Is this money laundering?

[Upthefinancialcreek]

Two people are moving money in and out of each other’s accounts.

For example, 1st Jan A pays B £500. B then pays A £500 on the same day.

There are also a lot of cash withdrawals.

In total A pays B £10,000. B pays A £10,000. A withdraws £10,000.

Is that money laundering? How does it work?

Are they paying each other in cash or bank transfers or one pays cash the other does bank transfer?

@Coconutter24
Bank transfers.

A is drawing cash out, not sure where that goes and not on the same days as the bank transfers.

You don’t need to worry……the bank will sort this almost immediately. This kind of activity is an instant flag

It’s the sort of money laundering criminals use student’s bank accounts for. Google money mules.

@Newbie8918
It’s been going on for years.

@Sassiskt
It is done using personal accounts, the cash is taken out on a credit card. Both people are self employed though.

How does it work and why would they need to do it though?

Whether or not it is money laundering really depends on why they are doing it

Where are the funds from?

It depends where the money comes from in the first place. It will definitely be flagged as potential money laundering but if the money wasn't dirty in the first place it isn't money laundering.

@tilypu
No idea.

@Upthenorth
No idea, money moved from credit card into personal account maybe.

Why don't you ask them as seem to have key knowledge about their banking?

Well unless you know where the money has come from you can't possibly know if it's money laundering.

@Waterbaby41
a friend asked me to help with some budgeting and i saw it all. They didn’t really have and answer, brushed it off.

@Upthefinancialcreek money laundering is hiding money that is gained through illegal means.

So unless the money was obtained doing something dodgy, then this isn't money laundering - it's just odd!

I mean if they think it looks like they're being paid, the bank will look at in and out money, and it has a net of £0, so I can't see what they're trying to achieve by doing this other than making it look a little dodgy.

Don't see how it's money laundering, the person who starts it off ends up as the person who withdraws the money, why do they even need to send it to B if all they do is send it back the same day?

@Biker47
i don’t know, that’s why it’s so odd.

Could it be tax evasion?

Is your friend person A or B?

I did something like this when I had banks accounts that gave freebies of you put in eg 3k a month. I just moved the same £300 around them 10 times a month by standing order.

Money laundering depends on where it comes from, its about making illegal money look legitimate or be hard to track.

I can't really see what advantages there would the taking cash out on a credit card to do this.

I guess if you can't afford your credit card repayment you could take cash and use that to make the payment. That won't end well.

@Biker47
i know them both through work, we work in the same industry and have small-ish businesses.

Maybe they're trying to make their accounts look so chaotic that if they do get investigated by HMRC, then they won't know what the hell is going on.

Not sure if that would work as a cover for tax evasion though.

The involvement of the credit card makes me wonder if they're funding the business with unofficial credit?

Again depends where the money has come from and then wether it is even taxable. You cannot pin anything on them from the little you know.

It’s just really weird.

Money laundering using someone else’s account (usually a student because they think they can earn easy money or an elderly vulnerable person, someone who doesn’t understand what’s going on) is usually done by Criminal having illegal enterprise pay money into random person’s account, so they have the illegal funds and then that person transfers the money to criminal’s account, and criminal can say “it’s just a gift from X”.

But transferring back and forth? That’s just weird.

Are they claiming UC? Could they be trying to fake income for each other to meet the minimum income floor? If they are, they’ll get caught so easily because just transferring the same money back and forth is really
obviously not income.

It doesn’t look like money laundering but it is really bloody weird so, since they’ve asked your help with finances, sit your friend down and ask what on earth is going on.

I’m more intrigued then wanting to report anyone but it is concerning.

Google mentioned smurfing?
This could be done for gambling gains?

It is just so odd.

Are they looking to get a loan or mortgage soon so this will make it look like they have more income than they do? Or possibly to sell their business?

It doesn't sound like money laundering or tax evasion.

@SargeMarge
I am seeing them on Monday so I might bring it up then.

I am worried they’re in financial trouble but not sure how this would help.

There was talk of setting up a business together but this makes me nervous to.

Money laundering is voluntarily paying tax on income that you received through illegal means so it becomes "clean" and traceable to a legit business. Once tax has been paid on it, you're free to use it without worrying about getting caught. ML often involves setting up a fake business and pretending to be your own customer, essentially funnelling the illegal cash through a legitimate registered company. Buying and selling art or buying extremely expensive tables and drinks at a nightclub are also popular ways of money laundering because the value greatly exceeds the service or product provided. Each transaction needs a receipt that is declared to Inland Revenue.

What you describe is weird but cannot be money laundering, particularly if it's going through a private account. People usually don't open their private accounts to inland revenue, so they're clearly not declaring the transactions so they can pay tax on it. It could be some other type of crime such as moving stolen money through several accounts to make it untraceable.