Anything About Everything

2 September 2010

Money Laundering

Filed under: Corruption,Crime,Finance,Markets,Society,Sport — rajiv @ 2:47 pm

News of the World smashes multi-million pound cricket match-fixing scandal:

“In a meeting with our investigators puppet-master Majeed:

  • BRAGGED that the scam is rife and future games against England this summer are already earmarked for cheating.
  • CONFESSED his match-fixing round the world had netted customers MILLIONS.
  • REVEALED how he oversees cheating by using no-balls, specifying how many runs will be scored or conceded in certain overs, with signals such as changing gloves to confirm the fix is on.
  • ADMITTED he abuses his position as owner of non-league Croydon Athletic FC to launder his illicit gains.”

A response on a forum:

“Something I have never quite got my head around – how can you launder money through a loss-making enterprise? I’m assuming a club like Croydon Athletic is a money pit. You might get the supposed glory of funding a successful team in effect at no cost to yourself if the funding is the proceeds of crime (allegedly), but hasn’t the money just vanished into a black hole? I suppose it’s always possible that if you pay a player more than he could get at a slightly higher level he might look so good that someone from an even higher level will pay a fee for him, but that sounds like a bit of a punt as a means of laundering serious money.”

Every business has expenses and revenue. Let’s say the owners of a legitimate business put in £100,000 obtained from other criminal activity unrelated to the business, and earn £70,000 revenue from the legitimate business, they may have lost £30,000, but now have £70,000 in clean money instead of £100,000 in “dirty” money.

£30,000 is the “laundry bill” [:)]

Sports clubs are just one way of laundering money.

Property is another popular asset. If say a property worth £100,000 is bought for £150,000 with dirty money. If the property is sold a few years down the road for £120,000, that’s £120,000 of clean money as opposed to £100,000 of dirty money.

However, a lot of dirty money coming into a property market has the effect of pushing up prices, so it may well be that a few years down the road, the property is sold for £200,000, so even better, £200,000 of clean money rather than £100,000 of dirty money.

Many asset classes can be used to launder money, as can the financial markets and betting/gambling.

I wouldn’t be surprised if there is more dirty money flowing through the global financial system than clean money.

An article from a 1994 issue of Newsweek. Has anything really changed?

1 Comment »

  1. […] Corruption is a global endemic, and FIFA’s conduct is merely symptomatic.   Before you can change FIFA, you have to change the world. […]

    Pingback by Change FIFA? Change The World « Football Insights — 1 June 2011 @ 11:58 pm

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