Money Laundering and Domain Names on my mind. As mentioned in my book that I wrote www.domainpowerbook.com I have always had my doubts about some of the domain names that have been sold in previous times for ridiculous amounts of money. Obviously the domains that are highly sort after dot coms can command high prices or domains which have equity attached with the domain. But when it comes to domains that online domain valuations and Google have low value for, but then you hear they have been sold for mind blowing amounts of money, you have to think is there an ulterior motives attached with the sales.
I for one always ask for a commission agreement form to be signed between the seller of the domain and myself. If the domain is sold for more than £1,000 I always ask both parties to fill in a due diligence form in accordance with “The Money Laundering, Terrorist Financing and Transfer of Funds” (Information on the Payer) Regulations 2017 / Part 230 of the General Rules and Regulation of the Securities Act of 1933
You can download a copy of this form and change the footer of the document, all you need is to copy and paste the wording into a word document and save it.Due_Diligence_Information-General-Report
So why Have I decided to write about this today I hear you say……
Well I received and email from https://domainnamewire.com/2020/02/13/feds-allege-man-laundered-money-through-domain-names/ In which a very colourful character by the name of “Larry Ray” whom on February 11th was indicted by the federal prosecutors for sex trafficking, extortion, conspiracy and other charges allegedly using the domain aftermarket to launder criminal proceeds.
One wonders what does the IRS think when large amounts of money are transferred surely this alerts authorities and send red flags. Banks especially want to know where the money comes from, I do not know about the United States but for the UK for sure they want to know where the money comes from and where it goes to. How does one justify paying 6 or 7 figures for a domain name to their accountant and if it is just a domain name alone without equity unless it was one word dot com how can one explain the transaction.
I always build websites for the domain names and show that the cost of web development, hosting and SEO as well as how much traffic is being generated. Nine times out of ten unless it is a highly sort after, a domain name does not sell if it is not developed not for high prices anyway unless there are questionable motives behind the sale.
So the moral of the story is if large amounts of money are being exchanged always cover your back and insist on a contract and a due diligence form to be be filled in accompanied but relevant documentation to authenticate the person/persons making the transactions.
If you want a copy of a contract that you can use for your own purposes, do not hesitate to contact me and I will send it to you by return.
Happy Reading Everyone!