A "black market" refers to the financial transactions regarding particular goods or services which is done outside the formal economy. While the nature of the transactions may be legal or illegal, the fact that it is not reported makes it illegal because it is most likely avoiding the payment of taxes.

The particular transactions involved in common black markets involve the following goods or services: prostitution, gambling, drug trade, currency exchanges, human trafficking and arms trade.

Cash is the preferred way of payment when dealing in a black market. It is not possible to track it like a transaction done through a financial institution.

The motive for the existence of black markets is profit. Parallel to the existence of black markets there are money laundering operations which become necessary so that the person obtaining the cash profit can make use of the money in the formal system.

This post is intended to only raise awareness. In order to make actual financial decisions please contact your financial advisor and/or tax advisor prior to making the decision.