Money laundering is a criminal act that has been around for many years. In fact, it’s been going on since the 1920s! As long as there are people who want to clean their dirty money, this practice will continue to exist. It’s important for businesses of all types and sizes to understand how money laundering works and what they should do in order to protect themselves from becoming victims.
Anti-money laundering services can help keep you safe by understanding your business’ risk factors and identifying any potential threats early on. This blog post will discuss the basics of anti-money laundering, why your business needs it, and how anti-money laundering services can help protect you from fraudsters.
What is money laundering?
Money laundering is a financial crime that involves the process of making dirty money look clean. Anti-money laundering is typically done in three stages: placement, layering and integration.
Placement entails moving your illegal or “dirty” income into another form of investment where it will not be suspected as criminal funds by law enforcement agencies such as banks.
Layering, also known as structuring, refers to the process of splitting up your money to avoid detection. Usually, criminals move their money electronically across the globe. They use small transactions to make detection difficult.
Integration is the final step where dirty cash becomes “clean” and goes back into circulation as a legitimate form of investment.
Simple ways to protect your business from money laundering
Anti-money laundering services can help protect you from fraudsters by attempting to prevent this illegal activity in its early stages. Let’s look at the best tips to protect your business.
Research regularly
Criminals use different methods to launder money. These methods continue to evolve to prevent them from being caught. As technology changes, criminals are also forced to change their methods.
Businesses that require little or no paperwork, such as car washes and art galleries are major targets of money launderers. Criminals can legitimize money through over-billing or falsifying invoices. Additionally, they can place large orders and then cancel them and get refunds.
Anti-money laundering services research the latest trends on money laundering and share these findings with you so that your business is fully informed about new risks.
Do not accept cash payments for large amounts
While some customers may prefer to use cash when buying a product or service from you, it’s important to be aware of how easy this can make it for someone else to launder dirty funds through small transactions.
One way they do this is by paying in large sums of cash over time as opposed to one lump sum. Don’t let them take advantage of your lack of knowledge! If it’s possible, refuse any purchase made in excess of $20 if paid in cash. Another thing that criminals use is prepaid credit cards. Avoid accepting them if you can.
Ask questions
While business propositions might be exciting, do not be too quick to accept them. Conduct a quick background check on anyone who wants to invest in your business or do business with you.
Ask questions about the source and amount of money that they want to invest. Is the money they want to invest their own? If it is, you might be able to ask for more information if there are any suspicions of illegal activity. If not, avoid doing business with them. It’s likely that something fishy is going on and your lack of knowledge could put you in legal trouble as well. Also, if any assets appear in the financials that they share with you, ask about them.
Use technology
The advancement of technology has made it easier to detect money laundering schemes. Anti-Money Laundering software is designed to detect suspicious transactions.
Make sure that you keep up with the times and take precautions with your business dealings in order to avoid putting yourself in danger or making it more difficult for law enforcement agencies to catch perpetrators who are trying to intentionally launder money through your company. You can do this by incorporating kyc solutions to aid in monitoring and identification of customers.
Update your policy
Create and include anti-money laundering policies for your company, employees, customers and vendors. Include a clause which states that anyone who wants to invest in your business or do business with you must agree not to launder money.
A policy can be as simple as “The Company does not knowingly engage in any activities designed to conceal the true origin of property obtained from criminal activity.” You should also adopt procedures to prevent corruption by public officials such as implementing FCPA guidelines among other things so that all transactions are handled ethically.
Criminals who launder money will continue to look for loopholes that allow them to “clean” their money through businesses. To keep them from using your business, avoid sharing financial data with strangers. Also, stay on top of the latest schemes by researching new money laundering methods.
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