By now anyone who reads these articles knows that money laundering is the process of taking money from criminal activity and cleaning it up to look like fresh and clean taxable income. Additionally the fact that if a drug dealer or would be terrorist walks into the bank with a suitcase full of cash sets off every warning bell in the building has also been beaten like a dead horse. Therefore, what can a chemistry teacher turned drug kingpin do to hide his cash? Find cheap businesses to operate as front companies and wait for the money to roll in. Be aware though, having a lousy front is just as bad as not having one at all.

How front companies operate

Front companies serve as the official face of drug dealers, terrorists and other criminal organizations looking to hide illegal money. The process sounds simple. Criminals buy a business, then take the proceeds of from their illicit acts, and then mix it in with profits from the legitimate sales. Once deposited into the bank, the criminals directly pay themselves a salary based off seemingly legitimate earnings.


While the process may be simple, success comes from choosing the right type of business. For example, businesses requiring complex operations, government oversight or heavy usage of traceable currency like credit cards usually fail as fronts. Criminals want simple companies that people associate with cash transactions.

Cash is king for now

Criminals generally operate in cash driven environments. This comes from the fact that unlike credit cards, which leave a digital trail, the government rarely tracks currency. For this reason, most drug deals, prostitution or sales of stolen goods go down in with greenbacks. For this reason, criminal groups regularly invest in convenience stores, gentlemen’s, restaurants and construction companies.


While cash still rules, technology will eventually find ways to catch up. Currently, peer-to-peer payment systems offer a niche for tech-based launderers. Using a system like Airbnb, Russian online scammers created fake rental listings. A second party then rents the property and leaves a fake review. A similar scheme exists with Uber drivers conducting ghost rides for fake passengers. As online retail moves away purely from large end retailers, to smaller personal stores, so will the opportunities for trade-based money laundering.

How front companies are spotted

Even though front companies hide criminal activities, they still operate as real businesses and a lousy business means trouble. See if any of these scenarios ring a bell. A clothing store only runs from 9:00 a.m. – 5:00 p.m. and closes up on the weekend. A convenience store never restocks the shelves. A restaurant serves crappy food and never has customers, but still stays in business.  If these sound familiar, then feel free to tip the police, because they are probably fronts.