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Comment by tasuki | Hacker News Reader

I guess I don't really understand it. I understand how a bank robbery leads to dirty money - the bank has the serial numbers.

In what way is money from selling drugs "dirty"? Why does it even need laundering?

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Criminals are not afraid of the police but afraid of the IRS. Smuggling and selling prohibited goods is super easy, but then you suddenly have a shitload of cash but everybody knows you as an unemployed bum without career, and they would report you to authorities if they see you in a supercar. They need a cover story and career that allows them to "earn" money without raising any suspicion.

As the other commenter said, "Ozark" is a really good show about this.

Breaking Bad was another show that addressed some of the issues with Walt buying a car wash as a way to try to launder the drug money although the problem was that there was too much money (thus the 55-gallon drums of cash buried in the desert).

> the problem was that there was too much money

In real life, wouldn't they just open another car wash? Even in the show, Los Pollos Hermanos was a chain.

What became clearer the 2nd time around was that Walter White was a horrible criminal who's downfall was that he was greedy and didn't know when to stop.

The show is a show. Do the real life drug cartels "know where to stop"? They basically own some countries at this point.

Well, yes, it's fiction. My point is that Walter White, as a written fictional character, is written as a horrible criminal.

Pay closer attention to Mike's criticism of Walter's antics; or the general contrast between Gus, who is a professional criminal, and Walter, especially when Gus "fires" Walter. Ultimately, things end up poorly for Mike and Gus because Walter doesn't know how to behave as a criminal. (Or as a tech startup founder, for that matter.)

Dirty means it comes from illegal activities. You need to create a plausible clean source of the money before you can safely spend it.

Then I don't understand how the money from the sale of the agricultural equipment is "clean". Surely someone can think to ask: "where did you get the money to buy all that agricultural equipment?"

Someone can, and that's indeed a common way for criminals to get caught. But a bank won't let you open an account at all if you don't have an explanation that's at least plausible. How much further effort a criminal invests depends on how competent they are and how much they want to reduce the risk of getting caught by some review or another.

"where did you get the money to buy all that agricultural equipment?"

usually loans from banks. Farmers tend to have a lot of debt.

The value of something depends on its condition.

Suppose a piece of equipment has a market value of $200k if it's working, but only half that if it's in need of major repairs. They go to a farmer and offer them $100k plus another $100k piece of equipment for the $200k one, but instead of listing it as a $200k transaction, they specify the condition of the expensive one as non-operational and list only the $100k in money. The farmer is happy because they get to write off a $100k loss on their taxes and get the other $100k piece of equipment off the books. The other party then claims to have repaired the $200k equipment even though it was never broken and sells it for $200k, thereby laundering $100k in dirty money.

This is why attempts to prevent money laundering have extremely low effectiveness. All you need is two parties, one of which wants to get something of value off the books, the other other of which wants to get clean money on the books. They engage in an on the books transaction and an off the books transaction at the same time, account for the value of the off the books transaction in the price for the on the books transaction, and agree on a reason for that to have been the price which is plausible but hard to verify.

From the article:

> One of these [recommendations is] a change in the legal attitude to drugs [...] with the significant weakness that it is very unlikely to happen in a reasonable time frame

see the show Ozark on Netflix

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