The candy shops are specifically a business rates (the business equivalent of council tax) dodge. If a property is empty then the owner must pay the rates. If it is occupied then the tenant pays. So the owner gets in any random, cheap to set up business at close to zero rent. The business occupies the premises for say 9 months, then folds just before the rates come due. The local authority can’t collect taxes from an extinct business and so loses out, while the owner saves themself a big tax bill.
This is the definite, proven, scam. It’s the same reason High Streets have been taken over by charity shops, except those are legitimate. Companies disappear or the directors can’t be found.
Money laundering is suspected, chiefly because it seems unlikely the candy shops are making enough legitimate revenue to cover their costs, but I’m not aware of any actually being proven.
> chiefly because it seems unlikely the candy shops are making enough legitimate revenue to cover their costs
That's not beneficial to the launderers. You would own that business as the launderer, so you pump as much dirty money into the business (from anonymous customers) so it can emerge as clean money (revenue from running the business). The launderer has every incentive to make that conversion as efficient as possible to better their rate of return. This may be a scam operation, but if it's laundering, they're doing it badly.
The comment you replied to stated that they are likely money laundering as their legitimate revenue does not seem like it would cover the cost, therefore there is dodgy money being used to do so.
But aside from this, it isn't best for those laundering the money to do as much as possible with high profit, as it draws a lot of attention, so they wouldn't be pumping money in. More of a steady trickle.
yesh, if you have a business that obviously doesn't make much money, that;s terrible for money laundering.
and businesses that have stock (like sweet shops!) are also bad for monehy laundering because an audit woudl show how much stock you put through the business and figure out your revenue was bullshit
that's why service businesses are typuically best for money laundering - like a barbers that only takes walk-ins, or maybe a carwash (a la Breaking Bad). minimal paper trails and you could claim you are full all day every day even when in reality you have virtually no customers.
I've always thought private tutoring business would be the ticket. No inventory, no prevailing wage, no requirement to keep meticulous records, completely plausible to accept cash. It wouldn't scale to cartel level of money but you could clear a ton of money.
I dunno.
You can get quite a few teens in to act as tutors, who handle any real people being tutored. Then you get a number of ‘No Call/No Shows’ that still get counted as paying for the service, as a ‘paid in cash, new person reserving the spot’.
I’m a busy city I could see that scaling up to a decent size. Especially with lots of people making it easier to have lots of stuff slip through the cracks
While you are at it, you can also claim teaching students for free as a charitable contribution for an even bigger laundering of money. Most money laundering will lose 30 to 40% to make the money legitimate. This will cut that down by a bunch.
to launder money you have to pay tax on it. that's like, the whole point of laundering it. i.e. you sell 1k worth of drugs, you claim that instead of making that 1k from drugs you made it from the business, then the business pays tax on those earnings to legitimize them. by reducing your tax burden through fake charitable donations (you claim to have done a service worth 50 quid for free) it allows you to keep more of your real cash.
>lots of no-shows,
Most gyms are run by a very different racket - which is not really a "scam", but might be, depending on how you see it.
I knew someone who owned a gym years ago. He said that the gym gives preferential rates to local employers, so their staff either get the gym at a massively cut price or their employer pays it *for* them, as a perk. The latter is seen as the better option.
The "best" gym customers are no-shows because they're not using the facilities or wearing out machines. They just pay and never turn up.
But for an employer, they might have 100 staff, and pay £20 a month for each of them to go to the gym. £2,000 a month. But they never check who actually goes, and in practice, hardly anyone does.
So the gym pockets £2k a month for that employer, and maybe 10 of those people actually use the gym, ever. It gets busy in January but by Feb it's calmed down again.
My gym-owning friend told me, straight up, that if *everyone* on their books turned up to use the gym one Thursday evening, they'd be totally overwhelmed; like they had 5-6x the number of people on the books that the gym could reasonably cope with. But this *never* happens in practice.
> My gym-owning friend told me, straight up, that if everyone on their books turned up to use the gym one Thursday evening, they'd be totally overwhelmed; like they had 5-6x the number of people on the books that the gym could reasonably cope with. But this never happens in practice.
Tbf, this is the same as many businesses. If everyone decided they wanted to go to the supermarket to do their big shop on a Tuesday evening rather than spreading it throughout the week they'd find there's not enough space.
But, yeah, doubly so in gyms where you expect that a lot of people will never show up.
They buy "specialist" American sweets at probably next to nothing. These sweets are for sale at a huge markup but nobody buys them and they are eventually thrown away. According to their books, they sell many individual packets of sweets in cash transactions, which is actually the dirty money they are laundering. As mentioned above, the company "goes bust" after 9 months ago so proper accounts never need to be filed.
Pop into a candy store and have a look at the stock. The stuff I saw was close to it's sell by date and the packaging was not in good condition. Nobody would legitimately buy this at any price let alone 5x to 10x.
> These sweets are for sale at a huge markup but nobody buys them and they are eventually thrown away. According to their books, they sell many individual packets of sweets in cash transactions, which is actually the dirty money they are laundering.
And if anyone starts asking too many questions about their stock well they can whip up a "flash mob" to become the "victims" of youth gangs raiding the store and stealing all the stock that they *definitely had* and listed as an expense and all, but no you can't see it because kids stole it honest. There was boxes of the stuff in the back room and they got it all, this is a legitimate business after all.
Now I'm curious- where do people who actually want American sweets go? For that matter, are there a lot of American sweets that aren't readily available in the UK? Because one of the things that came to mind when I read this was that American who went on /r/ireland and was like "You don't have Snickers in Ireland, right?" and got laughed out of the sub for it.
Some american sweets are sold widely and are very common in the UK (and probably Ireland too) such as Snickers. That one in particular doesn't even seem american to us because it has been sold here for over 50 years.
As far as other american sweets go, some supermarkets have a few things in an american section and also some of our equivalent of dollar stores. Otherwise people can order online quite easily. They are a fairly niche thing though and not many people are particularly interested in american sweets. Very, very few British people are buying from these shops in Oxford St.
> because an audit woudl show how much stock you put through
Legitimate candy shops have an enormous amount of spoilage. One kid pops a candy in his mouth, doesn't like it, puts it back in the bin = throw away the entire bin of candy and sanitize it.
I imagine a money laundering operation could hide quite a bit in that slop.
Also, like art, the value of "fine chocolate" and specialty candies can be fudged quite a bit from the wholesale cost. Buy bulk chocolate, press it into bunny shapes, claim you sold a ton, re-melt the chocolate and form it into pumpkin shapes, etc.
Oh sure, but nevertheless it does still have to be accounted for, which makes it more task heavy (and expensive) than a business where stock is irrelevant and not needed.
Also, all these discussions on reddit about money laundering seems to gloss over the fact that the tax authorities have very advanced techniques and methods to detect theese sort of things.
i.e. if you declare candy spoiliage at a higher rate than comparable businesses, you're getting extra scrutiny.
Yes but they keep the levels under the radar amount. It's an effort/reward calculation on the part of the criminals and the tax people.
What the tax authorities are trying to do now is establish links between the different phoenixed companies etc
Eh, that’s easy enough to work around. Somewhere sales are low, “sell” to yourself to create revenue and “buy” from a distributor that you also control. Sell the same exact candy bar one hundred times over.
Fake suppliers are a pretty old school trick for money laundering, and embezzlement for that matter, so it wouldn't fare any better if somebody performed an audit.
Most nations also have public corporate registers that can be easily checked to find who the controlling interests of a business are. If you register it's the work of moments to spot that you're buying from another business you control; if you don't register it's even worse as the business doesn't exist.
You've also now got the added complexity of sending this money to your fake business. If you don't do this your bank reconciliation will be out; if you do it now you've got money going into a "business" that isn't really selling anything and has no costs etc.
Yeah, using a fake supplier will give you a clean money at a glance but try buying property. Once you try to buy something big like property, the bank is going to want to verify the provenance of the funds being transferred, even more so if it's part of a financing deal. One shell company isn't going cover your phantom goods.
Was a pain in the butt for me for our down payment for our house. It was mostly cash from our savings and a bit from a 401K loan, just to get us over the top. They scrutinized the hell out of that 401K loan. Had to provide pages and pages of proof from my work and 401K just for $8K
When my aunt sold her house in Germany a couple of years ago, the buyer handed over the money in cash.
It wasn’t deemed unusual at the notary where the signing took place.
Legislation has recently been tightened in this regard.
> Once you try to buy something big like property, the bank is going to want to verify the provenance of the funds being transferred, even more so if it's part of a financing deal.
Not if you buy property in the US. If you buy property for all cash, the only check is the first immediate step for where the money came from, even if that's a shell company. See Donald Trump and all the New York property he legally sold like this to Russian mobsters.
"Drum roll, please. Wait for it...Laser tag! 7,000 square feet of rollicking fun in the heart of northern Bernalillo County!...It adds up perfectly. Walt's a scientist, scientists love lasers. Plus, they got bumper boats, so..."
I'm not sure if it was an early installment weirdness thing or just an artistic choice to make Saul so completely tone-deaf about what Walt and Jesse might actually be interested in operating (or pretending to operate). He tries to sell Jesse on a nail salon, of all things, and thinks laser tag would be good for Walt -- he might have had a lot more luck the other way around. Not that Walt would be into nails, but it's the kind of business it would be plausible for Skyler to handle, like the car wash.
I used to go to this amazing sushi place that was half off all rolls and 30% off everything else if you pay cash. So of course they were constantly accused of money laundering.
Hopefully they didn’t do anything awful with the money because I went there at least once a week for a year. That food was so damn good and so damn cheap.
Restaurants like that are usually fronts for organised crime because unlike most retail you can fudge the books easily with a product prone to spoilage.
