How To Launder Money

It seems that two members of the General Accounting Office in Washington, D.C. were assigned to do an investigation for the Internal Revenue Service. They were to survey businesses (other than the banking industry) which are supposed to report cash transactions over $10,000.

They picked out 79 names randomly from the Yellow Pages in cities all over the United States. When they contacted the businesses, they found that 76 of the 79 were willing to accept $10,000 or more in cash without reporting it to the IRS!

Seventy-five (75) of the 79 were willing to take a false name.

Twenty (20) of the 79 were willing to suggest ways to avoid reporting!

When they added all the funds the businesses were willing to accept, the two investigators figured they could have laundered $4.2 million during the month of August.

According to a story in the September 21 issue of American Banker, one realtor was approached and an offer was made to buy, for cash, a condominium priced at $259,000. They told him they wanted to keep the cash purchase "quiet." The realtor advised them that in order to get around filing, they should pay with numerous cashier's checks and money orders-then he wouldn't have to file.

All of this was reported to the House Ways and Means oversight subcommittee which was "appalled" and "shocked" according to two of it's members.

John Byrne, Senior Counsel for the American Bankers Association, feels that studies and reports like this are bound to have a good effect on the banking industry, which is "very good" in its reporting according to the IRS statement. Some of the heat we have been feeling may shift to other businesses. This will provide small comfort to bankers-but at least it's a start!

Copyright © 1990 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 1, No. 10, 9/90