From: tcmay@netcom.com (Timothy C. May)
Date: Tue, 19 Apr 94 11:16:58 PDT
To: rees@cs.bu.edu (David Rees)
Subject: Re: Money Laundering thru Roulette
In-Reply-To: <199404191756.NAA28412@csa.bu.edu>
Message-ID: <199404191818.LAA29917@mail.netcom.com>
MIME-Version: 1.0
Content-Type: text/plain


Maybe I'm just mistunderstanding the point David Rees is making:

>    Of course, as several people pointed out, there are a large number
> of ways to break even in roulette.  So if you have bad money that
> needs laundered, why not bet evenly on red and black each time.  Or even
> easier, buy 10,000 dollars worth of chips and then cash them in immediately.
> New and different money on demand.
>    I get the impression though that I am missing something in the
> discussion since no one has mentioned something like this and that merely
> replacing the money isn't the objective here.

No, converting one wad of, say, $100,000 into another wad of $100,000
is not the goal.

Let us suppose "Hillary" (much more interesting than our usual
cryptographic stand-in, Alice) want to be able to spend $100,000 given
to her by a friend at Tyson Foods in exchange for regulatory favors. 

He gives her a wad of $100,000. She takes this wad to Las Vegas (or,
now, to the nearby Mississippi River gambling boats) and "exchanges"
it. What has been accomplished? Nothing, except the comparatively
trivial change in serial numbers (which _can_ be an issue if the bills
are marked, as in a sting, but this is rarely an issue).

This is a _kind_ of money laudering, as is literally running currency
through washer-dryer cycles (yes, this is done), but this is not the
common meaning of "laundering," and the one which we're focussing on here.

No, one of the main goals of money-laundering is to make the
bribe/whatever money appear to be "legitimately earned," so that taxes
may be paid on it (yes) and the money then used for other investments,
buying houses, etc. "Legitimately earned" can mean won in Las Vegas,
or in cattle futures, etc. Hence the schemes here.

(In Hillary's case, suddenly having $100K that the IRS and other
agencies can find no "paper trail" for would be evidene of bribery,
for example. I suppose Hillary could claim it came out of her
mattress, where she'd been saving money for years, but I doubt this
would fly.)

U.S. casinos are closely watched for this kind of thing, of course. I
wonder if the IRS looks suspiciously at money won at the casinos on
Paradise Island, Bahamas? Or elsewhere.

And, germane to our list, the "Internet Casino" that Nick Szabo and
others have talked about someday building.

--Tim May


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