ML Terms and Concepts News

Money Laundering 101: Refining

Welcome to Technical Post # 6: Refining

Obviously, one of the challenges for a drug dealer is physically handling the money. The fewer bills in play, the fewer counting, handling, moving and storing issues one faces. That was a major reason the United States took all denominations over the $100 bill out of circulation 40 years ago.

So, refining is the changing of an amount of money from smaller denomination bills into larger ones. If the five dollar bill was the most prevalent bill used in drug deals on the street, then $1 million dollars of them would make a single stack 860 inches (nearly 72 feet) high and would weigh 440 pounds (I assume these dimensions are of freshly printed currency straight from the mint; bills in circulation probably stack taller). Now, if the dealer were able to convert all of those $5 bills to $100 bills, he is only facing a single stack 43 inches tall, weighing 22 pounds – much easier to conceal and transport).

Now there are some bank teller systems that will capture these transactions, but it is my belief that with many, probably most, institutions, the only safeguard against this is the education of the front line tellers. And it requires more than just a quick intro comment. Tellers are an often overlooked asset in the war against money laundering and terrorist financing. As such, they should be respected enough to warrant sufficient on-going training and have their own mechanism to report their observations and suspicions.

So, getting back to our topic, refining is the conversion of smaller denomination bills into larger ones – normally the largest available.

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