Money Laundering & Domain Names
Money Laundering and Domain Names are on my mind. As mentioned in the 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 sought-after dot coms can command high prices or domains that have equity attached to their 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 if there an ulterior motives attached to 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-ReportSo why Have I decided to write about this today I hear you say……
Well, I received an email from https://domainnamewire.com/2020/02/13/feds-allege-man-laundered-money-through-domain-names/ In which a very colorful character by the name of “Larry Ray” who 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 the IRS thinks when large amounts of money are transferred surely this alerts authorities and sends 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. 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 a one-word dot com how can one explain the transaction?
I always build websites for the domain names and show 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 highly sought 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 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!