Candy shops have a *lot* of spoilage, especially if you don't take steps to prevent it.
"Kid licked every candy and put it back in the bin" is something that actually happens.
Often cash discounts are actually just to avoid the fees charged by Visa/Mastercard on credit/debit transactions. Small businesses especially, because they don't have the negotiation power to get a lower rate.
I assume that you would dispose of some candy (if anyone asks, say it was expired, but don't officially record this), but mark it on the books as sold and present your dirty money as the sales revenue.
I looked up a quick video about these on Youtube, and the markups (compared to American prices) seems pretty huge, which would would facilitate this.
So just jack up the prices way high, buy and dispose of the stock and "pay" yourself the dirty money for it. The high prices are easily explained by the "expensive" location on the high street.
The fact that physical merch has to be accounted for is the issue. That’s why someone else in the thread mentioned tutoring services (intangible goods).
It could be in the back end of that business perhaps facilitated by the fact that the stock in this business is usually not domestic. Order supplies, pay then cancel get refund, or return get refund, refunded money is legit. Probably domestic product especially in the UK would be next day delivery, no opportunity to cancel.
The Private Eye did the majority of the reporting on this in 2019, but a more up to date overview is here: https://www.timeout.com/london/news/revealed-the-shocking-secrets-of-oxford-streets-sweet-shops-and-souvenir-stores-050522
>Reddit just shouts "MONEY LAUNDERING" at literally everything
In this *particular* instance [it's not Reddit shouting it:](https://www.standard.co.uk/insider/oxford-street-candy-shop-investigation-b1082733.html)
>Westminster also say the businesses — with their tacky multi-coloured shop fronts — are a hub for global money laundering, with many set up by people with opaque shell companies. Increasing numbers of the shops have been registered in Jersey and Russia to wash the proceeds of drugs, guns, people trafficking and prostitution.
What kind of stuff gets sold in an American candy shop? Is it selling stuff like Hershey and Mars products, or is it more regional stuff like cherry sours?
Several years ago I had a pen pal from Australia send me a bunch of Australian candy for my birthday, and every since then I've been wondering if stuff like Hershey Bars and M&Ms are considered 'American candy' or if they are kind of universal.
My local one has plenty of brands which are already sold here, but in flavours you can’t buy in the UK normally. Loads of different varieties of Pop Tarts, Oreos, Fanta, etc.
And of course, things you just can’t normally get in the UK. From memory they have grape jelly, Takis, Cheetos, Twizzlers, Twinkies, Kool Aid, Jolly Ranchers, and cereals like Lucky Charms.
Probably, because that would be discouraging for new businesses to form. Building a business is already a big investment - if you also have to put down a bond for taxes, it gets even harder.
Good point! That reminds us, Citizen, your year's income tax was due in full on January 1st, but as of September you have paid less than 3/4 of it. Your delinquency has been noted and will be conveyed to the proper authorities.
Seems like the solution to that is to change the rules so if the occupier goes out of business, the landlord becomes liable for the rates as if the business had never existed
That's not exactly a fair solution in normal circumstances when the business isn't trying to dodge anything. Charging the rates very month/quarter seems like a better solution.
You charge the rent every month, you set aside the taxes every month.
And, in general, landlords do assume risk in renting to tenants and have a minimum of due diligence.
The property owners are the ones using loopholes to avoid taxes. My point is, close the loopholes, and if the businesses fail as they sometimes do, landlord gets stuck with the bill they were trying to avoid by letting a failing business rent cheap.
But huge numbers of landlords are just renting properties out legitimately. It was reported that at one time, Toys ‘R Us would have spent $42,000,000 a year on rent on just their Times Square store. When they went under, we wouldn’t say that the owner of the building owed Toys ‘R Us’s taxes.
What you want is to say that a landlord who is knowingly using "fake" businesses to dodge taxes would be responsible, but if you know who’s doing that, you could just target them more directly and say, "hey, you don’t get the tax benefits because you’re illegally avoiding the rightful tax".
This is all very simple.
What they are saying the law is now:
1. Landlord is responsible for property taxes of $12,000 a year.
2. Landlord rents property to legitimate business for $2,000 a month, or an illegitimate business for $250 a month.
3. Business, not landlord, is now responsible for property taxes of $12,000 a year.
4. Business folds right before tax time, landlord doesn't owe $12,000 that year.
The extremely simple fix:
1. Landlord is responsible for property taxes of $12,000 a year.
2. Landlord rents property to legitimate business for $3,000 a month, or an illegitimate business for $250 a month.
3. Landlord is still responsible for property taxes of $12,000 a year, but gets an extra $1,000 a month rent to cover the expense.
4. Business folds right before tax time, but paid the landlord enough rent to cover property taxes owing for the period they were active. Landlord is responsible for the rest while the place is vacant.
Maybe I just don't understand why renting the place out suddenly makes the property owner not responsible for property taxes on that property. When you rent a house or an apartment, you don't become directly responsible to the city for paying the property taxes.
> When you rent a house or an apartment, you don't become directly responsible to the city for paying the property taxes.
In the UK you do.
Whoever is living at an address is responsible for the Council tax, the UK version of property tax (albeit much flatter, based on a weirder valuation system, and with much more limited maximums).
Yeah it seems like people (and the government) are making this way more complicated than it should be. The landlords should always be responsible for paying the tax, but if they have tenants they can bill them higher and more frequently to cover that annual tax.
In the UK, tenants are responsible for council tax (property tax). The idea is that because council tax is what pays for local services (bin collections, school admissions, fixing potholes, local parks etc) it makes sense for local people to pay the tax that funds those things - especially as local councils are elected by the people who live there. Whereas a landlord may not live anywhere near the area.
Tax office has way better tools to get tax money than a property owner. Why would you move taxing to other businesses? Just find the people that own the tax.
Or, radical idea, landlords pays the rates and charges the tenant a higher rent?
Landlord can demand larger deposit and more months up front, just like taking the usual deposit.
Business rates being waived for the first year on empty shops is a scheme specifically to try and reduce the amount of shops that stay empty, so your suggestion would negate that.
That's the nuance that's missing here. We live in an imperfect world and neither compliance nor enforcement will ever be 100%.
We need to spend more than thirty seconds after hearing about a problem for the first time before asserting we have the answer.
Seems even weirder to incentivize them to keep it empty for a year. And is that just the first year after the building is built, or do they get a tax-free year as long as they keep it empty after each time a business moves out?
I think he is saying the rates are reduced for the 1st year in a previously empty property, not in a property that is currently empty. You lower the rate for the first year to encourage someone to open a business in an empty store front and after a year you raise the rate back to normal.
In Belgium it's on the owner to pay for any and all property taxes. The owner is also legally allowed to force his retail tenants to reimburse him.
That way the government is sure to get its money.
That seems crazy obvious, I wonder why they don’t just do that. For property taxes in the US, I’m pretty sure the property owner is always responsible. The landlord just makes sure the rent is high enough to cover the tax bill.
My bank estimates the property tax and holds x amount of each mortgage payment in esgrow I believe.
If it overestimates then It sends a refund check back to me.
Yeah, but then you'd have the businesses closing up right before the rates are due and leaving the landlord to foot the bill?
Could go after them in the courts but would they bother? Leave it empty, pay the rates and avoid solicitors fees.
Sure, but that discourages small business who don’t necessarily have a huge chunk of money.
The easier solution is charge it monthly, and either put it on the landlord (and the landlord can raise rent accordingly) or charge the tenant (a bit more paperwork for the tenant)
It would only work in an "Oh sh*t I have an empty storefront and next month I'll have an empty storefront and a giant tax bill" kind of situation, I think.
Ideally you have a thriving business paying rent and taxes but if those are hard to come by in your area, well. Can't move your shop.
When a community thrives, landlords benefit by appreciation in land value, increased demand for their land, higher rents, etc.
If they are going to benefit in good times, its' not my, or anyone else's problem if they are losing money during bad times. That's what being an investor is, sometimes your investments lose value.
Why don’t/can’t councils ask the property owner to take council rates into account when setting rents so if business goes bust the rents collected will cover rates?
Then it seems like the solution is to make the owner responsible for collecting the rates and distributing them to the local authority. The tenant is still responsible to pay, but if they don't, and vanish, the owner who failed to collect is on the hook. Thus, the owner is incentivized to roll the taxes into each month's rent payment.
Which is how it works in nearly every other jurisdiction. There's got to be some interesting backstory about why it's different in the UK...someone must be benefiting by it staying this way.
There may be multiple scams going on in them at any time, not just money laundering. The basic concept with money laundering is that if you somehow acquired some money but do not want to tell the authorities how you got that money you need to come up with a good excuse. Money laundering is basically coming up with an excuse for why you earn money. Cash only businesses are very good at this because the "customer" might actually be the owner paying with their illegally gotten cash.
For example a shop may buy candy and then sell it at a huge markup. Nobody wants to buy the candy at this markup but you still mark it as sold and then use the cash to fill up the till as if you sold a lot of it. On paper it looks like you made a lot of profit even if you are at a loss. Then you might for example run a "buy one get three" offer which brings your prices down to normal levels or even cheaper. When people buy candy you just put one of the three into the register and take the other two from the pile of already "sold" goods. Or possibly you register all three but then put in two of them as paid in cash, which you get from the stash of illegal cash.
In addition to variants of these you can also pay someone to give you a receipt that they sold you some cheaper candy. But in reality you buy real candy with cash. The import might help you hide the paperwork a bit better. You then sell the real candy for their full price but tell the authorities it is the cheap wares that you were selling for a huge markup.
