
Fake books sold on Amazon could be used for money laundering - DanBC
https://www.theguardian.com/books/2018/apr/27/fake-books-sold-amazon-money-laundering
======
mjfl
This story touches a nerve for me because I recently tried to make a small
market service but couldn't get it off the ground specifically because of
money laundering concerns from my payments processor (Stripe). They shut me
down even though I was a small player and would have been very low risk for
large money laundering transactions (which I could have detected anyways). I
guess they had a point - it would have been very hard for me to detect and
eliminate money laundering from my service, if it was done very cleverly.
However, in doing research for my anti-money-laundering strategy (that they
had requested) I came to the conclusion that not only could I not solve that
problem - no one could! After all, all one has to do to launder money through
Venmo is label all the transactions as alcohol purchases. All one has to do to
launder money through Stripe is tell them you're selling pizza (hypocrites)!
And now apparently all one has to do to launder money through Amazon is sell a
crappy book for $25,000. For that reason I'm sort of annoyed to have been shut
down. Oh well, I've got other plans now...

Edit: To be fair to Stripe, they did tell me that it was not them, but their
underwriters that were responsible for the decision.

~~~
jstanley
Money laundering regulations are one of those things that started out with
good intentions (prevent people who obtain money via theft or fraud from being
able to spend it in the legitimate economy) but has now morphed into a
kafkaesque burden that isn't obviously a net positive for society.

This is one of the reasons I'm a big fan of cryptocurrency. Your service would
not have been shut down by the payment processor if you were able to handle
the money yourself without relying on a third party.

The world probably hasn't reached the point where going cryptocurrency-only
would be viable for your service, but onerous anti-money laundering regulation
is just pushing more people towards cryptocurrency, at the margin.

~~~
coldtea
> _This is one of the reasons I 'm a big fan of cryptocurrency. Your service
> would not have been shut down by the payment processor if you were able to
> handle the money yourself without relying on a third party._

If your cryptocurrency-based store wouldn't comply by the same regulations
that third party was required to comply with, though, then you, as a merchant,
would be breaking the law. Which takes you back to square one, cryptocurrency
or not.

It's just that with cryptocurrency you get to decide to break the law and
continue accepting payments, instead of being based to Stripe.

~~~
ryanlol
Why on earth would a cryptocurrency-based store have to comply with the same
regulations as a card payment processor?

One is just accepting payments, the other is processing them for vast amounts
of third parties.

~~~
coldtea
> _Why on earth would a cryptocurrency-based store have to comply with the
> same regulations as a card payment processor?_

Because money laundering can happen at any level, and specific regulations
apply, you don't need to be a card payment processor processing "payments for
vast amounts of third parties".

As long as you accept payments, even for a lemonade stand in the corner, you
need to comply with these.

In fact you probably misunderstood what Stripe demanded on the parent's
situation: they didn't demanded the parent's store comply with the same
regulations Stripe does as a card payment processor. They demanded they comply
with the regulations a store should comply with.

------
MichaelGG
Bad title, this is Office Space levels of misunderstanding. The claim of money
laundering is by some author that has no idea what he's talking about. All it
really is: scammers use Amazon to cash out stolen credit cards. That's not
money laundering, it's just fraud.

The money isn't even clean if they're using the wrong SSN.

~~~
caf
You're absolutely right, the described scam is not money laundering.

I think you could, however, use a very similar method to actually launder
money. The SSN/account would need to be accurate; the taxes would need to be
paid; and the contents/price would need to be a plausible if low-quality
example of the typical self-published book. You'd pay people dirty cash to buy
copies of the book, and/or use single-use debit cards bought with dirty cash.

~~~
ssimontis
If I we're to use my ill-gotten gains to buy cryptocurrencies, I could, at a
small loss, buy Amazing gift cards from independent sites which accept crypto.
At that point, aim straight up money launderin

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whataretensors
The problem is that there is good money and bad money that looks identical.
The only way to tell the difference is to get arrested, have your business
shut down, or lose access to all financial services.

And why is there 'bad' money? I think we have to take a detailed examination
of what constitutes 'bad money'. I think they are mostly all underserved
markets that are being served by the worst of society.

