Hacker News Reader

Comment by AnthonyMouse | Hacker News Reader

The type of tax fraud that requires money laundering is drugs. Or some other highly profitable criminal enterprise the proceeds of which have to be laundered to use in the regular economy without suspicion. As long as there is profit to be laundered it will be profitable to launder it.

Money laundering is a consequence, not a cause. You have to address the cause.

View on HN

> You have to address the cause

The causes are embezzlement and fraud (tax and otherwise). The drug trade is a flashy source of money laundering demand. But it is one of many.

Joe's Pizza not reporting their entire income or some plumber not reporting their side gig income isn't really a big deal except to the people who get bent out of shape over the sanctity of taxes. Only their thin profit margin (businesses with fat margins can afford to not run the risk of being on the wrong side of the law) doesn't make it right back into the local economy, arguably in a more efficient manner than if the money was taxed and given back by the government.

I've heard that one of the down-sides of underreporting is that, if in the future you want to get a business loan, you won't be able to claim as much past/future cash flow, so the bank won't extend you as much credit. For a plumber who plans to avoid debt, maybe that's fine. For another business that depends on leverage, like real estate, it could be disadvantageous, overall.

In Turkey, in the last 10 years, the major money laundering ops revealed were done on gold, oil, water and food.

> The type of tax fraud that requires money laundering is drugs.

even white collar crime would face the problem of explaining where the money for purchases came from if that income hasn't been declared. money laundering is part of the strategy for anyone who does crimes and wishes to not get caught (otherwise why give up part of the profit for the laundromat).

Reply on news.ycombinator.com