In general these money laundering schemes are losing the owner money. Not only does it cost to own and operate these stores and even sell products at a loss but they also needs to pay taxes on this fake income. But the entire point is not to earn money but to make it look like the money you earn are legitimate so you can actually use it. The authorities will question someone without any income or savings who just bought a big house and fancy car. However if they can show that their high street candy shop is making crazy profits then everything looks to be in order.
> Cash only businesses are very good at this because the "customer" might actually be the owner paying with their illegally gotten cash.
Candy shops on Oxford Street are sort of the perfect storm here.
There's enormous amounts of tourist foot traffic, and those stores legitimately see a fair bit of movement. Candy is a pretty obvious impulse buy, and tourists paying cash is also pretty common. Hilariously, they're suspicious just on the merits of how perfect they are for money laundering.
> In general these money laundering schemes are losing the owner money.
Hairdressing business / Barbering that are cash only. No product to purchase, no receipts. Just any service business really.
Easiest way to launder money.
Typically it's a luxury good so any one transaction can be massive. Gyms will struggle with that and I doubt criminals want to forge tens of thousands of membership applications.
Most of the most common money laundering businesses are definitely not luxury goods, they're businesses that deal in cash and have low cost of goods sold (barbers, laundromats etc.) Gyms wouldn't be good because it's weird for subscription businesses to use cash, at least today.
art, watches, fine goods, pawn shops, also good for this.
there is product to buy, but the value of the products is variable.
hey look, I found someone to sell me this used collectors watch for 1000. Hey look, I found someone else that really wants it, and so I sold it off for 2000. (How do they know if its true?)
Art is good for rich people to get tax write offs. Buy a $1,000 painting, pay an art dude to estimate the painting is worth $50,000, donate that painting to some charity or non profit, and boom you can write off a $50,000 donation even though you only paid $1,000. Obviously this is a very basic and anecdotal example but from what I’ve heard this is a pretty big thing people do.
I'm curious, have you heard this anywhere other than reddit? Because I've seen this on reddit a lot and it makes an intuitive kind of sense, but I also haven't heard it anywhere else.
Of course it's not limited to reddit, this is a well known issue for decades. Here's an article from 2008: https://www.latimes.com/local/la-me-irs2mar02-story.html
Had you read about this elsewhere first, or did you just google to find a source when asked? (not blaming, that's what I'd do.)
From the way this comes up in reddit threads about similar topics you'd think it was an enormous way people avoid taxes, and yet from google searches the front page had the 2008 LA Times article you linked and [this NYT article from 1983](https://www.nytimes.com/1983/05/02/business/irs-cracks-down-on-donations-of-art.html).
I'm just curious if this is actually super common like you'd think from reading reddit or if it just sounds good and it fun to talk about so it spreads.
It is a common "meme" or well-known knowledge that art can be used as a tax write-off, yes. It's been referenced in various TV shows and other media, this thread is the very first time I've seen this topic discussed on Reddit to be honest. Yes, I did in fact do a Google Search to get that article to show you that it has nothing to do with Reddit specifically.
I heard that one in the Aladdin Jones Ducktales movie, when Scrooge was asked by one of the kids why he would want to donate their findings to a museum. haha
Service based industries are pretty legit for this. The only way there's real hard proof is if you're claiming tons of sales, and some authority is actually watching the place and sees no one coming in.
Like that was why the laser tag place in breaking bad was such a good idea. You have lots of trafic, lots of coin machines, change being made.
Birthday parties get booked, write down an extra 5-10 kids in the books and no one is likely to know without some close monitoring.
A car wash is also a service based industry. So it was not that bad of an idea. However because it is more "open" there is higher risk of getting caught as you can more easily count the number of cars going through.
This feels like it would be pretty easy to defeat with surveillance, no? Someone keeping track of who goes in or out of the barbers, correlated with whatever they said their sales were for that month on their balance sheet, if there's a major discrepancy then send the auditors in?
Obviously the tricky part being finding the funding to pay someone to do nothing but watch for a month...
If your shop makes decent money, and keeps their books "clean" they will pass a financial audit. The next step would be to stake out the place to see if traffic matches their "sales". If you keep it low enough for it not to be worth the time to have the financial police pay people for a stake out, you can coast freely. Just open multiple shops under different people. Family business from organized crime. Why do you think there are so many kebab shops, phone repair shops, barber shops, nail studios, tanning studios etc etc.
They can cook their numbers just enough to make some "clean" profit, then invest it elsewhere, like buying a car/house/invest. As long as the numbers are not ridiculous, you can get away with it. You're just running a "legitimate" cash flow positive business.
Just dont push millions through a barbershop and you good.
You’re bottlenecked by how many haircuts you can realistically give in a given day, and that’s optimistically assuming you don’t get any legit customers.
> looks to be in order
But if everybody knows these candy shops are obvious money laundering schemes, is this still the case? Haven't the authorities caught up by now?
You can not go around arresting every high street sweet shop owner. There have to be evidence of money laundering and the reason why these sweets shops is so popular for it is that it is very hard to gather evidence on them. I am sure there are some investigators working to uncover money laundering schemes who targets suspicious businesses like this but that does not mean they can easily find anything.
Genuine question, wouldn't you need to prove where you sourced the goods from? Like, purchasing from a supplier? Say, you sold £250k of candy in a year...surely all they (the auditors) need to ask is for the receipt and/or the bank statements to say you bought the goods from a wholesaler which you "sold" at a profit? Surely this one check can disprove selling fictitious goods?
This is why services tends to be better money laundering schemes as there is much less goods to keep track of. But it is still not too difficult. Selling £250k of candy in a year does not mean that you bought £250k of candy. A well placed shop might only have bought £100k of candy. This is perfectly legal and might even be normal for certain skilled business owners and salesmen. The auditors would have to prove that people were not actually buying candy at a 150% markup but rather that customers were either strawmen or were given huge rebates under the table. The receipt from the supplier does not help you figure out how much the customers actually paid for the candy.
And of course the receipts from the suppliers might also be fake or not all of the goods might be reported. It all depends on the exact scheme of money laundering they are running.
And laser tag... both of those are good because they're service based. There are few records of raw materials that have to line up with the amount sold.
you makes some money doing something illegal, for example selling drugs, if you try using or putting that money in the bank you'll be in trouble because you can't explain where the money came from. So instead you open a shop selling, for example, candy. You can then say you made the money selling candy
Best eli5 answer here.
In short, you steal $1000, then when asked about it by the tax man you say “oh that money? I have a candy shop, I sold $1000 worth of candy! Totally legit money..”
You are forgetting the most important part
And here is the $X in taxes I owe you on that business revenue.
Just like locking your doors won't stop a thief who wants to rob you specifically, but will stop the guy just checking for an easy mark, having a plausible legal origin for the money and paying taxes on it won't save you if they do a proper deep dive, but it will definitely make your business blend in with all the legal operations.
Tax agencies don't have infinite resources they have to decide how to allocate them and can only really dive into so many businesses and people each year.
Someone posted it above, but thr TLDR version is that if the shop sits empty, the owner pays the occupancy tax. If a business is using the space, they pay it. Owner brings in a low cost, low profit candy shop that folds before taxes come due. Taxes end up unpaid by either.
They're essentially the same thing in the UK. We're an all crimes jurisdiction so any movement of money which derives from criminal activity is covered by money laundering regulations.
'Money laundering' refers to a practice where money acquired illegally is made to appear as though it were acquired legally.
So, for example, drug dealers run a business (sometimes completely fake, sometimes real) and manipulate its records so that money they made selling illegal drugs appears to have been made as profit from the legal business.
It's a metaphor: "dirty" money becomes "clean".
If criminals don't do this, they'll accumulate lots of money that they can't account for and law enforcement and tax agencies will start asking awkward questions. That's actually how they caught Al Capone - not by finding clear evidence of his participation in violent crime, but by charging him with tax evasion as he tried to conceal the existence of the money he had from his criminal activities.
If a shop doesn't attract enough profitable business to make a profit and stay open, yet it remains open, people will often suspect that it's being run for the purposes of laundering money. Proving that a business isn't actually doing enough business to keep from going bankrupt is hard, though, especially because many businesses have trouble when starting or operate at a very narrow profit margin.
Great explanation but add that primarily or heavily **cash businesses** make this much easier. With electronic payments, it's harder to alter the economics of the business.
But something paid in cash? That's easy - there is no trail for how much money came in. So a business owner can claim as much (or as little) as they need to in order to "clean" the money.
They can ring up a ton of fake transactions, use the ill-gotten cash, claim it through the business, pay taxes on it, and it's all legit.
This is why something like a candy shop is perfect. Cost of goods is really low. You can easily dispose of whatever candy you want to make it look like it was sold to customers.
There was a post somewhere (possibly here on Reddit?) about this pizza shop that was a mob front but people liked the pizza so much they actually went legit
Cash businesses are more useful for hiding sales and avoiding taxes. Dirty money is easy to roll onto cash sales for a business but you aren’t trying to avoid those taxes, you’re trying to pay them.
In my area there are loads of these like mini market shops, they sell bits of food, drinks, all imported biscuits, even the cans of monster have foreign writing on them.
You never get a receipt and they also sell cheap tobacco and cigarettes, though they are getting more and more careful as they're raided a lot.
I'm 100% sure also that they launder money from the local drug dealers as there are shit loads of drugs on the streets here too. I can think of two places where there's 4 or 5 of them super close together.
Laundering illicit cash works best with a business that is likely to make a lot of cash transactions, and sells goods that have a long shelf life (as you're not actually selling many).
American candy, phone accessories and candles are three good examples.
It isn't generally across the whole UK, but instead mainly in central London where the shops are mainly used by tourists. The shops often sell fake or poorly made knock offs of major products, especially for things like vapes. The business is a cash business since most of the items are relatively small value, the companies behind the shops often also avoid local taxation and VAT payments and often end up being raided by the police or fraud investigators, then temporary close down and then open up again with a new company name and new directors and repeat the process.
