Money Laundering Refresher 101
Before we delve into the captivating movies and shows depicting nefarious money laundering schemes bubbling away in the script, let's remind ourselves how it works.
There are three stages in money laundering:
You can learn about each stage in detail by clicking on the links.
In a nutshell, the placement stage is when criminals stuff dirty money into bags, suitcases (or similar), and then place it into a bank account or a cash-based business. Layering involves creating a labyrinth puzzle between them and the illicit money, consisting of a web of transactions. The integration stage is when the money launderers introduce the illegal cash back into the regular financial system, believing the risk of now being caught is small.
The above explanation is, of course, highly simplistic. Each stage in the money laundering process is sophisticated, intriguing, cunning, and multi-faceted - as you will now find out.
Money laundering stage covered: Placement
Money laundering scheme: Cash-based businesses
Breaking Bad perhaps needs no introduction because of its cult-like status and massive global fanbase. As many of you know, the US TV show set in Albuquerque, New Mexico, chronicles the transformation of Walter White, a high school chemistry teacher, into a ruthless methamphetamine producer.
In this article, we still need to remind ourselves that dirty money is the illicit profit from heinous crimes that inflict significant harm upon society, such as kidnap for ransom, corruption, and illegal production and sale of narcotics.
And back to Breaking Bad. How does it reveal the placement stage in the money laundering process?
The main protagonist in the script, Walter White, has a money problem. As in, his illegal methamphetamine business is doing so well that he's left with stacks of dirty cash that needs to be hidden and made to appear legitimate.
And how does he solve this problem? By purchasing cash-based businesses - a ubiquitous technique in the placement stage of money laundering. The first business Walt buys was one he once worked at part-time, the A1A Car Wash.
Criminals buy cash-based businesses (e.g., laundromats, restaurants, bars, convenience stores, and casinos) to deposit illegal cash into the banking system. They blend the illicit funds with legitimate income from the company, making it harder to detect the source of the money.
Money laundering stage covered: Layering
Money laundering scheme: Shell companies
Remember the 2016 notorious Panama Papers leak? Everyone does - including the general population. It revealed the extent to which criminals use shell companies in the layering stage of money laundering. Shell companies are legal entities that often hide a business's ultimate beneficial owner (UBO) from investigators, possibly because of money laundering activities. You can learn more here.
The Laundromat is an intriguing film directed by Steven Soderbergh and starring Meryl Streep that draws inspiration from the Panama Papers leak.
Rest assured. There will be no spoilers in this article. But the script involves a widow who gets no replies, answers - nothing - when attempting to receive a life insurance payout for her deceased husband. All roads lead to Mossack Fonseca - a now-defunct Panamanian law firm with an extensive rap sheet of money laundering allegations and charges (even before the Panama Papers). It once specialized in creating offshore shell companies and acted for approximately 300,000 firms.
Money laundering stage covered: Placement, layering
Money laundering scheme: Cash-based businesses, False invoicing
Our next example of movies and series that feature the covert and illicit world of money laundering is the Netflix crime drama Ozark. The name is an actual region, known for its natural beauty, in the US called the Ozarks, covering parts of Missouri, Arkansas, Oklahoma, and Kansas.
But this isn't a travel blog. How is money laundering covered in the hit show?
Marty Byrde (Jason Bateman) is a Chicago-based financial advisor - with a side gig laundering dirty money for a Mexican drug cartel. It all goes downhill after the cartel catches his business partner skimming the profits. His colleague is dead, and the cartel pressures Jason to repay the money. He agrees to continue laundering dirty cash and moves to the Ozarks, away from prying law enforcement agencies.
Cash-Based Businesses (Placement)
Ozark provides a compelling portrayal of the placement stage of money laundering through a cash-based business. Once arriving in the Ozarks and with a pressuring deadline, Marty buys strip club Lickety Splits and the Blue Cat Lodge lakeside inn and places the dirty cartel cash into these companies, mixing it with legally-gained profits (and thus into the legitimate financial system).
False Invoicing and Trade-Based Money Laundering (Layering)
In Ozark, Marty manipulates the businesses' outgoings and pays massively inflated sums to cartel-controlled suppliers for products and services that don't exist.
This tactic, designed to create a complicated and puzzling trail in the layering stage of money laundering, is complex and rarely seen in movies and series. However, in the real world, it's ubiquitous. Global Financial Integrity (GFI) states that fraudulent invoicing and trade-based money laundering is the most significant component of illicit financial outflows.
The Wolf of Wall Street
Money laundering stage covered: Placement, integration
Money laundering scheme: Offshore bank accounts, purchasing high-value items
The Wolf of Wall Street is a 2013 black comedy based on the memoir by Jordan Belfort. Leonardo DiCaprio plays a stockbroker (Jordan Belfort) who rises to immense wealth by operating an illegal penny stock pump and dump scheme.
This article won't discuss the financial crime that made him his fortune - as that's a separate offense. But we will, of course, examine the money laundering schemes from the movie.
In the placement stage, comical and chaotic scenes show how Belfort and his partners transport suitcases packed with dirty money from New York to Switzerland and literally into the hands of a suave and sophisticated Swiss banker. Swiss banks are notorious for banking secrecy and confidentiality, which can facilitate the concealment of dirty money.
In the integration stage of money laundering, The Wolf of Wall Street shows how fraudsters and criminals can wire money from offshore bank accounts with strict secrecy laws (in this case in Switzerland) and use it to pay for high-value items such as mansions, yachts, artwork, luxury cars - and much more.
Movies and television usually depict criminals purchasing these items purely for greed, enjoying the fruits of their crimes. In real life, it's more than only that. Why?
Money launderers also purchase expensive luxury goods to sell them later on. They then use the legitimate sale as evidence of the source of funds should they ever be asked, such as from banks and law enforcement investigators.
Bonus Examples and Final Thoughts
Today we dived into a selection of movies and series that cover money laundering themes. However, there are still many more, such as:
- American Made (movie)
- The Wire (series)
- Narcos (series)
- Casino (movie)
- The Accountant (movie)
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