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Money laundering through things like app sales is a classic technique. It's the modern version of buying "art" that isn't valuable at insane prices. Laundering through an app store incurs a 30% haircut, but the funds are very clean afterward and every money laundering technique is going to cost that much or more. It is not unusual for the laundered funds to be 40% of what they started with.
Pointing out that money laundering is a possibility is fair. I very much dislike Apple, but if it is a potential money laundering situation then their hands have been tied by the US government.
>It's the modern version of buying "art" that isn't valuable at insane prices.
That was possible because the art world (at some point in time) enabled this. Apple and its App Store actively prevent this from happening, it's the complete opposite.
https://news.ycombinator.com/item?id=38396197
https://news.ycombinator.com/item?id=38395956
https://news.ycombinator.com/item?id=38395894
If you keep this up, we're going to have to ban you. We've already had to warn you about this more than once in the past.
If you'd please review https://news.ycombinator.com/newsguidelines.html and stick to the rules when posting here, we'd appreciate it. That means no more swipes or name-calling, and definitely no more personal attacks.
I'll tone it down.
Step 2: Generate a bunch of fake accounts in many different countries, and fund them with the dirty money.
Step 3: Have all these accounts buy the app. Make sure you don't have them all buy it at once, or otherwise have a suspicious purchase pattern.
Step 4: Collect the (now clean) funds from the app store,
Okay, how does Apple "actively prevent" this? They don't have to enable anything.
In the art world there is (or at least, was) some level of secrecy in the transactions and parties involved.
Apple would give up all information it has about you to law enforcement at the slightest suspicion of some shenanigans happening. They also comply with all KYC requirements from the law. That's how (among other things) they "actively prevent" people using their platform for criminal activities. Heck, at their scale, they must have an entire team devoted to doing just that.
You use stolen credit cards to purchase the app. It's a very common method of fraud and does not require a criminal mastermind or a group of people to perform.
I have no opinion on what happened in this particular case, but it's crazy to imply that nobody is doing this stuff.
Because that is not money laundering.
You use stolen credit cards to buy gift cards (or just defraud people to obtain gift cards). This is dirty money.
You pay it to yourself on the App Store by getting an app listed and buying it. Apple then deposits money (minus their 30% cut) in your bank account, which is clean money.
How is that not money laundering?
The challenge with doing this at scale on the App Store is the account requirement. Apple also likely has controls on how many gift cards you can redeem over a period of time. You also need an app that looks plausibly functional. The amount of money people supposedly spend on gems or whatever will help though.
I’m willingly jumping into a hornet’s nest, but out of genuine curiosity, why?
An example, you have 1M cash but you need it in your bank account, because you want to buy a house or a car or groceries. If you just go to your bank with 1M in a briefcase a lot of people are going to ask you "where did that money came from?". But if you do ???? and you have a legit (or legit enough) excuse for that, you may get away with it and now you can use your money and people think you're a mastermind entrepreneur or something.
There's a reason why the first money launderers were laundromats and similar businesses, anything with plausible cash flow, because then you can go to the bank and tell them "I just run a very successful laundry business, and that's why I have a big bunch of $10 and $20 bills, some of them may have a bit of blood in them, though". Much more complex ways exist but the gist of it is this.
If you take legit money from someone's bank account, move it through Apple, then send it to Chile(?), then take it out(?) that's literally the opposite of what you'd like to achieve, hence why this argument is so absurd.
This is correct.
> Money laundering is the act of concealing that money, so that it becomes clean money in the face of any curious observer
This is the middle step, layering. Before that is placement, introducing the funds into the financial system; after, integration, withdrawing clean money.
Here, stealing the credit cards is the original crime. That per se is not money laundering. Running them is analogous to placement. Mixing those stolen numbers with people who legitimately forgot to cancel their subscriptions is layering. Getting a bank deposit from Apple: integration. (Banks won't question deposits from Apple.) That process, altogether, is absolutely money laundering.
The stolen credit cards are actually irrelevant. If the developer's dirty sources need to layer their funds, they can subscribe to the app and have it laundered for a meagre 30% haircut. Do that across a number of assumed identities and it's a decent cottage money-laundering operation.
> it almost always involves putting cash into a bank account
It very rarely does anymore. Certainly not at scale.
Yeah, I edited my comment shortly after but you were already writing this probably.
Only an observation, it almost always starts as money flowing into a bank account, though.
>If the developer's dirty sources need to layer their funds, they can subscribe to the app and have it laundered for a meagre 30% haircut.
No, because you cannot pay for apps with cash. If you already have cash into a bank account somewhere in the world then ... you most likely don't have the need to conceal it anymore. Buy shitcoin, send it to a tax haven, whatever, why would you make it dirty again by sending it to (of all damn options) Apple. Lol.
This is where you’re going repeatedly wrong. Most money laundering doesn’t involve cash.
If you embezzle funds, or defraud an investor, you wind up with dirty money in a bank account. While it’s there, it’s hot. You could do the crypto trade, but you’d still be in a position of holding cash (even in a tax haven, depositing loads of cash is expensive) and/or having a tainted account.
Running it through Apple yields a bank account tied to a developer entity that receives deposits from Apple. You can leave your money in that account without too many worries for extended periods of time, and produce KYC receipts to wary counterparties when asked to. That’s valuable.
But also, why would sending funds to Apple make them dirty? That doesn't make sense—as GP pointed out, sending funds to Apple so that Apple sends those funds back to you is what makes the money clean. It's the difference between depositing $50k in your bank account from a drug deal and getting a $50k direct deposit from Apple's developer program. The latter won't raise a single eyebrow.
No, because it is extremely easy for anyone to see that these funds came from an illegal activity, Apple would just say "these were stolen credit cards" within hours of it happening. That's the literal opposite of concealing the origin of money.
It’s super obvious, but here you go:
Step one: Trick old people into sending you iTunes gift cards or buy iTunes gift cards with stolen credit cards
Step two: Get an app in the App Store and use the iTunes gift cards to buy it many many times
Step three: Receive 70% of the money you laundered through the App Store from Apple. Pay taxes on it, and you’ve got clean money.
That is not money laundering.
Come on guys, read a bit, don't just parrot back what you see on Netflix.
This is money laundering.
You can also just buy mass amounts of stolen credit cards that have some moderate odds of successfully accepting some number of small ~$100 charges, so you can just do all this yourself. And folks do.
But please tell me what money laundering is and is not. It's not like I have a close to a decade of real world experience in an industry whose primary goals include combating it and working with relevant authorities.