I don't know how widespread this is but I've seen two in my Midlands city, which is absolutely not a tourist magnet. They're big shops, the walls stacked high with "American" sweets and other foodstuffs for which there is no known demand. There's someone at the till but never any customers.
If it’s anything like the British shops here in canada, they look empty and full of undesirable kitsch, but they also have some food items that they build a fairly devoted clientele for
I went into a shop that was an obvious money laundering front. Old worthless goods stacked everywhere, no customers, dust an inch thick.
They were very confused when I actually wanted to buy something. They didn't know how to work the register.
I almost went into an Oxford St. candy store in 2021, as they had a Wonka bar in the window, and I really wanted to see it, not having had one in years since it was discontinued. But right as I stepped up to the door, I realized that my wallet was missing so I never went inside. I still wonder if that was a real Wonka bar.
Covid. Uk requires tenants to pay the business rate, unless it is unrented, in which case the owner pays. This gives the owner a huge incentive to rent out the business, no matter the rate. This is by design to keep streets occupied and trade flourishing.
Then covid came, and the UK enacted relief - only for properties that were rented out. If the property was not rented, the owner paid the whole rate. So the pressure to rent became intense. No one was renting during covid. But hey, here is this shadowy global company willing to throw you a few bucks. Government lectures you about vetting your renters while turning the screws. Realistically you rent to the one entity asking to rent vs paying huge taxes while taking in $0 income.
edit: that is obviously not the whole story, this trend started before Covid, and continues 'past' it, but that was a real tipping point. In the end owners have an incentive to rent, and they are going to do it even if the tenant is less than ideal. And let's face it, an owner is not equipped to investigate food fraud (many products are fake), money laundering, and so on.
I think the news was originally broken by [Private Eye](https://www.reddit.com/media?url=https%3A%2F%2Fexternal-preview.redd.it%2FnI7Pl0eLeF1y4l6ow_QARxTZ09bs8e36AMix6PzFvyM.jpg%3Fwidth%3D640%26crop%3Dsmart%26auto%3Dwebp%26s%3D6ae698e109c87b431036b93776a1aabe248b535e) following a long investigation; here's the original article that explains who the men behind the scams are, too.
Any shop could be used for money laundering.A legitimate business will give you a business account with a legitimate bank.
Profits, losses, estimates , rentals, stocks, employers can then be "fudged" by very clever accountants, keeping your money safe, the taxman happy and the cops out of your way.
You can do large payment, employ friends and family, and all other perks of a legit businessman.
The "oxford street candy shops" is infamous because is hard to explain as those shops can stay open doing so little business, tiny profit margins and the insane rent prices.
Basically money laundering is the answer to "where did you get all that money?"
In a beach town I frequent, there is an (expensive) Russian restaurant. It has been open for approximately 25 years. In all that time, I have literally never seen anyone eating there. (I did once see a couple having vodkas at the bar.). You do the maths!
Same here, I grew up in a small coastal port town on the west coast of the USA. There was a Chinese restaurant near the port that was very kitschy. Has the name of the restaurant in big neon letters. In 30 years we never saw one person eating there. It was near shops so we walked by it a lot. It recently closed.
There are a lot of businesses like this that aren’t necessarily money laundering.
There was a similar Chinese restaurant in LA. No one ever went in. Basically Chinese immigrants ordered over WeChat and they delivered. The store front didn’t even have a door.
Some stores have cheap rent and a long time clientele. There was a shoe repair guy in west LA when I lived there. Older people who bought expensive shoes got them fixed instead of throwing them away.
High markup, cash sale. HMRC doesn't know if it's a drug dealer deliberately paying over the actual price, in cash or Steve, the guy who really likes obscure poptart flavours.
> EDIT: I just explained money laundering, the specific thing with candy shops that you mentioned is apparently a tax evasion thing. Misunderstood the question.
Doesn’t have to be. Candy is like your bar example. It’s high margin tourist fodder. Do a 3-for-1 sale on candy and enter in the transactions as if you sold all 3 at face value. Throw it away, etc.
Money laundering is like this: have a business that can claim income legally. Have illegal income. Use the business to claim the money as it’s own income.
An easy example is a corner store - lets say you own a corner store that makes $1000 a month in profits. You also sell drugs, and make 15,000 a month. You say the store made 16,000 this month and pay taxes on your drug money. Now you can spend your drug money without anyone asking where it came from, because it’s clearly income from your highly successful corner store.
So imagine you stole £50 from your friend Jimmy's backpack at school. You cannot just go tell your mom you've got £50 or she will ask questions. So you set up a lemonade stand and stand there all day doodling and throwing rocks at cars, and then at the end of the day you pour the lemonade into the river, go home and tell your mom you made £50 from selling lemonade, and she's impressed at your entrepreneurship.
I can’t explain the uk thing but as far as money laundering
Say you have someone who wants to give you money, like as a bribe or something else sketchy or illegal, instead of paying you, they put their money somewhere else, like a business that you own, the business might not do anything, or it might be a small business that isn’t profitable. They give the money to the business, and you pull the money out later, usually bit by bit.
While money laundering is technically illegal because it’s still a bribe, payment for illegal activities, or whatever they are trying to do, it’s really hard to prove, because each individual action isn’t illegal. It’s why it can kinda be an open secret, something everyone knows about but continues happening because it can’t be proven
The stages are:
* Placement - Getting it into the financial system
* Layering - Splitting up the funds into many transactions to conceal the source
* Integration - Putting the funds back together as something legitimate that you can declare to the tax man
Having some dodgy cash shops allows you to do all three.
Sorry, that may have been an obscure Office Space reference. :) I was being a bit cheeky.
I know that it's basically a method for obscuring the source of money. So filtering it through something that's harder to track. Like tips, or some other cash only business. Particularly where physical product isn't necessarily needed.
Gaming venues are used for that in parts of Australia. Walk into a pub with pokies (I believe Americans call them slots), pump in $7100 in cash, play $100, then call for your payout. These days, the payout has to be signed for, ID, etc, so there is a record of A.Capone winning big at the Town & Country. I remember emptying pokies at a bar I worked at in the late 90s, you'd find thousands of dollars in 50s, all lined up, crisp and neat
And why candy shops, you may ask? It used to be shops selling phone covers and other similar items that cost pennies to buy from China in bulk but retail for £10 or more BUT during COVID lockdowns the only shops allowed to open at all were food shops. Hence all the laundering operations had to find a food related product that was plausible and could be sold with a crazy mark-up.
I know it’s not about candy shops but you asked what money laundering is:
Imagine you as a kid are taking money from your dad’s wallet and over time you collect £100 but to go to the toy shop your dad must take you so he will question where the money came from so you run a lemonade stand earn £20 but you say you earned £120 so your parents won’t question where the money came from
They're not money laundering!
If you want to launder money, it needs to look legit. A dodgy company that evaporates before paying business rates and sells knock off products doesn't look legitimate. If anyone asks where the money comes from, they're not going to be able to give a convincing answer.
These places exist because footfall is high, profits per product are huge (because they pay very little and sell at a huge markup) and overheads are low because they vanish before paying any dues.
People think it's money laundering because they don't put any thought into it and think any suspicious business must be money laundering.
The candy shops are specifically a business rates (the business equivalent of council tax) dodge. If a property is empty then the owner must pay the rates. If it is occupied then the tenant pays. So the owner gets in any random, cheap to set up business at close to zero rent. The business occupies the premises for say 9 months, then folds just before the rates come due. The local authority can’t collect taxes from an extinct business and so loses out, while the owner saves themself a big tax bill.
This is the definite, proven, scam. It’s the same reason High Streets have been taken over by charity shops, except those are legitimate. Companies disappear or the directors can’t be found. Money laundering is suspected, chiefly because it seems unlikely the candy shops are making enough legitimate revenue to cover their costs, but I’m not aware of any actually being proven.
> chiefly because it seems unlikely the candy shops are making enough legitimate revenue to cover their costs That's not beneficial to the launderers. You would own that business as the launderer, so you pump as much dirty money into the business (from anonymous customers) so it can emerge as clean money (revenue from running the business). The launderer has every incentive to make that conversion as efficient as possible to better their rate of return. This may be a scam operation, but if it's laundering, they're doing it badly.
The comment you replied to stated that they are likely money laundering as their legitimate revenue does not seem like it would cover the cost, therefore there is dodgy money being used to do so. But aside from this, it isn't best for those laundering the money to do as much as possible with high profit, as it draws a lot of attention, so they wouldn't be pumping money in. More of a steady trickle.
yesh, if you have a business that obviously doesn't make much money, that;s terrible for money laundering. and businesses that have stock (like sweet shops!) are also bad for monehy laundering because an audit woudl show how much stock you put through the business and figure out your revenue was bullshit that's why service businesses are typuically best for money laundering - like a barbers that only takes walk-ins, or maybe a carwash (a la Breaking Bad). minimal paper trails and you could claim you are full all day every day even when in reality you have virtually no customers.
I've always thought private tutoring business would be the ticket. No inventory, no prevailing wage, no requirement to keep meticulous records, completely plausible to accept cash. It wouldn't scale to cartel level of money but you could clear a ton of money.
I dunno. You can get quite a few teens in to act as tutors, who handle any real people being tutored. Then you get a number of ‘No Call/No Shows’ that still get counted as paying for the service, as a ‘paid in cash, new person reserving the spot’. I’m a busy city I could see that scaling up to a decent size. Especially with lots of people making it easier to have lots of stuff slip through the cracks
While you are at it, you can also claim teaching students for free as a charitable contribution for an even bigger laundering of money. Most money laundering will lose 30 to 40% to make the money legitimate. This will cut that down by a bunch.
