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matty_a t1_j23uogu wrote

The mattress store for money laundering is more an urban legend 0r a conspiracy than an actual fact.

There are two things that make for a good money laundering front business: high usage of cash and high but opaque profit margins. You want to be able to increase your margins to be able to run more cash through the business, but also not be obviously disjointed from a market.

That's why a laundromat is good (tough to track the inputs of cost, not a fixed market for laundromat services, cash heavy), gas stations are bad (easy to see if you are out of market, gas is a commodity), and things like art or "consulting" are the best.

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TheKingMonkey t1_j23wlff wrote

Services and perishable goods too. Basically anything where you can say you sold a lot more than you actually sold and it’s difficult for anybody to prove you didn’t. It’s why Walt had a car wash in Breaking Bad.

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Ansuz07 t1_j2452r1 wrote

Laundromats aren't actually that good anymore - the IRS is pretty smart and will look at water consumption rates to determine if you are claiming more revenue than your expenses would dictate.

The mob figured out the best businesses for money laundering a long time ago - strip clubs and casinos.

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Belzeturtle t1_j2473lg wrote

>IRS is pretty smart and will look at water consumption rates

You run the machines with no load, and consume water, no?

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Ansuz07 t1_j248jd6 wrote

You could, sure, but laundromats are pretty low-margin businesses, so running with no load is going to eat away most of the profits and limit your laundering.

You also run into the issue with comparables. If your laundromat is doing much better than nearby laundromats, that is a red flag that could get you audited. If the foot traffic to your business doesn't match the number of loads you claim you ran (the average number of loads per person will be pretty static across laundromats) then you are going to have to explain why your business is so unique.

All in all, its going to get your business scrutinized, which is the last thing you want for a money laundering front.

That is why casinos and strip clubs are the best businesses for money laundering:

  • Most people use cash (no paper trail)
  • There is no "average" spend per customer (one guy could come in and drop 10k) and foot traffic doesn't correlate well with revenue
  • The marginal cost is next to nothing
  • Comparables are hard - your casino/club may just be higher end than the neighboring ones, explaining your higher revenue.
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Belzeturtle t1_j248xbc wrote

I certainly agree that there are much better ways. I just didn't think water consumption would be the smoking gun.

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Ansuz07 t1_j2498fz wrote

It doesn't have to be a smoking gun - it just has to be odd enough to get noticed, which will prompt a deeper dive into the finances, which is the last thing you want.

The average laundromat has margins in the 25% range - if your margins are higher, that is going to draw some curiosity. If you run your machines more and your water usage is much higher than comparables, that is going to draw curiosity too.

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