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Suppose you are a small-time drug dealer selling dime bags to kids. You probably don't have to be too concerned about all the 5 and 10 dollar bills you accumulate - you'll just buy more stuff to sell from your next higher-ups with the stacks of cash. So, somewhere up the criminal food chain, there will exist (a) a middle-management drug lord, whose job it is to "clean" loads of this dirty money.

Alternatively, suppose you are (b) a gang leader of a bunch of crooks collecting protection money from local businesses, so you're receiving thousands of dollars in cash every week.

Or perhaps you are (c) a Russian mobster selling cheap, lethal, illegally distilled vodka to Siberian peasants, or maybe you're in cahoots with the government and no one is supposed to know (including the government, some of whom most definitely do, and some who most definitely do not).

Money laundering works basically the same way for all three. Having lots of cash is contraindicated. Money that comes from criminal activity (drugs, hot goods, etc) is usually in cash. If the IRS or INTERPOL smells lots of cash on you they'll start investigating where it comes from, which, as a criminal, is against your career strategy. Owning a business, however, is fine. Owning a profitable business is even better, so long as the profits are not so sky-high that even a retarded monkey could tell that there is some alternative source of revenue.

So, in the case of (a), the middle management drug lord may set up a crappy restaurant that no one goes to or a laundromat (ha ha!) to account for all the little bills coming in. Miraculously, the initial seedy capital suddenly becomes money spent by honest punters wanting clean knickers.

(b) your gang will probably own a bar, or a number of bars, and you might even sabotage the Interact machine that previous honest bar owners or managers (who you have possibly had rubbed out) installed, so that more people will spend cash, and the volume should be such that it easily masks a few extra bills here and there. You will of course pay for all deliveries and services for your business in cash.

(c) one of the many sneaky Russian schemes is to buy luxury goods in dirty cash and then sell them for clean cash. Sotheby's, Christies, fashion houses and many exclusive auto dealerships have a $50,000 U.S. cash cap - any larger (and many smaller) cash payments are reported and scrutinized.

Another brilliant Eastern European trick is to set up a Linux starter kit distribution site with e-commerce functionality, not only suckering people into paying for free software, but also giving you the option to vastly inflate your volume of customers.