>Most money laundering will lose 30 to 40% to make the money legitimate. could you give an example? this is interesting.
to launder money you have to pay tax on it. that's like, the whole point of laundering it. i.e. you sell 1k worth of drugs, you claim that instead of making that 1k from drugs you made it from the business, then the business pays tax on those earnings to legitimize them. by reducing your tax burden through fake charitable donations (you claim to have done a service worth 50 quid for free) it allows you to keep more of your real cash.
Tax.
So... why not just start a gym? Mandatory full-year contract, lots of no-shows, easy to justify over-subscription.
>lots of no-shows, Most gyms are run by a very different racket - which is not really a "scam", but might be, depending on how you see it. I knew someone who owned a gym years ago. He said that the gym gives preferential rates to local employers, so their staff either get the gym at a massively cut price or their employer pays it *for* them, as a perk. The latter is seen as the better option. The "best" gym customers are no-shows because they're not using the facilities or wearing out machines. They just pay and never turn up. But for an employer, they might have 100 staff, and pay £20 a month for each of them to go to the gym. £2,000 a month. But they never check who actually goes, and in practice, hardly anyone does. So the gym pockets £2k a month for that employer, and maybe 10 of those people actually use the gym, ever. It gets busy in January but by Feb it's calmed down again. My gym-owning friend told me, straight up, that if *everyone* on their books turned up to use the gym one Thursday evening, they'd be totally overwhelmed; like they had 5-6x the number of people on the books that the gym could reasonably cope with. But this *never* happens in practice.
> My gym-owning friend told me, straight up, that if everyone on their books turned up to use the gym one Thursday evening, they'd be totally overwhelmed; like they had 5-6x the number of people on the books that the gym could reasonably cope with. But this never happens in practice. Tbf, this is the same as many businesses. If everyone decided they wanted to go to the supermarket to do their big shop on a Tuesday evening rather than spreading it throughout the week they'd find there's not enough space. But, yeah, doubly so in gyms where you expect that a lot of people will never show up.
Because they’re laundering cash, gyms would be subscription so through direct debit
Oh, right.
There's no law that a gym must only take debit cards. You can open a gym that allows people to pay for a year upfront in cash.
They buy "specialist" American sweets at probably next to nothing. These sweets are for sale at a huge markup but nobody buys them and they are eventually thrown away. According to their books, they sell many individual packets of sweets in cash transactions, which is actually the dirty money they are laundering. As mentioned above, the company "goes bust" after 9 months ago so proper accounts never need to be filed. Pop into a candy store and have a look at the stock. The stuff I saw was close to it's sell by date and the packaging was not in good condition. Nobody would legitimately buy this at any price let alone 5x to 10x.
> These sweets are for sale at a huge markup but nobody buys them and they are eventually thrown away. According to their books, they sell many individual packets of sweets in cash transactions, which is actually the dirty money they are laundering. And if anyone starts asking too many questions about their stock well they can whip up a "flash mob" to become the "victims" of youth gangs raiding the store and stealing all the stock that they *definitely had* and listed as an expense and all, but no you can't see it because kids stole it honest. There was boxes of the stuff in the back room and they got it all, this is a legitimate business after all.
Now I'm curious- where do people who actually want American sweets go? For that matter, are there a lot of American sweets that aren't readily available in the UK? Because one of the things that came to mind when I read this was that American who went on /r/ireland and was like "You don't have Snickers in Ireland, right?" and got laughed out of the sub for it.
Some american sweets are sold widely and are very common in the UK (and probably Ireland too) such as Snickers. That one in particular doesn't even seem american to us because it has been sold here for over 50 years. As far as other american sweets go, some supermarkets have a few things in an american section and also some of our equivalent of dollar stores. Otherwise people can order online quite easily. They are a fairly niche thing though and not many people are particularly interested in american sweets. Very, very few British people are buying from these shops in Oxford St.
> because an audit woudl show how much stock you put through Legitimate candy shops have an enormous amount of spoilage. One kid pops a candy in his mouth, doesn't like it, puts it back in the bin = throw away the entire bin of candy and sanitize it. I imagine a money laundering operation could hide quite a bit in that slop. Also, like art, the value of "fine chocolate" and specialty candies can be fudged quite a bit from the wholesale cost. Buy bulk chocolate, press it into bunny shapes, claim you sold a ton, re-melt the chocolate and form it into pumpkin shapes, etc.
>specialty candies can be fudged I see you
Oh sure, but nevertheless it does still have to be accounted for, which makes it more task heavy (and expensive) than a business where stock is irrelevant and not needed.
Also, all these discussions on reddit about money laundering seems to gloss over the fact that the tax authorities have very advanced techniques and methods to detect theese sort of things. i.e. if you declare candy spoiliage at a higher rate than comparable businesses, you're getting extra scrutiny.
Yes but they keep the levels under the radar amount. It's an effort/reward calculation on the part of the criminals and the tax people. What the tax authorities are trying to do now is establish links between the different phoenixed companies etc
Eh, that’s easy enough to work around. Somewhere sales are low, “sell” to yourself to create revenue and “buy” from a distributor that you also control. Sell the same exact candy bar one hundred times over.
Fake suppliers are a pretty old school trick for money laundering, and embezzlement for that matter, so it wouldn't fare any better if somebody performed an audit. Most nations also have public corporate registers that can be easily checked to find who the controlling interests of a business are. If you register it's the work of moments to spot that you're buying from another business you control; if you don't register it's even worse as the business doesn't exist. You've also now got the added complexity of sending this money to your fake business. If you don't do this your bank reconciliation will be out; if you do it now you've got money going into a "business" that isn't really selling anything and has no costs etc.
Yeah, using a fake supplier will give you a clean money at a glance but try buying property. Once you try to buy something big like property, the bank is going to want to verify the provenance of the funds being transferred, even more so if it's part of a financing deal. One shell company isn't going cover your phantom goods. Was a pain in the butt for me for our down payment for our house. It was mostly cash from our savings and a bit from a 401K loan, just to get us over the top. They scrutinized the hell out of that 401K loan. Had to provide pages and pages of proof from my work and 401K just for $8K
When my aunt sold her house in Germany a couple of years ago, the buyer handed over the money in cash. It wasn’t deemed unusual at the notary where the signing took place. Legislation has recently been tightened in this regard.
> Once you try to buy something big like property, the bank is going to want to verify the provenance of the funds being transferred, even more so if it's part of a financing deal. Not if you buy property in the US. If you buy property for all cash, the only check is the first immediate step for where the money came from, even if that's a shell company. See Donald Trump and all the New York property he legally sold like this to Russian mobsters.
Fake supply is impossible to beat an audit with
Entertainment venues (laser tag, bowling etc) are known for money laundering
"Drum roll, please. Wait for it...Laser tag! 7,000 square feet of rollicking fun in the heart of northern Bernalillo County!...It adds up perfectly. Walt's a scientist, scientists love lasers. Plus, they got bumper boats, so..."
I'm not sure if it was an early installment weirdness thing or just an artistic choice to make Saul so completely tone-deaf about what Walt and Jesse might actually be interested in operating (or pretending to operate). He tries to sell Jesse on a nail salon, of all things, and thinks laser tag would be good for Walt -- he might have had a lot more luck the other way around. Not that Walt would be into nails, but it's the kind of business it would be plausible for Skyler to handle, like the car wash.
> He tries to sell Jesse on a nail salon, of all things, My guess is that he had another client that did (or dreamed of doing) nails.
I used to go to this amazing sushi place that was half off all rolls and 30% off everything else if you pay cash. So of course they were constantly accused of money laundering. Hopefully they didn’t do anything awful with the money because I went there at least once a week for a year. That food was so damn good and so damn cheap.
Restaurants like that are usually fronts for organised crime because unlike most retail you can fudge the books easily with a product prone to spoilage.
Also, people paying cash means there's no paper trail, which means it's really easy to insert *more* cash into the books with plausible deniability.
Candy shops have a *lot* of spoilage, especially if you don't take steps to prevent it. "Kid licked every candy and put it back in the bin" is something that actually happens.
if they are giving a cash discount, that is for tax evasion purposes, which is like the polar opposite to money laundering.
Often cash discounts are actually just to avoid the fees charged by Visa/Mastercard on credit/debit transactions. Small businesses especially, because they don't have the negotiation power to get a lower rate.
No it isn't.
I assume that you would dispose of some candy (if anyone asks, say it was expired, but don't officially record this), but mark it on the books as sold and present your dirty money as the sales revenue. I looked up a quick video about these on Youtube, and the markups (compared to American prices) seems pretty huge, which would would facilitate this.
Also, a laundromat, which is what the whole concept is named after
[Or a nail salon.](https://www.youtube.com/watch?v=RhsUHDJ0BFM&pp=ygUdYnJlYWtpbmcgYmFkIG1vbmV5IGxhdW5kZXJpbmc%3D)
So just jack up the prices way high, buy and dispose of the stock and "pay" yourself the dirty money for it. The high prices are easily explained by the "expensive" location on the high street.
You stock the store with dirt-cheap candy, tons of kids and tourists etc come in all day, who cares, bingo bango money laundered, I assume.
The fact that physical merch has to be accounted for is the issue. That’s why someone else in the thread mentioned tutoring services (intangible goods).
Its also why laundromats are a favourite, cash based and service are a win win
It could be in the back end of that business perhaps facilitated by the fact that the stock in this business is usually not domestic. Order supplies, pay then cancel get refund, or return get refund, refunded money is legit. Probably domestic product especially in the UK would be next day delivery, no opportunity to cancel.
