Money Laundering in Vehicle Sales

Sophisticated practices of illicit activities remain on the rise; one such practice is that of money laundering in vehicle sales that continues to remain a vice criminals often engage in.

Within the automotive industry, criminals often overvalue or undervalue prices to transfer criminal proceeds across the border or legitimize it through resales.

These practices only further complicate trails, making it increasingly difficult for authorities to detect money laundering schemes and highlight the exact origin of illicit activities.

How Illicit Funds are Disguised through Vehicle Transactions

Over or Under-Invoicing

It is a classic in money laundering in vehicles. Criminals usually declare a higher price or a lower price for that matter, on an invoice than the actual value of goods and services. It paves way for criminals to move extra illicit money across accounts or borders under the guise of legitimate business transactions.

Structuring in Order to Avoid Reporting Requirements

Structuring includes essentially the breakdown of large volumes of cash amounts into smaller cash payments that ensures that the criminals remain below the AML reporting thresholds for example in the United States the Form 8300 (the reporting of  Cash Payments that exceed the payment threshold of 10,000 USD that have been received in a trade or a business) is a Treasury Form used to report large cash transactions to the Internal Revenue Service as well as FinCEN.  It is an important tool in anti-money laundering and financial crime prevention. Buyers may split payments across transactions in order to avoid scrutiny.

Straw Purchases

A straw purchase is one where a vehicle is bought by someone else on behalf of a launderer/criminal. The buyer may not necessarily have any interest in the vehicle but, however, facilitates the transaction. The launderer then resells the vehicle in order to obtain “clearer” funds.

Use of Fake Identification/Documentation

Fake documentation is also a staple for criminals especially in the case of money laundering in vehicle sales. Criminals draft fake licenses, passports. Fake Ids also aid in “title washing” which is basically transferring the vehicle ownership multiple times to obscure the origin of funds.

Regulatory Standards for Car Dealings

Caution and preventable measures go a long way and dealers should comply with these standards in order to avoid being complicit in crimes like money laundering. Different countries may set other limits that trigger AML obligations for high value traders like Auto dealers, but usually the threshold is set to $10,000 for cash payments.

For example, in Germany car dealers typically need to comply with the following AML requirements when dealing with single or linked cash payments worth 10,000 euros:

Customer Due Diligence

Dealers must be aware of the kinds of people they do business with. In this regard,  a thorough customer due diligence where they verify the identity of their customers, the correct source of their funds and what their intent is behind the usage of the vehicle they want to buy. In order for this to happen the dealers must obtain ID documents, financial reports and/or other relevant and necessary information.

Filing of Suspicious Activity Reports (SARs)

Filing a Suspicious Activity Report becomes a compulsory task for dealers with the authorities when required by applicable regulations while surveilling customers’ transactions. It should also be filed in a specific frame of time and  all the important details of the transaction that make them suspicious in the first place, must be mentioned in the report.

Data Logging

A thorough record of all relevant documents, transactions, ID verifications, the buying and selling of vehicles as well as the exact origin of money must be available with the dealers.  This is so that, upon the demand of the regulatory authority the dealer is able to assist them wherever required throughout the process of investigation.

Compliance Regulatory Reporting

If there are any additional regulatory reporting requirements then it is bound upon the dealers to complete them. This includes but is not limited to reporting large cash transactions or any suspicious wire transfers.

Examples of Money Laundering in Vehicle Sales

Notable money-laundering cases have emerged over the years especially in the vehicle sales industry.  Following are a few examples:

• According to the IRS  in 2025, a California man was sentenced to 64 months in prison for an online car sales fraud that scammed hundreds of victims out of more than $10 million and for conspiring to launder proceeds of bribes.  He was also asked to pay $10.6 million in compensation for heading a vast-scaled conspiracy that involved the proceeds of deceptive online vehicle sales.
• According to the Office of Public Affairs at the US Department of Justice in May of 2025, a Columbian national was sentenced for 12 years and 7 months in prison. He was also ordered to surrender his Lamborghini Huracan Spyder of 2017 and a Porsche Cayenne of the same year since they were discovered to be involved in his money-laundering scheme.
• According to a report by FinCEN,  SARs gave a major breakthrough to investigators with helpful information in a case against an automotive dealer and several other associates who were involved in a drug trafficking and money laundering organization. The cash transactions had passed the $10,000 threshold as set by FinCEN Form 8300 but the auto dealer had documented the sale of cars for under $10,000. As a result of this, the local financial institutions filed multiple SARs regarding the alarming financial deposits.

The above mentioned examples are all as recent as 2025 thus, reiterating the pressing issue that money laundering in vehicles sales remains. This puts the onus of responsibility on dealers and all other similar professionals in the industries to remain observant in noticing and reporting deceitful activities.