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?

@Sensiblesal I doubt it’s layering as it is an identifiable repeating pattern which, as you rightly say, the bank will have noticed. If the aim is to distance the funds from their origin paying them back to the source seems an odd choice.

This is what I mean, what is the point.

Given the amounts, it seems a lot and multiple transactions to keep accounts going.

There are also some odd amounts like £132.60

Put it this way, if they're trying to launder money, they're really bad at it.

Why do you care? How is affecting you?

I mean, there could be a perfectly reasonable explanation. For example my ex partner and I used to do it quite often. For example, I used to amass cash from doing market stalls (all declared) and because all local bank branches are either closed permanently or shut at 1pm, I wouldn't be able to deposit money to my bank. My ex, on the other hand travelled up and down the country for work and could pop into the branch if he happens to drive by one. If I had urgent expenses coming out of my account, he'd transfer me the money and I would give him cash. He would then deposit it to his own account.

I was going to say this, am glad you have!!

I don’t know what’s going on OP but it doesn’t sound like money laundering or tax evasion. It could be, but you don’t have enough information. I’m not quite sure what you’re worrying about, really what 2 people do with their money is nothing to do with you and if you think it could constitute a crime you’re best off well away from it.

I was going to say this, my BIL has a long daisy chain of accounts he moves money between for the benefits, some of them his wife’s. Its too much hard work for me though, he’s a really frugal person.

If they let you get access to their account, it doesn’t seem illegal.

if it is, then random amounts like 132 could be used to stop the bank from tracing a pattern, look like normal behaviour.

Where does all this money come from?

If cash is drawn from a credit card then its not laundering as it came from a legit source originally.
Its laundering if someone is paying in large sums of cash without being able to provide a legitimate reason as to where it came from and a paper trail if challenged by the bank/HMRC etc
Cash is perfectly legal and so is moving money between accounts as long as its all tracked and tax is paid where necessary.

Are they applying for a rental property or car finance by any chance? I mean, for each of these you usually need to prove actual income rather than capital but having £10k in your account would look good to a landlord

they may have bank accounts which have a minimum to be paid in each month, to benefit from perks, so they each transfer each other the same amount

They could just be a little stupid! Agree that you would usually expect to see distance and the funds not returned to the same person that day.

sounds to me that the intent is to move/hide money maybe trying to launder it or not but there is definitely something dodgy going on. OP deffo doing the right thing, esp if they are all in financial services industry as if for any reasin this post was linked to the OP it would mean prison if they are & she suspected & didn’t report

This. Nationwide’s Flex account requires you to have so much paid in per month in order to have access to some of the accounts features.
When I was running a business my DH often took cash from me in exchange for a cheque because it was cheaper to bank a cheque than the cash. It also saved a trip to the hole in the wall. The bank would monitor my personal account to make sure I wasn’t using it to clear the cash myself but DH banked with another bank so it was not a problem.
It all went through the books so not a tax dodge.
We have had a surge in Turkish barbers opening in our local town. They are regularly raided because they are money laundering for drug dealers. They only accept cash and are always empty. They also sell illegal vapes. It’s very easy to launder money through businesses that are cash only.

Is it to show that they are working or earning to claim benefits?

I think the crucial element of money laundering is a corrupt intent. It looks weird, but you never know. Are you a bank employee, or how do you know this?

And since this is very specific, why not ask in the Money forum instead of AIBU? I don't know why so many people consider this a catch-all.

Me and DH move money between our personal accounts like this. I’m self employed and sometimes my balance gets very low if I haven’t billed an invoice for a while or a client is late paying me an invoice. DH might transfer me £500 to top me up - then I’ll transfer it back when I get paid (sometimes the same day, the next day or in a few days or weeks).

It’s just to balance cash flow and whilst it might seem disorganised or odd to some, it works for us.

@Franjipanl8r
These payments are always the same day. There are other payments to top up the cash flow of the business.

Some current accounts need X amount paid in per month to maintain certain perks or avoid a current account fee.