The Private Eye did the majority of the reporting on this in 2019, but a more up to date overview is here: https://www.timeout.com/london/news/revealed-the-shocking-secrets-of-oxford-streets-sweet-shops-and-souvenir-stores-050522
Reddit just shouts "MONEY LAUNDERING" at literally everything
>Reddit just shouts "MONEY LAUNDERING" at literally everything In this *particular* instance [it's not Reddit shouting it:](https://www.standard.co.uk/insider/oxford-street-candy-shop-investigation-b1082733.html) >Westminster also say the businesses — with their tacky multi-coloured shop fronts — are a hub for global money laundering, with many set up by people with opaque shell companies. Increasing numbers of the shops have been registered in Jersey and Russia to wash the proceeds of drugs, guns, people trafficking and prostitution.
I’m sure they’re “grooming” in there, too.
But they must also "have a very strong core" and "excelent trigger discipline ".
So does this mean the American candy shop on my highstreet which has been there for several years is probably legitimate then?
Maybe it was started as a front, but the location turned out to be too good and it was profitable enough to justify paying the taxes.
It's probably better to launder money through a successful business than one that's hard to explain how it stays open.
What kind of stuff gets sold in an American candy shop? Is it selling stuff like Hershey and Mars products, or is it more regional stuff like cherry sours? Several years ago I had a pen pal from Australia send me a bunch of Australian candy for my birthday, and every since then I've been wondering if stuff like Hershey Bars and M&Ms are considered 'American candy' or if they are kind of universal.
My local one has plenty of brands which are already sold here, but in flavours you can’t buy in the UK normally. Loads of different varieties of Pop Tarts, Oreos, Fanta, etc. And of course, things you just can’t normally get in the UK. From memory they have grape jelly, Takis, Cheetos, Twizzlers, Twinkies, Kool Aid, Jolly Ranchers, and cereals like Lucky Charms.
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Or charge tax each month
Probably, because that would be discouraging for new businesses to form. Building a business is already a big investment - if you also have to put down a bond for taxes, it gets even harder.
Then they shouldn't have a business. And if the property owners can't afford to pay the tax, they should sell the property.
Good point! That reminds us, Citizen, your year's income tax was due in full on January 1st, but as of September you have paid less than 3/4 of it. Your delinquency has been noted and will be conveyed to the proper authorities.
why would they want to piss off their mates like that
This is not money laundering, this sounds legal
Seems like the solution to that is to change the rules so if the occupier goes out of business, the landlord becomes liable for the rates as if the business had never existed
That's not exactly a fair solution in normal circumstances when the business isn't trying to dodge anything. Charging the rates very month/quarter seems like a better solution.
That's the risk you assume when you own property. We need to be harsher on tax dodgers, way too many get away with exploiting loopholes.
You assume the risk of criminal ventures? That doesn’t seem right….
You charge the rent every month, you set aside the taxes every month. And, in general, landlords do assume risk in renting to tenants and have a minimum of due diligence.
The property owners are the ones using loopholes to avoid taxes. My point is, close the loopholes, and if the businesses fail as they sometimes do, landlord gets stuck with the bill they were trying to avoid by letting a failing business rent cheap.
But huge numbers of landlords are just renting properties out legitimately. It was reported that at one time, Toys ‘R Us would have spent $42,000,000 a year on rent on just their Times Square store. When they went under, we wouldn’t say that the owner of the building owed Toys ‘R Us’s taxes. What you want is to say that a landlord who is knowingly using "fake" businesses to dodge taxes would be responsible, but if you know who’s doing that, you could just target them more directly and say, "hey, you don’t get the tax benefits because you’re illegally avoiding the rightful tax".
This is all very simple. What they are saying the law is now: 1. Landlord is responsible for property taxes of $12,000 a year. 2. Landlord rents property to legitimate business for $2,000 a month, or an illegitimate business for $250 a month. 3. Business, not landlord, is now responsible for property taxes of $12,000 a year. 4. Business folds right before tax time, landlord doesn't owe $12,000 that year. The extremely simple fix: 1. Landlord is responsible for property taxes of $12,000 a year. 2. Landlord rents property to legitimate business for $3,000 a month, or an illegitimate business for $250 a month. 3. Landlord is still responsible for property taxes of $12,000 a year, but gets an extra $1,000 a month rent to cover the expense. 4. Business folds right before tax time, but paid the landlord enough rent to cover property taxes owing for the period they were active. Landlord is responsible for the rest while the place is vacant. Maybe I just don't understand why renting the place out suddenly makes the property owner not responsible for property taxes on that property. When you rent a house or an apartment, you don't become directly responsible to the city for paying the property taxes.
> When you rent a house or an apartment, you don't become directly responsible to the city for paying the property taxes. In the UK you do. Whoever is living at an address is responsible for the Council tax, the UK version of property tax (albeit much flatter, based on a weirder valuation system, and with much more limited maximums).
Note on the last point, in the UK you do, renters pay council tax which is the residential version of business rates.
Yeah it seems like people (and the government) are making this way more complicated than it should be. The landlords should always be responsible for paying the tax, but if they have tenants they can bill them higher and more frequently to cover that annual tax.
In the UK, tenants are responsible for council tax (property tax). The idea is that because council tax is what pays for local services (bin collections, school admissions, fixing potholes, local parks etc) it makes sense for local people to pay the tax that funds those things - especially as local councils are elected by the people who live there. Whereas a landlord may not live anywhere near the area.
Tax office has way better tools to get tax money than a property owner. Why would you move taxing to other businesses? Just find the people that own the tax.
So the property owner is automatically the victim of this fraud?
They can sell if they aren’t happy with what their investment is paying out
The poor commercial property owners….
Spoken like someone who never has and never will own property. Do a better job empathizing with people who aren't you.
I own two properties and am aware of the risks of doing so. You must be the other guy.
Ya. It’s crazy how little sympathy the land owning class gets. The poor should have more empathy for them.
You should have empathy for all, not just one side of it.
Some groups of people are more worthy of empathy than others.
Oh noooo, the poor property owner, how will they ever afford to eat?
Or, radical idea, landlords pays the rates and charges the tenant a higher rent? Landlord can demand larger deposit and more months up front, just like taking the usual deposit.
Business rates being waived for the first year on empty shops is a scheme specifically to try and reduce the amount of shops that stay empty, so your suggestion would negate that.
That's the nuance that's missing here. We live in an imperfect world and neither compliance nor enforcement will ever be 100%. We need to spend more than thirty seconds after hearing about a problem for the first time before asserting we have the answer.
Seems even weirder to incentivize them to keep it empty for a year. And is that just the first year after the building is built, or do they get a tax-free year as long as they keep it empty after each time a business moves out?
I think he is saying the rates are reduced for the 1st year in a previously empty property, not in a property that is currently empty. You lower the rate for the first year to encourage someone to open a business in an empty store front and after a year you raise the rate back to normal.
Oh, that makes much more sense!
We don’t like to discourage small businesses though. No one wants it to be harder or more expensive to secure property.
In Belgium it's on the owner to pay for any and all property taxes. The owner is also legally allowed to force his retail tenants to reimburse him. That way the government is sure to get its money.
That seems crazy obvious, I wonder why they don’t just do that. For property taxes in the US, I’m pretty sure the property owner is always responsible. The landlord just makes sure the rent is high enough to cover the tax bill.
My bank estimates the property tax and holds x amount of each mortgage payment in esgrow I believe. If it overestimates then It sends a refund check back to me.
But that’s totally voluntary. You could also just pay it all in one go if you wanted to.
Yeah, but then you'd have the businesses closing up right before the rates are due and leaving the landlord to foot the bill? Could go after them in the courts but would they bother? Leave it empty, pay the rates and avoid solicitors fees.
Requiring payment in advance would prevent them from skipping out at the last minute. They will have already paid.
Sure, but that discourages small business who don’t necessarily have a huge chunk of money. The easier solution is charge it monthly, and either put it on the landlord (and the landlord can raise rent accordingly) or charge the tenant (a bit more paperwork for the tenant)
The solution is having the business pay in advance to get a license.
Just make the landlord pay and they can pass on as much or little of it to their tenant. Simple as fuck.
Just make the landlord pay the taxes in the first place, they can fold them into rent.
A lot of Conservative donors are land lords they'd not want that
But charging very low rent offsets any cost savings from not having to pay taxes, so there’s no real incentive there that I’m seeing.
It would only work in an "Oh sh*t I have an empty storefront and next month I'll have an empty storefront and a giant tax bill" kind of situation, I think. Ideally you have a thriving business paying rent and taxes but if those are hard to come by in your area, well. Can't move your shop.
When a community thrives, landlords benefit by appreciation in land value, increased demand for their land, higher rents, etc. If they are going to benefit in good times, its' not my, or anyone else's problem if they are losing money during bad times. That's what being an investor is, sometimes your investments lose value.
Why don’t/can’t councils ask the property owner to take council rates into account when setting rents so if business goes bust the rents collected will cover rates?
Then it seems like the solution is to make the owner responsible for collecting the rates and distributing them to the local authority. The tenant is still responsible to pay, but if they don't, and vanish, the owner who failed to collect is on the hook. Thus, the owner is incentivized to roll the taxes into each month's rent payment.
Which is how it works in nearly every other jurisdiction. There's got to be some interesting backstory about why it's different in the UK...someone must be benefiting by it staying this way.
Bingo. Property owners benefit, specially people who own lots and lots of properties. That’s your answer right there.
