Criminals Laundering Dirty Money Buying and Selling Used Vehicles
If you’re dealing down illicit avenues you’re no doubt dealing in cash. And once you become successful, if you don’t land in prison first, you need to figure out what to do with all of that cash. Laundering it through the sale of cars seems like a great way to get that dirty money into circulation and clean it up. And no scams of innocent victims are involved.
Many criminal enterprises import and export used cars for laundering money
That’s what many criminal enterprises are doing; importing and exporting used cars to launder their illicit money. In Canada, the Cullen Commission was tasked with looking at dirty money artificially raising real-estate prices in Vancouver. But it inadvertently found that cars are a big part of money laundering according to carscoops.
A lot of the cars being exported are selling for less money than they are actually worth. China, Hong Kong, the Philippines, and Cambodia, are destinations, with prices lower by almost 50%. It is a quick way to dump the vehicles to get cash into circulation.
This includes over $6 million undervalued going to China. And $10 million in diesel trucks undervalued by as much as 50-70% are coming into the US. Recipients here in the US are mostly used car dealers.
Cars can be purchased and then resold for laundering money
Using wire transfers like WeChat Pay, cars can be purchased and then resold for clean money. Another way to clean up dirty money is to put down a deposit on a vehicle. Then, the person backs out of the deal, with the refund coming as clean money.
Leasing is still another way criminals use because the car actually belongs to the dealer. So for the police to get involved it is harder to trace the money. They can’t prove where the funds come from.
Used car dealers are the preferred route to engage with because they are regulated with fewer laws than new car dealerships. Protecting their franchises means things need to be clean for the most part. Financing is usually done through a corporate entity that has the ability to see the origin of the funds.
“Salespeople aren’t detectives”
The other thing about using used car dealers is that there is usually no need to seek out where the money is really coming from. As the head of the Used Car Dealers Association Bob Pierce says, “Salespeople aren’t detectives. We have not trained them to be and nor should we. How can we tell if a driver’s license is issued officially or by people who make false passports?”
Obviously, that applies to cash. Especially, if someone is paying in cash it makes for a much cleaner transaction. So in the case of used car dealers, it is probably the preferred method to sell a vehicle.
New car dealers are paid incentives to finance vehicles through the internal manufacturer’s financial credit arm. So selling a new car for cash offers much less incentive than it does for a used car store.