I think most things can be fixed with more sensible approaches.
Decriminalizing drugs is a good place to start. Especially considering our own
CIA and pharma industry created a lot of addicts that then get fed into the
prisons, bureaucrats profiting at every step. They helped create the drug
kingpin monsters.

This seems like just another problem created by government where the citizens
have to pay the price. No shortage of those these days.

------
jacquesm
Any two sided marketplace has the potential to be used for money laundering.
This really ought to be something everybody that runs a two sided marketplace
is aware of.

------
rdlecler1
Amazon has huge fraud and counterfeit issues that you dont have with
traditional large brick and mortar sellers. This is going to be a major crack
in Amazon’s armor in the same way that privacy was a crack for Facebook. Wait
until Amazon sells some kind of counterfeit and tainted baby product that
injurers or kills. It will happen and it will be on Bezos because Amazon is
clearly turning a blind eye in the name of profits.

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quickthrower2
Is it worth it for a launderer to give up 30% to Amazon, and then of course
pay taxes on the income? Also I assume you can't launder cash this way.

~~~
lotsofpulp
You can buy gift cards with the cash. Gift cards as a concept are so funny to
me. As a recipient, I would always want cash over a gift card. As a gift
giver, I'd think "if I was receiving this gift, I wouldn't want a gift card,
so why would I give it to someone else".

But they exist, and they're huge. Obviously merchants love them for the float
and captive customer spending more than the gift card balance. Businesses
might love them to give out to employees since it's not taxed income, and
similarly, money launderers would like them.

I guess I could see some niche use, like wanting to give a child funds for a
movie ticket, but to avoid them using it for other purposes you restrict it by
giving a movie gift card. But I don't see that supporting a large market.

~~~
kuschku
In many cultural circles it’s very rude to gift money (or to even left the
gifted know how much something cost).

Giftcards are seen as a way around that (although they’re not really better).
They also show that you thought about the gifted (what would this person
like), but respect that they might not like the specific gift you’d pick.

e.g. if you know someone is a LEGO collector, you gift them a LEGO gift card,
instead of buying a specific collectors model that they might already have.

~~~
TorKlingberg
It's a weird cultural quirk of the west that you shouldn't gift cash. In China
people are perfectly happy to give money in red envelopes.

~~~
fjsolwmv
Wealthy cultures tend to spend extra to hide the visible evidence of the
financial reality of their existence. It's silly but common.

------
DanBC
Amazon doesn't appear to be doing much about its problem with fakes.

But this, if it does include money laundering, may attract regulators with
teeth.

Also, Amazon wouldn't be able to get away with this nonsense if they were
compliant with EU data protection laws:

> Reames says Amazon has told him that it can send him a letter “acknowledging
> than I’m disputing ever having received the funds, because they said they
> couldn’t prove I didn’t receive the funds” and won’t share the details of
> the payee.

~~~
paulgb
> Amazon doesn't appear to be doing much about its problem with fakes.

Sometimes it seems like they are actively helping them. I wrote a review
pointing out that an author[1] is a fake person[2] and they didn't respond to
me and deleted the review. Meanwhile, the obviously fake reviews on "her" work
still stay up.

It used to be that I could go on Amazon and judge by reviews and know I'd get
something good, but these days searching Amazon means wading through a lot of
crap and fakes and I don't get the impression that the company sees it as a
problem.

[1]
[https://www.amazon.com/Tina-B.Baker/e/B0716Q2Y4Z/ref=sr_tc_2...](https://www.amazon.com/Tina-B.Baker/e/B0716Q2Y4Z/ref=sr_tc_2_0?qid=1524915767&sr=8-2-ent)

[2] [https://www.canstockphoto.co.uk/portrait-of-senior-woman-
in-...](https://www.canstockphoto.co.uk/portrait-of-senior-woman-in-
kitchen-9956766.html)

------
vmateixeira
This isn't new..

[https://news.ycombinator.com/item?id=16428671](https://news.ycombinator.com/item?id=16428671)

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jpttsn
This is more or less a rewrite of Krebs’ post.

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stefan_
I love how there are hundreds of (genuine!) reviews on those "how to call
Amazon support" books. Very much a "googling facebook login" moment.

------
TheRealPomax
Not entirely sure why the Guardian uses a hypothetical here. This is how
amazon is used for money laundring. Fake products, and real products sold at
10,000% prices

~~~
MichaelGG
Their source is an author that doesn't know what money laundering is. What he
described is just a way to cash out a stolen card (fraud).

