
Airbnb’s Money-Laundering Problem - gfredtech
https://www.thedailybeast.com/inside-airbnbs-russian-money-laundering-problem
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zodPod
I really don't understand how this is Airbnb's problem. Why do people attack
these kinds of services so often? It's not their fault people are paying
through them and then having people send the money back. What are they
supposed to do? Send someone to the home to check that the person is actually
staying there?

I mean, the way this works you could literally use any service ever. Why is
AirBnB, in this case, any different than like Paypal, eBay, or Amazon or
literally any online fund transferring for goods service?

~~~
Xixi
I fail to see your point: Paypal, eBay and Amazon are also under the
obligation to adequately monitor and prevent money-laundering.

~~~
zodPod
My point is they call AirBnB out specifically when they're not the only ones
that have this issue and that could be used to do this. They even state in the
article that AirBnB is just being used as an example and many services could
be seeing this kind of usage. If that's the case, why call out AirBnB
specifically? That company gets so much flack for the way its users act. I'm
not sure what it's expected to do in many of these cases.

~~~
kerkeslager
> That company gets so much flack for the way its users act.

Gig economy companies blur the line between user and employee. If a hotel
chain had a problem with its hotel managers laundering money, would you be
saying this?

What you're saying here is tantamount to claiming that AirBnB isn't
responsible for its employees' actions because they didn't bother to vet their
employees. Companies aren't simply exempt from laws because their business
model refers to their employees as "users".

~~~
headShrinker
The gig economy is individuals leveraging their time and personal assets to
make money. They aren’t employees, just like a musician playing a pub isn’t an
employee. purpose of a company to provide a product or service on a scale
larger than one person could provide. A company’s primary goal isn’t to police
employees the same way Facebook isn’t responsible for the content I write on
their website. They have some duty to clean up afterwords but they do very
little in the way of supervision. If someone does an investigation and finds
criminal behavior the company has a responsibility to report that behavior to
authorities. A company wants to avoid damaging its reputation over something
like a laundering scheme.

The Uber and Airbnb model is more like a credit card gateway for a specific
industry and their ideal user is, ‘I’m an individual who does whatever I want
with my time and property and I would like to make some money on the side’
that is not an employee’s mindset.

Its a little upsetting that there are people who are more invested in their
Airbnb and Uber status therefore claim employee status. If my YouTube channel
takes off and I make a bunch of money on views can I claim employee status at
yt? Clearly the answer is no

~~~
ojgojegoj
Seeing as you're already upset, I hate to break it to you that special purpose
credit card gateways have similar regulatory requirements.

That said, your characterization of Uber and such is egregiously inaccurate.
Uber does not hire individuals who do whatever they want with their time and
property. They hire individuals who are willing to use only very specific
property, in very specific age and condition, to make money in specific
places, in an exceedingly specific manner, while following very specific
rules.

As such, you're not just peddling a false dichotomy, you're doing so using
grossly distorted portrayals of reality.

~~~
headShrinker
'Upset' and 'not thrilled' are interchangeable in my lexicon. Didn't mean to
convey hyperbole.

It's generally understood that employees have all the rules you mention. I
have been a contractor for 20 years and I have all those rules as well. So
when does a consultant become an employee? Is it when I'm a 1099 or a W2 in
the eyes of the IRS?

The difference is in the initial negotiation; the benefits and a promise of
future work for employees, but no such commitment for consultants. It's
negotiated up front and must be renegotiated by both parties for any change.
If I'm hired as a consultant, I don't get to claim I'm an employee later on
because they worked me too hard. I have been worked too hard, but I know the
rules, I made it through what ever the commitment I made, then either
renegotiated or fired the client. That's what consultants have to do every
day.

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eliben
The actual title is "Inside Airbnb’s Russian Money-Laundering Problem", which
is more suitable IMHO, as it highlights this is a local issue in Russia, not
AirBnB as a whole

~~~
nkurz
What makes you confident in asserting this? While it appears to be Russian
speakers who are looking for cooperative hosts, it's not at all clear that the
issue is limited to Russia. From the article:

 _The laundering may work outside Russia as well. In another post, a sixth
scammer, who is also willing to split the cash 50-50, says they are looking
for hosts and “the country does not matter,” their post reads. Another post on
a Russian-language forum is looking for EU-based hosts._

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philfrasty
So let me get this straight:

1.) they book a night at a cooperating-host with a stolen credit card

2.) host receives payment minus AirBnB fees 2 days later

3.) host transfers amount minus his own cut to criminals

4.) chargeback from CC owner. I'd guess that Airbnb either charges the Host
for the chargeback or cancels the entire account. How is this „scalable
laundering“?

~~~
laurencei
But it can also be:

1.) get "illegal" money from somewhere/anywhere. Create bank accounts under
fake names with the "illegal" cash.

2.) host receives payment minus AirBnB fees 2 days later

3.) host transfers amount minus his own cut to criminals

4.) AirBnB never gets notified of anything - it's just another happy customer.

