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Money to Launder? Here's How (Hint: Find a Bank)

You’re a criminal with millions of dollars in ill-gotten gains but one big problem: Transferring slugs of money or carrying suitcases of cash will raise eyebrows. You need to “launder” the dough — make the dirty money appear to be the proceeds of legitimate enterprise. Then it can be spent anywhere in the world — say, on real estate or luxury yachts — no questions asked. Most countries and all the world’s major banks have controls in place to flag suspicious funds coming into the financial system. But as shown by a series of revelations and the probes roiling European banks, bad actors come up with innovative ways to skirt the rules. 

Hiding under shell companies

Deliberately opaque “shell” companies, which exist only on paper and have no active business operations, are easy and cheap to set up and effective at obscuring ownership. They’re key to what experts call the “layering phase” of money laundering, in which funds are shoveled around multiple times to make them harder to track. Shell companies are traditionally foundin offshore tax havens such as Panama and the Bahamas, but the U.S. states of Delaware and Nevada also permit corporations to be set up in anonymity. The international consortium of journalists that uncovered the Troika Laundromat scheme says it involved at least 75 shell companies that generated a total of $8.8 billion in transactions through made-up deals. There’s been a global push for more transparency, even in the U.K., whose crown dependencies include Jersey, Guernsey and the Isle of Man…[  ]

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