Can you tell me how you can laundering, say $100K in cash via Amazon? If you
already have it on a credit card, you've already laundered it.

~~~
TheRealPomax
While in the US and Canada, "credit card" is the main method of payment, large
parts of the world in which Amazon operates offer additional payment methods
such as bank transfers, with credit cards offered as secondary option but not
owned, let alone used, by large portions of the demographic.

If you already have a credit card, you're indeed almost certainly already good
to go.

------
pyb
What I've seen happening is people buying ebooks with stolen credit card
numbers. Presumably, the criminal had published ebooks just for this purpose.

~~~
vidarh
Possibly. For small value transactions there's also a lot of people doing
tests to see if a card is still live before using it for real purchases. When
I was at Yahoo more than a decade ago, we ran into a lot of attempts to
purchase extra storage for e-mail (pre-Gmail days...) with stolen cards for
that purpose.

~~~
nopassrecover
I’ve always wondered the point of this. I had a card stolen (skimmed in a
taxi) and the first thing they did was donate $1 to a charity, before buying
$12k of aquarium equipment from another country. Why not start with the
aquarium purchase? (side note, the bank didn’t chargeback the donation because
it would have cost the charity, and I wasn’t going to challenge that).

~~~
toast0
Criminal A skims your card and sells a bundle of cards to criminal B as
unvalidated.

Criminal B runs the cards through a donation engine to validate them, and
sells to criminal C for more per card.

Criminal C buys one validated card to make an order for aquarium equipment.

------
mirimir
But how is money from a fraudulent Amazon account actually "laundered"? I
mean, wouldn't you want to launder such iffy income?

------
squarefoot
That's very likely the case since money laundering always needs goods with
very low intrinsic value but sold at inflated prices. From "modern art" works
by unknown artists valued as masterpieces to poor football players priced and
sold as champions who will never see the playfield, there are numerous cases
which should raise alerts.

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youdontknowtho
This is actually a pretty old story. It's been happening for some time now
apparently.

------
georgebarnett
I’m surprised this guy is still waiting for Amazon to play ball instead of
lawyering up.

------
gwbas1c
Providing fake or incorrect income to the IRS is a crime and comes with a
stiff penalty. If Amazon doesn't "fix" the problem quickly, I'd deal solely
with the IRS.

------
diyseguy
pretty sure this is what cryptokitties are for too

------
em3rgent0rdr
Can't people just use crypto-currency for money laundering now?

~~~
nabla9
How is the currency changing anything? It's like using cash.

Crypto-currency exchanges are not exceptions to money laundering regulations.
You have to identify yourself and you may need to explain the source of money
if you withdraw too much.

~~~
jrockway
I'm not sure you need to involve exchanges necessarily. Just buy some CPU/GPU
resources and mine your own currency. I've never had a hosting provider do KYC
on me. Then you can store the cryptocurrency indefinitely and move it to real
currency as needed. That step might require KYC, but you can buy physical
items using cryptocurrency, so maybe not.

I have no idea whether or not this is cost effective given current mining
difficulties and cloud hosting rates... but I'm sure someone somewhere is
doing this.

~~~
kgwgk
How is “use cash to buy computing resources, mine bitcoins and keep them,
convert them to cash as needed” money laundering? In that case, the much
easier “keep the cash in a box and take it out as needed” solves the problem
in a much simpler way.

~~~
MichaelGG
Well suppose you have a million bucks of cash or Bitcoin from selling drugs.
If you just buy miners and get clean Bitcoin, that might solve the issue by
providing a clear and legal source of funds. But if they ask how you bought
the miners in the first place...

~~~
pbhjpbhj
Who will ask, and why? Perhaps you earnt the money through speculating on
bitcoin using a computer that is now sadly destroyed.