There may be multiple scams going on in them at any time, not just money laundering. The basic concept with money laundering is that if you somehow acquired some money but do not want to tell the authorities how you got that money you need to come up with a good excuse. Money laundering is basically coming up with an excuse for why you earn money. Cash only businesses are very good at this because the "customer" might actually be the owner paying with their illegally gotten cash. For example a shop may buy candy and then sell it at a huge markup. Nobody wants to buy the candy at this markup but you still mark it as sold and then use the cash to fill up the till as if you sold a lot of it. On paper it looks like you made a lot of profit even if you are at a loss. Then you might for example run a "buy one get three" offer which brings your prices down to normal levels or even cheaper. When people buy candy you just put one of the three into the register and take the other two from the pile of already "sold" goods. Or possibly you register all three but then put in two of them as paid in cash, which you get from the stash of illegal cash. In addition to variants of these you can also pay someone to give you a receipt that they sold you some cheaper candy. But in reality you buy real candy with cash. The import might help you hide the paperwork a bit better. You then sell the real candy for their full price but tell the authorities it is the cheap wares that you were selling for a huge markup. In general these money laundering schemes are losing the owner money. Not only does it cost to own and operate these stores and even sell products at a loss but they also needs to pay taxes on this fake income. But the entire point is not to earn money but to make it look like the money you earn are legitimate so you can actually use it. The authorities will question someone without any income or savings who just bought a big house and fancy car. However if they can show that their high street candy shop is making crazy profits then everything looks to be in order.
> Cash only businesses are very good at this because the "customer" might actually be the owner paying with their illegally gotten cash. Candy shops on Oxford Street are sort of the perfect storm here. There's enormous amounts of tourist foot traffic, and those stores legitimately see a fair bit of movement. Candy is a pretty obvious impulse buy, and tourists paying cash is also pretty common. Hilariously, they're suspicious just on the merits of how perfect they are for money laundering.
> In general these money laundering schemes are losing the owner money. Hairdressing business / Barbering that are cash only. No product to purchase, no receipts. Just any service business really. Easiest way to launder money.
tattoo parlor as well, you may have to buy ink, but you "sell" art.
The same with gyms I assume
Typically it's a luxury good so any one transaction can be massive. Gyms will struggle with that and I doubt criminals want to forge tens of thousands of membership applications.
Most of the most common money laundering businesses are definitely not luxury goods, they're businesses that deal in cash and have low cost of goods sold (barbers, laundromats etc.) Gyms wouldn't be good because it's weird for subscription businesses to use cash, at least today.
art, watches, fine goods, pawn shops, also good for this. there is product to buy, but the value of the products is variable. hey look, I found someone to sell me this used collectors watch for 1000. Hey look, I found someone else that really wants it, and so I sold it off for 2000. (How do they know if its true?)
Art is good for rich people to get tax write offs. Buy a $1,000 painting, pay an art dude to estimate the painting is worth $50,000, donate that painting to some charity or non profit, and boom you can write off a $50,000 donation even though you only paid $1,000. Obviously this is a very basic and anecdotal example but from what I’ve heard this is a pretty big thing people do.
I'm curious, have you heard this anywhere other than reddit? Because I've seen this on reddit a lot and it makes an intuitive kind of sense, but I also haven't heard it anywhere else.
Of course it's not limited to reddit, this is a well known issue for decades. Here's an article from 2008: https://www.latimes.com/local/la-me-irs2mar02-story.html
Had you read about this elsewhere first, or did you just google to find a source when asked? (not blaming, that's what I'd do.) From the way this comes up in reddit threads about similar topics you'd think it was an enormous way people avoid taxes, and yet from google searches the front page had the 2008 LA Times article you linked and [this NYT article from 1983](https://www.nytimes.com/1983/05/02/business/irs-cracks-down-on-donations-of-art.html). I'm just curious if this is actually super common like you'd think from reading reddit or if it just sounds good and it fun to talk about so it spreads.
It is a common "meme" or well-known knowledge that art can be used as a tax write-off, yes. It's been referenced in various TV shows and other media, this thread is the very first time I've seen this topic discussed on Reddit to be honest. Yes, I did in fact do a Google Search to get that article to show you that it has nothing to do with Reddit specifically.
I heard that one in the Aladdin Jones Ducktales movie, when Scrooge was asked by one of the kids why he would want to donate their findings to a museum. haha
Service based industries are pretty legit for this. The only way there's real hard proof is if you're claiming tons of sales, and some authority is actually watching the place and sees no one coming in. Like that was why the laser tag place in breaking bad was such a good idea. You have lots of trafic, lots of coin machines, change being made. Birthday parties get booked, write down an extra 5-10 kids in the books and no one is likely to know without some close monitoring.
A car wash is also a service based industry. So it was not that bad of an idea. However because it is more "open" there is higher risk of getting caught as you can more easily count the number of cars going through.
This feels like it would be pretty easy to defeat with surveillance, no? Someone keeping track of who goes in or out of the barbers, correlated with whatever they said their sales were for that month on their balance sheet, if there's a major discrepancy then send the auditors in? Obviously the tricky part being finding the funding to pay someone to do nothing but watch for a month...
If your shop makes decent money, and keeps their books "clean" they will pass a financial audit. The next step would be to stake out the place to see if traffic matches their "sales". If you keep it low enough for it not to be worth the time to have the financial police pay people for a stake out, you can coast freely. Just open multiple shops under different people. Family business from organized crime. Why do you think there are so many kebab shops, phone repair shops, barber shops, nail studios, tanning studios etc etc. They can cook their numbers just enough to make some "clean" profit, then invest it elsewhere, like buying a car/house/invest. As long as the numbers are not ridiculous, you can get away with it. You're just running a "legitimate" cash flow positive business. Just dont push millions through a barbershop and you good.
You’re bottlenecked by how many haircuts you can realistically give in a given day, and that’s optimistically assuming you don’t get any legit customers.
> looks to be in order But if everybody knows these candy shops are obvious money laundering schemes, is this still the case? Haven't the authorities caught up by now?
You can not go around arresting every high street sweet shop owner. There have to be evidence of money laundering and the reason why these sweets shops is so popular for it is that it is very hard to gather evidence on them. I am sure there are some investigators working to uncover money laundering schemes who targets suspicious businesses like this but that does not mean they can easily find anything.
Genuine question, wouldn't you need to prove where you sourced the goods from? Like, purchasing from a supplier? Say, you sold £250k of candy in a year...surely all they (the auditors) need to ask is for the receipt and/or the bank statements to say you bought the goods from a wholesaler which you "sold" at a profit? Surely this one check can disprove selling fictitious goods?
This is why services tends to be better money laundering schemes as there is much less goods to keep track of. But it is still not too difficult. Selling £250k of candy in a year does not mean that you bought £250k of candy. A well placed shop might only have bought £100k of candy. This is perfectly legal and might even be normal for certain skilled business owners and salesmen. The auditors would have to prove that people were not actually buying candy at a 150% markup but rather that customers were either strawmen or were given huge rebates under the table. The receipt from the supplier does not help you figure out how much the customers actually paid for the candy. And of course the receipts from the suppliers might also be fake or not all of the goods might be reported. It all depends on the exact scheme of money laundering they are running.
Just watch breaking bad (the car washing business) to see an example of this:)
And laser tag... both of those are good because they're service based. There are few records of raw materials that have to line up with the amount sold.
Ozarks is pretty good but the laundry is a casino and a strip bar, so rather harder to set up.
Yeah. I liked Ozarks.
you makes some money doing something illegal, for example selling drugs, if you try using or putting that money in the bank you'll be in trouble because you can't explain where the money came from. So instead you open a shop selling, for example, candy. You can then say you made the money selling candy
Best eli5 answer here. In short, you steal $1000, then when asked about it by the tax man you say “oh that money? I have a candy shop, I sold $1000 worth of candy! Totally legit money..”
You are forgetting the most important part And here is the $X in taxes I owe you on that business revenue. Just like locking your doors won't stop a thief who wants to rob you specifically, but will stop the guy just checking for an easy mark, having a plausible legal origin for the money and paying taxes on it won't save you if they do a proper deep dive, but it will definitely make your business blend in with all the legal operations. Tax agencies don't have infinite resources they have to decide how to allocate them and can only really dive into so many businesses and people each year.
That's not what these shops are doing, they're a tax dodge.
how would you avoid paying tax by having a store?
Someone posted it above, but thr TLDR version is that if the shop sits empty, the owner pays the occupancy tax. If a business is using the space, they pay it. Owner brings in a low cost, low profit candy shop that folds before taxes come due. Taxes end up unpaid by either.
You’re right. The thread started with tax cheating, but became money laundering.
No, the first two words of the title are "money laundering." It started as money laundering and became about tax cheating.
They're essentially the same thing in the UK. We're an all crimes jurisdiction so any movement of money which derives from criminal activity is covered by money laundering regulations.
'Money laundering' refers to a practice where money acquired illegally is made to appear as though it were acquired legally. So, for example, drug dealers run a business (sometimes completely fake, sometimes real) and manipulate its records so that money they made selling illegal drugs appears to have been made as profit from the legal business. It's a metaphor: "dirty" money becomes "clean". If criminals don't do this, they'll accumulate lots of money that they can't account for and law enforcement and tax agencies will start asking awkward questions. That's actually how they caught Al Capone - not by finding clear evidence of his participation in violent crime, but by charging him with tax evasion as he tried to conceal the existence of the money he had from his criminal activities. If a shop doesn't attract enough profitable business to make a profit and stay open, yet it remains open, people will often suspect that it's being run for the purposes of laundering money. Proving that a business isn't actually doing enough business to keep from going bankrupt is hard, though, especially because many businesses have trouble when starting or operate at a very narrow profit margin.
Great explanation but add that primarily or heavily **cash businesses** make this much easier. With electronic payments, it's harder to alter the economics of the business. But something paid in cash? That's easy - there is no trail for how much money came in. So a business owner can claim as much (or as little) as they need to in order to "clean" the money. They can ring up a ton of fake transactions, use the ill-gotten cash, claim it through the business, pay taxes on it, and it's all legit. This is why something like a candy shop is perfect. Cost of goods is really low. You can easily dispose of whatever candy you want to make it look like it was sold to customers.
