Quora Answer: How is Large-Scale Money Laundering Performed?

The following is my answer to a Quora question: “How are large-scale money laundering operations performed?” 

There are a multitude of methods to do it, and it has to involve a colluding group of bankers, and a business that has constant cashflow.  It must take place in a large economy so that it can be masked by the sheer volume of transactions. 

One of the favourites is property development since a lot of the payments are difficult to track, especially at the subcontractor level.  The main contractor is large enough to get backing bank instruments, and you can manipulate them, especially across different currencies with fixed internal rates to hide the origin of funds, which is a sophisticated process of layering. 

Having a company with many subsidiaries means that you can manipulate the value of assets, engage in asset switching, and utilise one company to access the cash flow of another, which allows you to draw down funds into another entity such as revocable fund, further concealing your income.  You then create entities that invest in start-ups, or donate to institutions of public character, to further gain a tax credit. 

It is also important to have companies in different economies with large paid up capitals even though the company may be gutted through asset placement and switching.  You then create accounts with the same bank in different jurisdictions.  This allows you to perform ledger to ledger transfers, bypassing most bank protocols. 

Finally, you get everything insured, which creates an immediate estate should you need to quickly create liquidity in the event of political risk.  You pay a portion of the premium, and then take a loan for the remainder.  You then create a series of credit lines for the subsequent policies, which are themselves, financial instruments. This means you have liquidity and cash with a reason for the money to be there.  Insurance policies, particularly investment-linked plans, are useful for moving funds discreetly since people look at the coverage, not the instrument value.  In summary, large-scale money laundering is a complicated business.