How brand name bags and watches become the money laundering tools?

Brand name bags and watches are often seen as symbols of luxury and status, but they can also be used for illicit purposes. Some criminals use these expensive items to launder money, hide assets, or evade taxes. How does this work?

One way is to buy these items with cash from illegal sources, such as drug trafficking, fraud, or corruption. The cash is then converted into goods that can be easily transported, stored, or sold. These goods can also be used as collateral for loans or investments, or as gifts to bribe officials or associates.

Another way is to sell these items at inflated prices to shell companies or straw buyers, who act as intermediaries for the real owners. The sellers then claim the income as legitimate business revenue, while the buyers use the items to conceal the origin of their funds. These transactions can also involve tax evasion, by underreporting the value of the goods or avoiding customs duties.

A third way is to use these items as part of a trade-based money laundering scheme, where they are shipped across borders with false invoices or documents. The items are either overvalued or undervalued, depending on the direction of the flow of money. The difference between the actual and declared value of the goods is then transferred through banks or other channels, without raising suspicion.

How to stop it?

To stop this practice, authorities need to enhance their detection and enforcement capabilities, as well as cooperate with other jurisdictions to track the movement of illicit funds and assets. Some possible measures include:

- Requiring dealers of high-value goods to conduct customer due diligence and report suspicious transactions to the relevant authorities.

- Imposing stricter controls on cross-border cash movements and transfers, such as declaring the source and purpose of the funds, and verifying the identity of the sender and receiver.

- Enhancing the exchange of information and intelligence among law enforcement agencies, financial institutions and regulators, both domestically and internationally, to identify and disrupt money laundering networks and activities.

- Educating the public and raising awareness about the risks and consequences of money laundering, and encouraging them to report any suspicious or unusual transactions or behaviors.

- Imposing harsher penalties and sanctions on money launderers and their accomplices, such as confiscating their assets, freezing their accounts, revoking their licenses, or imposing fines or jail terms.

In other words, the authorities need to acknowledge this trend and involve relevant luxury dealers to be included in the anti money laundering network. 

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