The art of Money Laundering by Sara Nunnally


Meyer Lansky… one of the most successful money launderers in modern history. He schemed, siphoned and skimmed money from illegal gains in the casino business and filtered $1 billion through Swiss banks, Hong Kong businesses and shell companies in the Caribbean.

He even bought an offshore Swiss bank to launder his money.

He was never caught, and his methods formed what’s considered modern-day laundering. Here’s how he did it.

From Meyer Lansky: The Shadowy Exploits of New York’s Master Manipulator

At first, Meyer funneled much of the money into legitimate and quasi-legitimate businesses in the United States. Many other crime bosses had done the same, more as a front than to hide income from the tax man. Real estate, food processing and distribution, garment production and restaurants were popular choices… None of this was enough; the enormous amount of money coming in outstripped their means to secrete it…

What Meyer did was find a new home for dirty money — the anonymous, numbered Swiss bank account. From there, dirty money could be used as collateral for legitimate bank loans, and the cash from the loans could then be funneled back into investment in the United States.

To be clear, this isn’t a step-by-step guide to breaking the law… It’s actually a case study in how to turn cash into something that actually has value.

Because today’s “money launderers” understand that cash itself is a liability. Today’s launderers take advantage of cheap credit to buy things like real estate.

Take South African billionaire Nathan Kirsh, whose net worth is about $5.1 billion. He spends his time hopping around his 86 Restaurant Depots and 10 Jetro Cash & Carry stores mostly on the East Coast of the United States.

His company’s EBITDA margins are twice that of Costco, and he actually owns most of the land his stores are on.

And here’s how he’s turning cheap cash into real money. From Bloomberg:

He raised $1 billion in a private debt placement in April as yields on US corporate bonds fell and used the proceeds to repay short-term debt and pay a one-time dividend to Jetro shareholders…

The billionaire is using some of the cash to buy property, which he said is a hedge against global inflation. He controls about 70% of the Jetro and Restaurant Depot warehouses, as well as residential and commercial real estate in the US, the UK, South Africa and Australia.

“Our business in the US is a big business that throws off cash, and we strip that cash,” Kirsh said in London. “I just don’t want that money lying around. We are certain that inflation isn’t going away, so it’s smart to be borrowing cheaply and putting it into realassets.”

And he’s not the only one taking advantage of today’s cheap credit. Banks that park their cash with the Federal Reserve can borrow cheaply and turn around and make loans that rake in 10 times the interest.

It’s simple math… low-hanging fruit, if you will. But loans aren’t quite real assets…


Link to the detailed article: click here