Working a case were the suspect is mixing illegal monies with legitimate laundry. What are some of the red flags. No access to any records/
Here are a few red flags for detection:
- Withdrawing all, or nearly all funds from an account within a short period of time
- Value of funds transfer inconsistent with customer profile
- Use of multiple accounts for deposits
- Use of accounts connected to third parties
- Inactive accounts
- Shell company
- High rates of return for low risk business activity
Hope this helps.
Delena D Spann, MSc, CFE, CCA
United States Secret Service
*ACFE Board of Regents (Emeritus)
I would suggest you look at some of the guidance provided by FinCEN through their website at Fincen.gov. While the guidance is typically used to educate banking industry officials identify red flags for anti money laundering (AML) monitoring, they also provide value to investigators.
The cases I've seen involved restaurants where the food was bad and the places didn't have very many customers or employees. Yet the owners were running tons of cash through them, depositing it, and paying taxes on it to legitimize it. The way to solve those is by auditing the expenses since they won't be ordering food, beverages, linen services, etc...in the quanities needed to support the gross sales they're reporting. And their labor costs will be pitifully low too, as will the number of unemployment claims and workers comp case claims filed with the state. The states usually only investigate instances of under-reporting sales, not over-reporting them because they want to make sure the proper sales taxes get paid. That's why this type of ML scheme often avoids detection - they're hiding in plain sight and nobody's looking.
My father could estimate a restaurant's gross sales by driving by the back of a restaurant location in the morning and counting how many empty bread racks were there waiting to be picked up. He's also look at how large the dumpster was and if he knew someone at the garbage company he'd ask how many times a week they had their dumpster emptied.
If it's coin operated laundramats you can solve them similarly. How much laundry detergent boxes are they selling compared to gross sales volume? Usually these places offer "dry and fold" services by the pound, so they'd have to be buying laundery soap in size equal to the busienss they're doing. You can find out the proper conversion metrics by asking a legitimate business owner for the statistics commonly used in that particular industry. For example, maybe the conversion factor is for every $100 in gross sales you sell $X of laundry boxes via the vending machines. Any competent business operator can quote his/her expenses as a percent of gross sales. Do a few informational interviews with honest operators and you'll find out the range of operating expenses typical for that locale.
Harry Markopolos, CFE