(Ethiopia: Council Passes Bill on Dirty Money. USA Today. [internet] Available at: http://content. usatoday.com /topics /topic/People/Notorious/Al+Capone. [Accessed June 25, 2009].) Whatever receipts coming from the washing venture, even if at a loss or lesser than what he invested, would therefore come out clean. So, the dirty money was delivered somewhere, washed and made clean or made to appear clean.
Here is a kidnapper from Indonesia, for instance. Let us give him the name K. He kidnaps a vacationing wealthy Chinese in Macau. K gets one million dollars as ransom money in exchange of the victim's freedom. One cannot always carry one million dollars in bills or currency notes without inconvenience or difficulty. So, K deposits 300,000 dollars to the account of his Mistress No. 1, also 300,000 dollars to the account of his Mistress No.2, and another 300,000 dollars to the account of his Mistress No. 3. For the remaining 100,000 dollars, he keeps part of it in a minor bank account he has and part in his pocket. Bingo. The 900,000 dollars are safely placed in the custody of his paramours' bank accounts. In case he needs money, he simply calls any of the ladies and gets an on-line cash credit to his petty account.
A corrupt official from Korea who receives kickback money or illegal commissions from a Japanese construction firm will not keep the bucks in Korea. What will he do He can buy corporate bonds from companies based in the United States. After a while, the scandal arising from his plunder will subside. He now wants to have his cake and eat it. How will he realize his evil earnings That is very simple and is not a problem. He will sell those U.S.-based debt certificates fast at a discount. What is the point The illegitimate loot sums up to one million dollars, all used to buy the bonds. The subsequent sale of the debentures generates 900,000 dollars. He losses 100,000 dollars in the process, does he Yes, but what He evades the long hand of the law. He runs around the law. He mocks the law.
Tax havens, on the other hand, are generally bona fide. These schemes to avoid taxes are sometimes encouraged to push investments or to drive forward a good cause or crusade. A current event item is the tax incentive for the use of alternative energy. (Home Energy Efficiency Improvement Tax Credit. Consumer Energy Tax Incentives. U.S. Department of Energy. [internet]. Available: http://www.energy.gov/taxbreaks.htm. [Accessed June 25, 2009]) Thus, if you invest in a solar energy panel, for example, you can get a tax credit of maybe 30% or the equivalent of 300 dollars. This means that if you purchase that kind of gadget for 1,000 dollars, it is just like you only bought it for 700 dollars. Once you file the required return for the April 15 annual income tax deadline and your supposed tax liability is 500 dollars, you only pay 200 dollars. You are entitled to deduct the 300 dollars as tax credit. You are allowed to do that because you help the government about its environment concerns