Money laundering is a criminal activity that is likely to find space to be virgin terrain, ripe for exploitation. As with nearly everything else we’ve discussed so far, this is a guess, but it’s probably a correct one. According to the UN, between 2% and 5% of the world’s GDP is laundered globally. Criminals, terrorists, and others are therefore laundering somewhere between $800 billion and $2 trillion annually. It seems inevitable that this activity will extend to space as the space economy grows larger and becomes more integrated with the terrestrial financial system.

Assuming we are right about this, a brief digression into the nature of money laundering is in order. While there are many different ways to launder money, and an infinite variety of techniques within each of them, money laundering almost always follows a three-step process:

  • Placement—The transferring of “dirty”/criminal money into a bank, shell company, or goods
  • Layering–Moving the dirty money or goods around so its origin is obscured
  • Integration—Converting the dirty money, now obscured, into cash or goods that the original launderer can declare as “clean” income for tax and reporting purposes

With that in mind, we predict that space money laundering will follow two common methods of cleaning cash. One will be laundry through commercial transactions, such as the buying and selling of space cargoes. For insight into this first prediction, we spoke with Kenneth Rijock, a banking lawyer turned career money launderer, who eventually became a compliance officer and financial crime consultant. Rijock has a unique personal perspective into this issue.

In Rijock’s view, money laundering in space will resemble conventional Earth-based practices, only it will occur in outer space. He said, “I think criminals will take the traditional money laundering formula of placement/layering/integration and apply it to cargo or some other goods of value, outside of regulated jurisdictions in space.”

He added, “I’m sure you understand that there are probably people who stay up late at night trying to figure out how to bring law to space. And they may find some sort of way to do so, but that won’t stop the money launderers because they’ll just transplant their method aloft. They’ll buy goods with dirty money, like minerals from asteroids for cash. That will be the placement stage. Then, they will arrange for those minerals to be purchased by a company they control on Earth… which is the layering process. When that firm sells those minerals, that’s integration. They get ‘legitimate’ taxable income from the sale of space minerals. Just like Al Capone and his chain of laundromats in old Chicago.”

The other mode of money laundering that’s probable in space involves shell companies and the buying and selling of space assets. This is a widespread practice on Earth right now, often involving real estate and other assets that are subjective in value, such as artworks. According to LexisNexis, “Shell companies and trusts are effective tools used in money laundering schemes, as they offer an intricate façade to disguise illicit funds.”[1]

With a shell company, a money launderer can throw up a smokescreen that enables the transfer of funds between accounts—the illusion of legitimate transactions. Then, as LexisNexis explained, “By intertwining multiple shell companies, the complexity of the financial web grows, making it increasingly difficult for authorities to trace the money back to its original source.”

Luxury high rise apartments in New York city are a prime example of this technique. Opaque, multi-layered shell companies with foreign ownership buy and sell Manhattan condos worth tens or even hundreds of millions of dollars. It is an open secret that many of these transactions are masking money laundering.

Space will almost certainly be a venue for this kind of activity, according to Professor Salvatore Mercogliano, a maritime piracy expert who teaches at Campbell University in North Carolina. He said, “I believe that money laundering operations will include the buying of expensive space assets, because it’s an easy way to launder money—easier than, let’s say, a shrimping company or siphoning oil off a Panamax ship. For the actual purchase, they will create front companies or investment firms that will buy legitimate space entities—and then sell them to other companies who are colluding with them, either knowingly or not.”

The potential for shell company-driven money laundering in space offers the beginning of an explanation for why small countries like Luxembourg have taken such an active interest in space commerce by becoming a full member of the European Space Agency (ESA).[2] At a glance, Luxembourg, a tiny landlocked country, seems like an unlikely candidate to be a space power. Yes, the country’s business elite may legitimately want to get a head start on a growing, high-value industry. However, a better explanation is that the country, known for harboring questionable financial entities, sees itself as a vessel for asset-based space money laundering.

With the caveat that this may turn out to be unfair insinuation, recent reporting suggests that space-based money laundering could be in Luxembourg’s future. The OpenLux investigation, conducted by reporters from Le Monde, Le Soir, The Miami Herald, and Sueddeutsche Zeitung, examined millions of documents related to 260,000 companies linked to Luxembourg’s €4.5 trillion ($5.4 trillion) investment funds sector between 1955 and 2020.

The investigation concluded that the country’s investment fund industry is “a financial ‘black box’ that helps people launder illicit money and avoid tax.”[3] Will Luxembourg’s “black box” investment fund sector open itself up to space-based money laundering? We’ll have to wait and see… assuming we can see what’s happening there.

Photo by Pixabay: https://www.pexels.com/photo/hard-cash-on-a-briefcase-259027/


[1] “Examples of Money Laundering Techniques,” Lexis Nexis, May 4, 2023, https://www.lexisnexis.com/blogs/gb/b/compliance-risk-due-diligence/posts/examples-money-laundering.

[2] Marc Serres, “How Luxembourg Becomes Europe’s Commercial Space Exploration Hub,” Cairn, May 2019, https://www.cairn.info/revue-realites-industrielles-2019-2-page-69.htm.

[3] Huw Jones, “Luxembourg Fund Industry is a $5.4 Trillion ‘Black Box’, Investigation Says,” Reuters, February 8, 2021, https://www.reuters.com/article/idUSKBN2A81NO/.