On the ground, money laundering looks a lot like embezzlement, because it's basically the opposite: instead of trying to divert money away from a business and into somewhere it shouldn't be (their bank account), they're trying to take money from somewhere it shouldn't be (say, a shipping container full of cash) and putting it into a legitimate business.
This works best with a variably high volume, cash-based, low-variable cost business. Variably high volume, because the more legitimate cash flow you have, the harder it is to notice some level of illegitimate cash flow, and the variability makes it much harder for someone (law enforcement) to notice that you're consistently making more money than you have business for. Cash based is obvious, you have cash you need to legitimize. Low variable costs eliminate another way law enforcement could notice you, if your variable costs don't match your revenue (a restaurant that only buys a couple lbs of butter a month shouldn't be making thousands of meals).
> On the ground, money laundering looks a lot like embezzlement
Thank you, this is exactly the sort of mental rubric that made a lot of things click!
And it makes me even more suspicious of that car wash that offers a very expensive "premium" wash package whose differences from the mid-grade package are stuff like vacuuming and hand-rubbed wax that probably consume little to no additional inputs. Hmmm. Hmmmmmmm.
This works best with a variably high volume, cash-based, low-variable cost business. Variably high volume, because the more legitimate cash flow you have, the harder it is to notice some level of illegitimate cash flow, and the variability makes it much harder for someone (law enforcement) to notice that you're consistently making more money than you have business for. Cash based is obvious, you have cash you need to legitimize. Low variable costs eliminate another way law enforcement could notice you, if your variable costs don't match your revenue (a restaurant that only buys a couple lbs of butter a month shouldn't be making thousands of meals).