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?

I can't see any benefit in it for gambling winnings, given that winnings are tax free, and the original person ends up with the money in the end anyways.

It could be as simple as having an account that requires you to pay in a minimum amount each month to avoid paying an account fee or to keep benefits (like some give out cash back and coffee vouchers etc if you pay in a minimum).
So, to guarantee that they both always hit the same minimum for each account, they transfer £500 back and forth as many times as needed to hit the minimum coming in.

Those account’s don’t mean that you need to have £1000 come in and stay in, they just mean that there needs to be £1000 of deposits a month and you can still then transfer it all out or spend it.

I dont get the question?

@SargeMarge
It is several times a month. It looks like other money has been going in too.

@JacknDiane
Why would this be happening. That is the question.

Someone putting money into an account and it being almost immediately removed isn't necessarily fraud, ML etc. But the bank will flag it up if it looks suspicious.

How is it effecting you OP? If you suspect anything criminal I guess tell the police.

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

You don't need to "open" your account to Inland Revenue. HMRC can access your bank transactions without your knowledge or permission whenever they want although they usually don't without good reason.

It's probably to keep their accounts open - lots of accounts require a minimum amount "in" each month.

Too little detail to know.

It may be a case of people trying to inflate the transactions or turnover on their accounts. It may also be some sort of misguided way of managing their money.

The reasons for doing so all may be wide ranging from trying to beat a credit scoring loan system, trying to avail of discounts or offers (i.e. free fees depending on number of transaction), trying to make both businesses appear healthier than they are etc.

It may also some sort of money mule activity.

The implications may range from very bad practice to illegal activity.

There may also be an innocent explanation too (althought I can't think of one off hand) but too little info to know.

There are some weird and incorrect "definitions" of money laundering on this thread.

"Money laundering is a criminal offence by which the proceeds of criminal activities, such as fraud or bribery, are converted into assets that appear to have a legitimate origin.

Typically, it involves disguising the origins of 'dirty' money and moving it through complex financial systems, businesses or overseas accounts.

The laundered money can be withdrawn later and either kept permanently by criminals or recycled into further criminal activity."

www.lawsociety.org.uk/topics/anti-money-laundering/money-laundering-risks-and-threats

If they are self employed it's also possible it's an example of very poor money management. Ideally, all business transactions need to go through a single account. However in some cases, especially married couples or very close business partners, it's fine for one person to pay expenses for the other one, or pay in cash for something that later needs to be claimed under the name of the other person. The accountant will sort it out but the transactions have to be traceable.

Another wild guess would be that both are struggling and "fronting" money for the other one or shoving money between the accounts so the statement looks higher than it actually is. Maybe they're trying to impress investors or maybe they're running a scam where they show people screenshots of their bank accounts.

Last guess would be a very clumsy attempt at tax evasion. They're trying to bring down the total profit by issuing fake invoices and basically "paying" the invoices for each other but then returning the money. It's highly stupid to do this through the same bank account so no idea what they might be thinking.

These transactions are all through personal accounts though. Person A is very successful, Person B is starting out.

would it make a difference if they worked in the financial industry?

If this is a regular occurrence know that banks use automated anti-money laundering (AML) systems that flag back and forth transactions. If they are in finance they must be stupid to do this. Don't do any business with them.

This is called cash advance… getting credit card money that you haven’t paid for yet.

Banks pick up on it though… it’s not allowed.

Other option for back and forth is cashing in credit card points without spending in shopping

It’s more likely to be someone trying to artificially increase the number or volume of money or transactions into their account or to try and bolster business receipts.

It doesn’t make sense as true money laundering as the money is moving from one bank account to another so it has already been cleaned. The aim of money laundering is to get dirty money into the system in a way that doesn’t draw attention to it eg a vape shop or pizza delivery with cash takings that are much higher than the volume of goods sold but banking the money as if it was legitimate business income.

Smurfing is different, smurfing is getting lots of people to make multiple small cash deposits in multiple bank accounts so they don’t trigger any checks. That usually requires a large scale operation.

This just looks like swapping money

I can't for the life of me think what it would be for! are they trying to show a higher balance to someone? But that wouldn't happen on a regular basis.

you aren’t getting good advice here cos people are defining money laundering as one thing when it could be lots of things. The moving between accounts could be layering. The bank should definitely be raising it as a flag internally but no one would know that they are looking at it.

whats the reason for you looking at their accounts? Just because its a criminal offence to tip someone off that you suspect is money laundering, esp if you are in a position where you should be reporting it.

your striked through comment in particular would make any regulated company come under a lot more scrutiny as they have to meet regulatory standards.

No, it’s not.

Are they a couple? We move our money around. We have several accounts each. Some have good rates for the balance, another has cash back if you put money in it. DH keeps track of it all. It gets moved through the accounts and ends up in savings or the current account. The current account then pays off the credit card.

It’s called cash advancing. Withdraw funds from a credit card and transfer to a bank account and withdraw cash.
Turning credit into cash
Banks usually take a dim view of it so it’s surprising ifs been going on for years.

A cash advance is a high-cost, short-term loan, either as a credit card withdrawal for individuals or a financing option for businesses based on future sales

Maybe it’s got to do with the credit card? Taking out money from a credit card (which is not your money) and putting it back into a debit account. Did they pay the cc money back monthly?

Are they doing a money transfer from the credit card to the bank account then withdrawing the cash?

If you withdraw cash using a CC the fees are extortionate but if you do a money transfer it would be lower.

I think the credit card might be a red herring. The only reason thought it was linked was because it totals roughly the same amount as the transactions between A and B although the cash withdrawals aren’t done at the same time.

We are all self employed within the same industry (I have a different role). We were talking about setting up together but this has made me think twice.

The transactions are several times a month so I don’t think it’s about keeping an account open. It’s literally A gives B £500 and B gives a £500 - all on the same day and from personal accounts.

I will speak with someone about it on Monday. I feel it should be flagged although it will obviously be me

This. I used to do the same. I had 6 account that’s already required a minimum input each month. I input the money to get the bonus but then transferred it straight out