How Money Laundering Deals Work, From Matt Levine

Jason Bateman plays a money launderer in Ozark.
Photo by Georges Biard, CC BY-SA 3.0 via Wikimedia Commons

I LOVE Matt Levine's column on Bloomberg.  He's very knowledgeable about money stuff, so I learn a lot, but he's also incredibly funny, so I laugh a lot.  It's the best possible combination.  I can introduce topics relating to financial transactions to my students, imitate Levine's way of storytelling, and trick my students into thinking financial transactions are interesting.  They go into investment banking, make millions before realizing it was all a trick, and just before retiring, they donate to my law school, and I get an endowed chair!

Anyway, this is how Matt Levine describes a contract for money-laundering. 

You are an art dealer. A woman walks into your gallery and says, enunciating very clearly, “hello, I am a drug dealer, I have a lot of money and would like to launder it using art. Can you help me?” You explain to her the basics of art-based money laundering: She can use her drug money to buy art from you, with no real record of the transaction; later, she can say that she inherited the art or bought it cheap at a yard sale, and sell it for a lot of clean taxable money. She says “ah great thank you very much, I will be back with some drug money that I have earned by dealing drugs.” Later she comes back and says “hello, it’s me again, remember, the drug dealer?” She hands you a bag of money and says: “I would like to buy some art with this money, which smells like drugs. Smell it, see? Drugs. I guess I need to launder it, ha ha ha. To get the smell out. Because it smells like drugs. Because I got it from selling drugs. Because I am a drug dealer.” 

The question is: What does this woman do for a living?

If you answered “she’s a drug dealer” you are definitely in prison right now because the only possible answer is “she’s a police officer.”

The great thing about Matt Levine's columns is that they are absurd but they are also close enough to being true that they are absurdly illuminating.  His version is only a slight exaggeration of the story reported in this article in the New York Times.