Bailout

Can you launder money through black hotels?

By Felix Salmon

John Le Carré has a new book out, Our Kind of Traitor, which stars a big-deal Russian money launderer called Dima. There’s not actually all that much on the mechanics of money laundering, but this would be rather clever, I think, if it actually worked:

‘Would somebody mind telling me what a black hotel is?’ Matlock demanded of the air in front of him. ‘I happen to take my holidays in Madeira. There never seemed anything very black about my hotel.’

Fired by a need to protect the subdued Hector, Luke appointed himself the somebody who would tell Matlock what a black hotel was:

‘You buy a bit of prime land, usually on the sea, Billy. You pay cash for it, you build a five-star luxury-hotel resort. Maybe several. For cash. And throw in fifty or so holiday bungalows if you’ve got the space. You bring in the best furniture, cutlery, china, linen. From then on your hotels and bungalows are full up. Except that nobody ever stays in them, you see. If a travel agent calls: sorry, we’re fully booked. Every month a security van rolls up at the bank and unloads all the cash that’s been taken in room rentals, bungalow rentals, the restaurants, the casinos, the nightclubs and bars. After a couple of years, your resorts are in perfect shape to be sold with a brilliant trading record.’

No response beyond a raising of Matlock’s avuncular smile to maximum strength.

‘It’s not only resorts either, actually. It can be one of those strangely white holiday villages — you must have seen them, trickling down Turkish valleys to the sea — it can be, well, scores of villas, obviously, it can be pretty well anything that’s lettable. Car hire too, provided you can fudge the paperwork.’

The book as a whole is very cleverly constructed, and full of wildly implausible ever-so-English characters who sound as though they’ve just walked out of a Noel Coward play. It’s a rollicking read, and I got through it in no time; I’m now wondering how common this black hotel ruse really is. Do people really buy hotels which have never actually been stayed in? One would think that before shelling out vast amounts of money for a seafront resort you might at least take a look at Tripadvisor. Still, I suppose that absent a legitimate buyer, Money Launderer Number One could always just sell to Money Launderer Number Two.

Full post as published by Macroprudential on September 09, 2010 (boomark / email).