So the problem with this scenario is AirBnB never knows about the problem - so
all the "bad" hosts can go on for long times, and you dont need as many
accounts; thats where the "scalability" comes in.

~~~
jasode
_> Create bank accounts under fake names with the "illegal" cash._

In USA, I don't see how this is "scalable" with the stringent "know your
customer"[1] laws.

Using a fake drivers license + fake Social Security Number to open a new bank
account with a false name is not trivial. Many banks also require a thumb
print for identification. The customer's face is also captured on security
cameras as he walked through the bank to open the account. All of that can be
cross-checked with the FBI.

It seems the preferred method for criminals using banks to wash money is a
"shell company" instead of fake personal accounts. E.g. Open a business
account for a car washing company or restaurant. But then the criminal has to
be careful and make sure his "pattern of deposits" does not raise suspicions.
Any unusual banking activity could trigger an investigation for racketeering
and money laundering.

[1]
[https://en.wikipedia.org/wiki/Know_your_customer](https://en.wikipedia.org/wiki/Know_your_customer)

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notyourday
This is not money laundering. This is a simple case of extracting money out of
stolen goods. Since unauthorized transactions on CC would be reversed, it is
at most inconvenient.

~~~
tjbiddle
Example of extracting money out of stolen goods: Selling a stolen phone.

Example of money laundering: I have illegitimately earned money, I funnel it
through a service which then gives me "clean" money.

I wouldn't say it's money laundering, but I wouldn't say it's _not_ money
laundering. Is there a word for where it's kinda-both?

~~~
notyourday
The fundamental characteristic of money laundering is that after money is
laundered it is in fact clean money and it is not possible for another entity
to reach out and get it because the entity that a claim on the dirty money.
That's why those with dirty money are willing to pay 20-40% for it.

That's for example, why uncut diamonds are so popular - diamond sourcing
business is largely a cash business operating in the grey area - dealers act
as mixers of currency sell uncut diamonds for $X. The buyer takes the diamond
to a jeweler, gets a finished product, sells it to a different jawler for $Y
where $Y is 20-40% lower than $X and that $Y is nearly impossible to link to
the initial $X.

Carders cannot do this because no one in businesses like this takes credit
cards as the transactions simply gets reversed by the issuing bank at which
point whoever was the first hop of the transaction gets money crawled back
from him/her.

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todd8
Money-Laudering is sometimes confused with different crimes because, in the
modern world, it is often a necessary adjunct to financially motivated crimes.

Criminals often do business in cash and can't report it on their income taxes.
Money laundering is getting this "dirty" cash safely into a bank account or
legal investment without revealing the crimes that caused the accumulation of
cash.

In the US, banks are required to "know" their customers. Moving between cash
and bank accounts is only possible with an account at the bank and every cash
transaction over 10K is reported to the government. Furthermore, traveling
with more than 10K into or out of the country requires paperwork to be filed
with the government. All of this makes it difficult to use the cash sourced
from criminal activity.

AirBnB appears to be an easy way to launder a modest amount of money. Heidi
Fleiss was the Hollywood Madam and would have had a "dirty" money problem, not
a huge dirty money problem like drug cartels, but nevertheless, lots of cash
and no way to explain it to the banks: one million dollars in her first four
months[1].

It doesn't seem like AirBnB would be practical for such a large operation;
however, think of one of her operatives, they might be able to hide a couple
of thousand dollars a week of cash income by pretending to be renting out
their place as an AirBnB. The challenge would be on the payment side to
AirBnB, setting up enough cards under fake names, etc. because the government
also tracks these and would detect any trivial cycles between a set of cards
and or people.

The Netflix TV series Ozark, a Breaking Bad kind of show, but staring an
accountant rather than a chemist, revolves around this problem.

[1]
[https://en.wikipedia.org/wiki/Heidi_Fleiss](https://en.wikipedia.org/wiki/Heidi_Fleiss)

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user5994461
It makes no sense. Reservations have to be paid by cards, the money is already
laundered if it's sitting behind a card in a bank account.

~~~
runeb
Read the article. They are stolen credit cards.

~~~
glastra
From the Guidelines:

> Please don't insinuate that someone hasn't read an article. "Did you even
> read the article? It mentions that" can be shortened to "The article
> mentions that."

In my opinion, OP is actually right. It's not money laundering, but simply
carding/stealing.

~~~
runeb
Fair point

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ChuckMcM
I expect that a good question to ask as a founder of a new business these days
is, "How might this be used to launder funds?" and if you're the bad kind of
entrepreneur make that really easy to boost early growth, and if you're the
good kind put controls in place to prevent it from happening.

One of the things I dealt with at Blekko was people clearly trying to use the
search engine to find sites with vulnerable (unpatched) Wordpress or Joomla or
other storefront frameworks. We spent a lot of time banning IP addresses which
were doing that rather than treat them as higher traffic numbers.