Barclays Premier Banking current account, for example, needs payment of £40k into the account in the last 12 months to maintain premier status.

It’s probably something along those lines.

It could be money laundering, if person A has illicit cash and pays it into B’s bank account B transfers the money back to A perhaps alongside a fake invoice that could clean cash, but it’s a very unsophisticated attempt and wouldn’t fool anyone looking.

I did money laundering once, 30 years ago.

I washed some jeans with a number of notes in the pocket, obviously accidentally.
When dry they still looked ok so I forgot all about it.

A few days later, I went to a bar and paid for a round of drinks with one of the 20 pound notes and the barman used his special pen or ultraviolet light, and the fact they had been laundered, made them appear fake.

He refused to return the note so I gave him another which also failed the counterfeit test and was confiscated.

Money laundering isn't always profitable!

I’ve done this before! Had to pay in £X to get interest but I wasn’t using as my
main account so had a SO in & one back out again.

As its net zero, it’s likely moving money around to avoid a bank fee for an inactive account.

@Upthefinancialcreek This is called a closed loop. Its unlikely to be tax avoidance.

Not necessarily as dark as you fear. There are certain bank accounts that if you keep a minimum amount going through it per month you get certain perks and/or avoid certain bank charges which could be beneficial for small businesses or if someone has certain hobbies.

So if one person is transferring say £500pm to another bank account and then they send it back later, they are artificially increasing the income passing through each others bank account, getting the perks without costing either of them anything. Hence closed loop as the money just goes around in a loop.

i.e and this is maybe not the best example but Barclays Premier account offers the following perks if you put something like £75Kper year through the account:

• Early access to tickets for major UK events and festivals.
• Reserved ticket allocations at iconic venues like The O2 and Co‑op Live.
• Access to premium lounges at The O2.
• Discounts such as 5% off selected events when paying with your Premier debit card.

Financial & Banking Benefits

• Fee‑free Premier current account.
• Access to exclusive mortgage, loan, and savings deals.
• Cashback rewards and the ability to earn Avios points.
• Free Apple TV+ membership (current perk).

I am sure there are lots of other similar accounts out there but these perks could be beneficial. But hopefully you see what I mean.

However I think given your description of your friends, I think it is likely to be one of the following:

A “Money cycling” scam
Where scammers ask people to move money around to make accounts look active or to hide the origin of funds.

B. Fake turnover inflation
Some small businesses artificially move money between accounts in a loop to make their business look busier or more profitable.

C. Credit‑card cash‑flow schemes
Using credit cards to pay each other, then withdrawing cash, to create liquidity that shouldn’t exist.

It usually works like this:

• Person A pays Person B using a credit card.
• Person B then sends the same amount back to Person A’s bank account.
• Person A now has cash in their bank, but the original payment sits on the credit card balance.
• They repeat this back and forth.

So if you go to a bank dispenser and take out cash on a credit card, the interest is astronomical but if you use it to pay a bill to another account holder, you don't get charged the cash withdrawal rate, they pay you it back, you have £10,000 in your bank account, it sits on your credit card balance but then you pay it back before interest is payable. It gives the illusion of more income than there is for the business. Its usually something like this anytway.

It creates the illusion of income or liquidity, even though no real business activity has happened.

Why people do it? Some people try this because they’re:

• short on cash
• trying to “float” money using credit
• trying to hit credit‑card reward thresholds
• trying to make their business look busier than it is
• confused and think it’s harmless

I personally think its a combination of B&C

Just to add they banks monitor for stuff like this and so to avoid it, it helps to change the figure occasionally to an odd erroneous figure to break the continuity and avoid automated identification.

Yeah it sounds like if they are money laundering they are bad at it or they are just doing something slightly dodgy without thinking. If its random amounts could it be they are taking cash off people & then transferring the money to kind of hide it to avoid tax by not putting it in the business.

No it’s not money laundering. Money laundering is where proceeds of crime are made to appear legitimate by layering a series of transactions. If they’re taking cash out on a credit card and banking it and then moving it to the other person’s that isn’t money laundering.