discuss How new TLDs could be used to launder drug trafficking proceeds

[garptrader]

One-word and hyper short LL .Com domains are rare and already in the hands of well-established domainers or corporations. Such domains are expensive and their sale even if private is more likely to draw attention. However , the release of hundreds of new extensions has made the acquisition of premium keywords, short numeric, LL and Chinese premiums much easier - in some TLDs. Following is a potential scenario...

A drug dealer in the U.S. sells $1 million of illegal drugs. The proceeds are deposited in small transactions into a series of related bank accounts. They could be linked to separate PayPal accounts but that might not be necessary. An affiliated partner in a foreign country (source of drugs) registers 250 cheap new TLDs at $1 each. The U.S. based partner buys the 250 new TLD domains in separate transactions over a period of days for an average price of $4000 each but under limits which might attract the attention of authorities (suspicious activity reports have $5k to $10k triggers). The domains are transferred to the U.S. partner while a series of small transfers from numerous bank accounts and or PayPal accounts totaling about $1 million less transfer fees is laundered out of the country. Yes .Com domains could be used but it is much harder to find good combinations in .Com.

Theoretically these same domains could be sold back to the original seller for $1 each so that the process could be repeated with the same domains.

This same method could be used to launder human trafficking proceeds or to fund terrorist activities. Yes this is all hypothetical but we have already seen buyouts in certain domain categories and TLDs. The Chinese are huge players in the new TLD space. Why?

 

[domainscp]

It sounds like you have way to much time on your hands, consider taking up a new hobby, this thread is beyond stupid....

 

[33S]

wow

 

[baseballworld]

Think you have some free time there.

 

[DnEbook]

If they really want to go under the radar they should buy my 5Ls and 7Ns

 

[N-A]

No, no, no. That's not how laundering money will every work. It's way easier to build a hotel in Cancun (for instance) that stays at let's say 10% occupancy, but is always, on the books at 100% paid in cash with "tourist money". I mean, that's one way. The way you mentioned is way too much work for a crime syndicate to do (registration, etc.) when it is much easier just writing numbers in a book, bribing foreign exchange centers, and of course, killing anyone that stands in their way.

Nice imagination though.

 

[betthelot]

Like it. Finally it all makes sense. Much more sense then believing you can make money with theses names by domaining.

 

[garptrader]

The Margaritaville hotel in Hollywood Beach Florida was a $140 million project which took about two years to complete.

 

[mad409]

Hmmm does this mean the G in gTLD could possibly mean Gangster?

 

[hostnesta]

Imagine splitting up $1 million to series of $4k.
It can't go under the radar, because all the transactions will move in the same direction.

 

[deez007]

Lol....I have been saying it for a long time now... domains are going to be used for money laundering... they are already being used at the moment but will soon be done on a larger scale

As soon as someone launches a reliable escrow service that can use Bitcoin or other Crypto as payments...then rest assured money laundering is going to start happening on a MASSIVE scale.

People are also using domains to take large sums of money out of their countries.... no need for a 3rd party or anything.....

All they need to do is register a company in a tax haven (Delware, Seychelles, cayman islands, isle of man, bermuda, etc....)

Then buy a few domains using the companies name....let say you buy 20 domains...

Now....you buy these domains from your company...... you pay lets say... $10 000 per domain.

Thats $200 000 thats out the country and into a foregin bank account belonging to a company that belongs to you.

***Also if you make these purchases recorded sales then word gets out about these domains sales, then the percieved value of the domains go up.... so you could still resell the domains at a decent price as welll***

 

[Kate]

Domain names are the perfect vehicle for money laundering, because they are immaterial assets and without the trail of usual financial instruments. It is possible to conceal ownership.

I am certain that domains are used for laundering.

I don't know about the registries, but some registrars are shady and support illegal activities (spamming, rogue pharmacies, counterfeit). In fact and at least one was terminated for criminal activities (Estdomains).
Money laundering goes on in every industry (eg. real estate), and the domain industry being little regulated why would anyone think that kind of stuff doesn't happen ?

PS: playing the devil's advocate further: have you noticed that some registries have sold inventory to themselves, that is to a subsidiary they have set up. I think there could be legitimate tax reasons but there can be a fine line between tax avoidance and tax evasion or downright money laundering.

 

[dordomai]

I think that happened during the chinese bubble. People were trying to conceal their wealth and move it offfshore.

The government took action within a few months and implemented their WHOIS verification procedure. Then the market went down.

 

[vivaldi]

PS: playing the devil's advocate further: have you noticed that some registries have sold inventory to themselves, that is to a subsidiary they have set up. I think there could be legitimate tax reasons but there can be a fine line between tax avoidance and tax evasion or downright money laundering.

