Concealing Financial Activities: Methods Used by Scammers, Tax Evaders, Insider Traders, and Money Launderers
The world of finance is fraught with illicit activities, and those who engage in them often employ sophisticated methods to conceal their transactions from authorities. This article delves into the tactics used by scammers, tax evaders, insider traders, and money launderers to keep their financial dealings under wraps.
Scams: Pumping Up Prices and Dumping Holdings
Scammers use various strategies to deceive investors:
- Investing in relatively unknown currencies: They spread misinformation on social media to artificially inflate the price of these currencies.
- Creating online identities: Scammers cultivate fake personas that specialize in recommending cryptocurrencies or stock picks, then recommend a particular asset for investment.
- Selling at peak prices: Once the price seems to be at its highest point, scammers sell their holdings, causing the price to plummet.
Tax Evasion: Storing Wealth Abroad
Wealthy individuals use offshore accounts to stash untaxed wealth:
- Estimated $8.6 trillion in 2016: Offshore accounts held an estimated $8.6 trillion in 2016.
- Shell corporations and intermediaries: They use shell corporations and law firms to connect people to banks and supply anonymous companies.
- Easy access to offshore funds: Accessing money in offshore accounts is as easy as using a debit card or taking out a loan against assets held abroad.
Insider Trading: Gathering Valuable Information
Employees at publicly held companies possess valuable information about their employers’ prospects:
- Connecting with finance and marketing departments: Insider traders try to make connections in these departments to gather intelligence.
- Social and professional circles: They use social and professional networks to draw out information from anyone willing to share secret details of products or strategies.
Money Laundering: Structuring Deposits and Using Prepaid Debit Cards
Criminals structure their deposits into banks to avoid triggering reporting requirements:
- Transactions over $10,000: They break down large transactions into smaller ones to avoid triggering reporting requirements.
- Prepaid debit cards like Green Dot: Prepaid debit cards offer anonymous means of working dirty money into the system.
- Smuggling cash across borders: Smuggling cash across borders is also a common method, especially in countries with lax banking laws.