One-stop knocking shop

Following a recent Financial Times article on money laundering through cash-intensive businesses in the UK (albeit in the “luxury sector”), a investigation in New Jersey is a timely reminder for us all about how useful to criminals are businesses that accept and process cash.  Following a six-month investigation launched after an anonymous tip-off, over a period of two days at the end of November six passage parlours were raided and then closed.  At first, the investigation had focussed on the prostitution aspect of the business – in New Jersey, both the buying and selling of sex are illegal.  But things became really interesting when officers looked at the finances of the parlours, and realised that they were being used for the laundering of the proceeds of crime, and not just from their own prostitution activities.  Money was being laundered through the payment of bills and expenses, through taking out advertisements for the parlours, and (this is really cheeky) through paying state and municipal licensing fees (after registering the premises for other commercial use, of course – the parlours operated under names such as Q Health Center, Oriental Wellness Center and New Gold Day Spa).  Nineteen individuals have been charged with a mixture of prostitution and money laundering offences – one is charged with laundering US$150,000, and all are suspected of laundering at least $25,000.

The use of brothels for money laundering is certainly not unusual.  In February 2015, several arrests were made in Birmingham after police raided the Libra Club on suspicion of it being a brothel that had laundered £13 million over three years.  And in June 2015 two men were jailed for propping up a struggling nightclub in Shoreditch with the proceeds of prostitution.  They set up so-called “hospitality companies” and used them to install chip and pin machines in seven brothels across Camden and Westminster, taking a cut of the profits.  Customers paid for sex and cocaine on card and (with their critical faculties somewhat impaired by their environment, if we can put it that way) were sometimes scammed, with the cards charged up to £10,000 – and in three years the pair made and laundered £12.3 million, investing much of it in property.  Confiscation proceedings are underway.  So MLROs with clients who are reluctant to specify exactly what part of the hospitality industry they inhabit might be wise to ask more questions – on-site visits should be undertaken with caution…

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5 Responses to One-stop knocking shop

  1. David Maxwell says:

    Passage parlours are little known in the depths of East Sussex, but I shall keep my eyes peeled!

    In south London it was Hand Car Wash establishments. When we moved south of the river all these places were run by South London geezers; within a few years they had all been taken over by Albanians. It must have been their love of good motors, or all those suds…

    • Ah yes, it’s only now that I spot my spelling mistake! But you can rest assured that if there is money to be made from “passage parlours”, criminals will get in on the act soon enough!
      Interestingly, when we were on holiday in Romania recently, my husband commented on the astonishing number of car-washes about the place – maybe eastern Europeans are genuinely obsessed with clean cars!
      Best wishes from Susan

  2. Andrew Clarke says:

    And there was the conviction of a Birmingham police sergeant who had a second career running brothels in ‘exclusive’ areas of London, which also included scamming the customers’ credit cards. They were laundering through high-end chauffeur and event management companies. But he was rumbled after turning up for work in a £170,000 ferrari (on a £40k salary). You couldn’t make it up!

  3. Hello Neil – thank you for your comment and welcome to the blog. Yes, there are all manner of “specialist services” out there… some of it done in the name of “keeping warm” in cold places like the windy isle!
    Best wishes from Susan

  4. Thanks for the reminder, Andrew – here’t the link: http://www.bbc.co.uk/news/uk-england-birmingham-30710852 He obviously wasn’t the sharpest knife in the drawer…
    Best wishes from Susan

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