Yes this and similar activities are more common than most know, some really dirty stuff happening. Not unique to this industry though.

 

[mad409]

I'm curious why this has been posted within the gTLD section? If many believe this could, or can happen it's not just with new g's. LOL

Hate to bust your bubble but it's .com, cctlds and everything if it could possibly be done.

Why put a spotlight on something that could hurt our investments, agree with the OP whether it's accurate or not?

 

[Kate]

You are correct. Laundering was going on before the new TLDs.
But it's true that the new extensions open new opportunities. For example you can now set up your own extension and registry, which is the equivalent of owning a bank.
It's better to own a registry than a registrar. The registrar has to pay the registry for every name registered even if they are ultra-cheap. The registry has the ability to create domains out of thin air for nothing. This is the equivalent of printing money.
While this may look like a conspiracy theory to some, it brings an inch of reason to those silly, what-were-they-thinking strings

 

[guillon]

It's not April first right? I am sure this post is sponsored by the .LOL Registry. Congratulations for the idea.

 

[N-A]

Domain names are the perfect vehicle for money laundering, because they are immaterial assets and without the trail of usual financial instruments. It is possible to conceal ownership.

I am certain that domains are used for laundering.

I don't know about the registries, but some registrars are shady and support illegal activities (spamming, rogue pharmacies, counterfeit). In fact and at least one was terminated for criminal activities (Estdomains).
Money laundering goes on in every industry (eg. real estate), and the domain industry being little regulated why would anyone think that kind of stuff doesn't happen ?

PS: playing the devil's advocate further: have you noticed that some registries have sold inventory to themselves, that is to a subsidiary they have set up. I think there could be legitimate tax reasons but there can be a fine line between tax avoidance and tax evasion or downright money laundering.

I didn't argue that it isn't possible to launder money with domains. However, the OP specifically posted money laundering from the drug and sex trafficking trades. Those two "industries" make $360,000,000,000 and $150,200,000,000 per year respectively. There is no way that the domain name trade alone could hide that much money. The more conventional ways of laundering would be through shell construction companies as they can "construct" a multi-million dollar building on paper, foreign exchange centers as they can use previously used passports of real tourists to trade currencies quickly (if it managed to physically cross borders, which, it does), and hotels as there is no way to prove a guest did not stay in that room. I'm sure that I left out many other methods of laundering, but, I don't believe domaining to ever be an avenue for drug dealers to use.

Edit: as example of the low-life drug dealer in the sums of $1 million as discussed, the most used approach is renting an entire club/venue out and "selling" tickets.

PS: All of this knowledge was acquired from Drugs, Inc. on Netflix. So, it may not be the most accurate, but I've not seen any mention that dealers bought and sold domain names to Chinese investors to launder their drug earnings. Perhaps, in the next season(?).

 

[Domo Sapiens]

It's possible... the only problem is that usually the chosen investments hold some 'Tangible Value'.

 

[ikhub]

Just because I registered some precious new gtlds, you cannot be suspicious of me. I am too old for the sex trade, and drugs? My wife cannot tolerate my cigarette smell.

 

[garptrader]

We have already seen some degree of liquidity among short numeric and Chinese premium domains - which could make them quasi-virtual currencies. A few cases of money laundering involving virtual currencies or websites....
Liberty Reserve
https://en.wikipedia.org/wiki/Liberty_Reserve

Silk Road
https://en.wikipedia.org/wiki/Silk_Road_(marketplace)

Western Express Cybercrime Group
http://www.informationweek.com/seve...crime-and-id-theft-in-new-york/d/d-id/1061328

http://www.fatf-gafi.org/media/fatf...y-definitions-and-potential-aml-cft-risks.pdf

The FATF mentions internet and mobile payment services as a risk area....
http://www.fatf-gafi.org/media/fatf/documents/reports/ML using New Payment Methods.pdf

We have not yet seen a report of a criminal organization using domains to launder money. However, to the extent that such organizations do oftentimes use seemingly legitimate businesses as a front for their illicit activities, laundering via domains could be possible - and easier in TLDs where keywords are more readily available and cheap.

 

[carob]

I don't believe domaining to ever be an avenue for drug dealers to use.

The new TLDS are the new crack.

 

[N-A]

The new TLDS are the new crack.

That, I can agree with.

There are going to be many ngTLD hand-reg domainers with strung out bank accounts in the coming years as this epidemic of new-wave crack grows.

 

[Domo Sapiens]

Upcoming Deletes: 707,536 (2.94%)
https://ntldstats.com/

CentralNic expects 10% or less .XYZ renewals
Close to 5MM could drop...