cash for an expensive car or property. These transactions using cash raise flags, and questions.

One question is, where did you get the money?

Then there is the issue of have you paid taxes on the money, HMRC wants their share.

Long ago law enforcement officials realised that the best way to catch criminals was to follow the money trail, and if you can stop a crook from being able to spend their ill gotten loot, you make it difficult to be a criminal.

However, criminals got smarter as well, and so money laundering became a big business. How big you is difficult to say how much money is actually laundered due to the very nature of the business, some estimates are $2 trillion across the globe.

Here in the UK the estimate of money laundering is £24 billion a year!

That is a huge dry cleaning bill.

How Do They Launder Dirty Money?

There are many methods to launder money, but they all have one thing in common; you take money that was initially earned and not in the financial system, and use some financial transactions to hide the source of the illegal money, and then introduce the money back into the financial system.

This can be done with businesses that are mostly cash transactions. The books are inflated to show more money coming in than in reality, and since it is a cash business, these transactions are near impossible to trace.

Think of all the places that you just pay cash, car washes (Mr. White), takeaways, some florists, some shops, etc, deal in cash more than card transactions.

There are also “money mules” who either inadvertently, or knowingly launder money.

If you accept payments from someone in cash, or you allow them to pass money through your bank account, you are laundering money.

A laundering scam a few years ago involved criminals approaching students and stating they would pay their tuition fees, which can be as high as £9,000 a year.

The criminal offers to pay a portion or all of the fees, in return the student only pays back a percentage of portion. An example may be the criminal pays £3,000 towards the student’s tuition, and in return only wants to be paid back £2,000.

That £2,000 is now clean.

As you can see, criminals keep coming up with new ways to clean their dirty money.

Our Attitudes Towards Fraud and Money Laundering

Many people feel that while they know money laundering is illegal, there is a certain glamour to it, brought on in part by the media, such as the TV shows and films.

Who gets hurt, is a common thought, almost like a victimless crime. It is the actual origin of the money, usually through the sales of drugs, which can ruin lives, and create victims.

Our attitude towards fraud is even more lenient, with one-seven of us committing some form of financial fraud, and 40% of us believing that “the most common kinds of financial theft are “reasonable”.”

It can be a minor thing, such as using someone else’s address for our car insurance, to “deshopping”.

Deshopping is where you buy an item, clothes or anything, with the intention of wearing the clothes or using the item, and then returning it for a full refund.

The CEO of Cifas, Mike Haley states, “It’s sad to note how common fraud is among the British population, and that even more people find such acts of dishonesty acceptable.”

Many people seem unaware that what they consider to be reasonable, such as buying shoes to wear for a night before returning them or adding their parent as a main driver for cheaper insurance, can be considered acts of fraud.”

Regarding why Cifas produced the report and their findings, Haley adds, “We wanted to raise awareness of the consequences of what can be considered everyday fraud, such as finding it difficult to obtain a financial product or a mobile phone account, and in some cases, such as being a money mule, ending up with a criminal record.”

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