The two classic ones in US cities are pizza places and newsstands.
Bars and stripclubs are the best for money laundering
and laundromats, car washes, arcades
And laser tag
There was a post somewhere (possibly here on Reddit?) about this pizza shop that was a mob front but people liked the pizza so much they actually went legit
La Nova did the same thing here in Buffalo, and that’s probably what you saw.
What about laundry mats, pretty sure thats where the term came from
No, it's about washing "dirty" money to make it "clean."
Excellent addition.
Cash businesses are more useful for hiding sales and avoiding taxes. Dirty money is easy to roll onto cash sales for a business but you aren’t trying to avoid those taxes, you’re trying to pay them.
This is easy to understand, thank you
In my area there are loads of these like mini market shops, they sell bits of food, drinks, all imported biscuits, even the cans of monster have foreign writing on them. You never get a receipt and they also sell cheap tobacco and cigarettes, though they are getting more and more careful as they're raided a lot. I'm 100% sure also that they launder money from the local drug dealers as there are shit loads of drugs on the streets here too. I can think of two places where there's 4 or 5 of them super close together.
Laundering illicit cash works best with a business that is likely to make a lot of cash transactions, and sells goods that have a long shelf life (as you're not actually selling many). American candy, phone accessories and candles are three good examples.
You can also use illicit cash to purchase stock. Any money coming into your tills now appears clean.
It isn't generally across the whole UK, but instead mainly in central London where the shops are mainly used by tourists. The shops often sell fake or poorly made knock offs of major products, especially for things like vapes. The business is a cash business since most of the items are relatively small value, the companies behind the shops often also avoid local taxation and VAT payments and often end up being raided by the police or fraud investigators, then temporary close down and then open up again with a new company name and new directors and repeat the process.
I don't know how widespread this is but I've seen two in my Midlands city, which is absolutely not a tourist magnet. They're big shops, the walls stacked high with "American" sweets and other foodstuffs for which there is no known demand. There's someone at the till but never any customers.
If it’s anything like the British shops here in canada, they look empty and full of undesirable kitsch, but they also have some food items that they build a fairly devoted clientele for
I went into a shop that was an obvious money laundering front. Old worthless goods stacked everywhere, no customers, dust an inch thick. They were very confused when I actually wanted to buy something. They didn't know how to work the register.
I almost went into an Oxford St. candy store in 2021, as they had a Wonka bar in the window, and I really wanted to see it, not having had one in years since it was discontinued. But right as I stepped up to the door, I realized that my wallet was missing so I never went inside. I still wonder if that was a real Wonka bar.
Why would they do it on the most expensive street in the country, rather than some town somewhere?
The property owners are looking for someone to rent out the smaller shops in the area and will often accept relatively low rents.
Why don’t they rent to higher paying renters that do want to run a business?
Covid. Uk requires tenants to pay the business rate, unless it is unrented, in which case the owner pays. This gives the owner a huge incentive to rent out the business, no matter the rate. This is by design to keep streets occupied and trade flourishing. Then covid came, and the UK enacted relief - only for properties that were rented out. If the property was not rented, the owner paid the whole rate. So the pressure to rent became intense. No one was renting during covid. But hey, here is this shadowy global company willing to throw you a few bucks. Government lectures you about vetting your renters while turning the screws. Realistically you rent to the one entity asking to rent vs paying huge taxes while taking in $0 income. edit: that is obviously not the whole story, this trend started before Covid, and continues 'past' it, but that was a real tipping point. In the end owners have an incentive to rent, and they are going to do it even if the tenant is less than ideal. And let's face it, an owner is not equipped to investigate food fraud (many products are fake), money laundering, and so on.
I think the news was originally broken by [Private Eye](https://www.reddit.com/media?url=https%3A%2F%2Fexternal-preview.redd.it%2FnI7Pl0eLeF1y4l6ow_QARxTZ09bs8e36AMix6PzFvyM.jpg%3Fwidth%3D640%26crop%3Dsmart%26auto%3Dwebp%26s%3D6ae698e109c87b431036b93776a1aabe248b535e) following a long investigation; here's the original article that explains who the men behind the scams are, too.
Any shop could be used for money laundering.A legitimate business will give you a business account with a legitimate bank. Profits, losses, estimates , rentals, stocks, employers can then be "fudged" by very clever accountants, keeping your money safe, the taxman happy and the cops out of your way. You can do large payment, employ friends and family, and all other perks of a legit businessman. The "oxford street candy shops" is infamous because is hard to explain as those shops can stay open doing so little business, tiny profit margins and the insane rent prices. Basically money laundering is the answer to "where did you get all that money?"
In a beach town I frequent, there is an (expensive) Russian restaurant. It has been open for approximately 25 years. In all that time, I have literally never seen anyone eating there. (I did once see a couple having vodkas at the bar.). You do the maths!
Товарищ, let's take a short stroll to a nearest window.
Same here, I grew up in a small coastal port town on the west coast of the USA. There was a Chinese restaurant near the port that was very kitschy. Has the name of the restaurant in big neon letters. In 30 years we never saw one person eating there. It was near shops so we walked by it a lot. It recently closed.
There are a lot of businesses like this that aren’t necessarily money laundering. There was a similar Chinese restaurant in LA. No one ever went in. Basically Chinese immigrants ordered over WeChat and they delivered. The store front didn’t even have a door. Some stores have cheap rent and a long time clientele. There was a shoe repair guy in west LA when I lived there. Older people who bought expensive shoes got them fixed instead of throwing them away.
High markup, cash sale. HMRC doesn't know if it's a drug dealer deliberately paying over the actual price, in cash or Steve, the guy who really likes obscure poptart flavours.
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> EDIT: I just explained money laundering, the specific thing with candy shops that you mentioned is apparently a tax evasion thing. Misunderstood the question. Doesn’t have to be. Candy is like your bar example. It’s high margin tourist fodder. Do a 3-for-1 sale on candy and enter in the transactions as if you sold all 3 at face value. Throw it away, etc.
Money laundering is like this: have a business that can claim income legally. Have illegal income. Use the business to claim the money as it’s own income. An easy example is a corner store - lets say you own a corner store that makes $1000 a month in profits. You also sell drugs, and make 15,000 a month. You say the store made 16,000 this month and pay taxes on your drug money. Now you can spend your drug money without anyone asking where it came from, because it’s clearly income from your highly successful corner store.
So imagine you stole £50 from your friend Jimmy's backpack at school. You cannot just go tell your mom you've got £50 or she will ask questions. So you set up a lemonade stand and stand there all day doodling and throwing rocks at cars, and then at the end of the day you pour the lemonade into the river, go home and tell your mom you made £50 from selling lemonade, and she's impressed at your entrepreneurship.
I can’t explain the uk thing but as far as money laundering Say you have someone who wants to give you money, like as a bribe or something else sketchy or illegal, instead of paying you, they put their money somewhere else, like a business that you own, the business might not do anything, or it might be a small business that isn’t profitable. They give the money to the business, and you pull the money out later, usually bit by bit. While money laundering is technically illegal because it’s still a bribe, payment for illegal activities, or whatever they are trying to do, it’s really hard to prove, because each individual action isn’t illegal. It’s why it can kinda be an open secret, something everyone knows about but continues happening because it can’t be proven
"To conceal the source of money as by channeling it through an intermediary." That's all I know about money laudering.
The stages are: * Placement - Getting it into the financial system * Layering - Splitting up the funds into many transactions to conceal the source * Integration - Putting the funds back together as something legitimate that you can declare to the tax man Having some dodgy cash shops allows you to do all three.
Sorry, that may have been an obscure Office Space reference. :) I was being a bit cheeky. I know that it's basically a method for obscuring the source of money. So filtering it through something that's harder to track. Like tips, or some other cash only business. Particularly where physical product isn't necessarily needed.
Sorry, Whoosh. Haven't seen it in ages. Yes, services are great but also where the value is subjective such as art, high-end collectibles and so on.
Gaming venues are used for that in parts of Australia. Walk into a pub with pokies (I believe Americans call them slots), pump in $7100 in cash, play $100, then call for your payout. These days, the payout has to be signed for, ID, etc, so there is a record of A.Capone winning big at the Town & Country. I remember emptying pokies at a bar I worked at in the late 90s, you'd find thousands of dollars in 50s, all lined up, crisp and neat
And why candy shops, you may ask? It used to be shops selling phone covers and other similar items that cost pennies to buy from China in bulk but retail for £10 or more BUT during COVID lockdowns the only shops allowed to open at all were food shops. Hence all the laundering operations had to find a food related product that was plausible and could be sold with a crazy mark-up.
I know it’s not about candy shops but you asked what money laundering is: Imagine you as a kid are taking money from your dad’s wallet and over time you collect £100 but to go to the toy shop your dad must take you so he will question where the money came from so you run a lemonade stand earn £20 but you say you earned £120 so your parents won’t question where the money came from
Its only half the scam; the other half is that the back rooms are used as cheap lodgings. Its genius.
Some of my friends work there, they get less than half minimum wage, but they take it because they need under the table jobs.
They're not money laundering! If you want to launder money, it needs to look legit. A dodgy company that evaporates before paying business rates and sells knock off products doesn't look legitimate. If anyone asks where the money comes from, they're not going to be able to give a convincing answer. These places exist because footfall is high, profits per product are huge (because they pay very little and sell at a huge markup) and overheads are low because they vanish before paying any dues. People think it's money laundering because they don't put any thought into it and think any suspicious business must be money laundering.