Money laundering is illegal and a heinous crime that has become rampant. Thus, it gives long term problems for you and your business. Because of this, you can have a long sentence in jail, which can have a negative impact on your personal life.
Small businesses are mostly included in this kind of “organized crime,” as they want easy money and don’t consider where it circulated from, as long as they are having a benefit from it.
How does money laundering work?
The money will first go through placement. It is where the money will move from source to source until it becomes misrepresented.
The money will then be transferred to banks, casinos, and money changers/couriers locally or overseas. It can also be circulated by purchasing assets, currency exchange, and the blending of funds.
The next stage is layering, wherein it makes the money hard to trace to cover the laundering activity from the law enforcers.
The last stage is the integration upon receiving the laundered money. The owner can buy tangible assets or transfer the money to a foreign bank to incorporate the complexity of its traceability.
It is best that you are educated on how to prevent money laundering schemes to avoid perils and to protect your business.
1. Learn about money laundering schemes
There are countless ways for criminals to perform money laundering. Hence, it is good that you and your co-workers are properly educated about it in order to properly implement safety measures.
The more tactics you are aware of, the more you will be able to detect the trends and the whereabouts of money laundering.
It is best that you and your team utilize a trustworthy source that can provide you ample information about money laundering.
2. Know who your customers are
It is very important that you know who your clients are. You should know what the motive for their transaction is.
In the event that something weird might occur while completing a certain transaction, ask them and be able to assist with the query. Be wary that electronic identification verification is a must to identify if the customer is legit or involved in financial crime.
For various businesses that include large purchases, it is important to know who your investors are and what is the source of their income. It is good to have a background of their business’ nature, the too good to be true attitude, overly exciting offers, and make sure not to miss any strange settings as this might be a trap.
3. Always conduct due diligence
It is important that you investigate a business, its customers, and their reason for purchasing.
According to First AML, an AML Audit NZ company, “Businesses should avoid indulging cash bait or easy money with a stranger, as he/she might be most likely involved in the money laundering scheme”.
A business should conduct a thorough background to see if your current or potential business partners have been previously investigated or charged with a crime. This is to ensure your own and your business’ safety.
Be sure that their company is registered. It can be checked online or through government institutions.
It is also important that you have an accountant and a lawyer when conducting due diligence. They are the people who can help you monitor your funds, documents, compliance, and prevent lapses and possible lawsuits.
4. Beware of cybersecurity risks
Consumers are falling into online transactions as they can easily be accessed. By transacting online, most people use cards (credit, debit and prepaid cards) that are prone to cybercrime-related cases. Therefore, cyber activities must be strictly monitored to avoid scams, and report anything suspicious.
Protection must be provided for the business and its consumers. Safety measures such as information confidentiality must be observed to avoid identity theft. A simple regular changing of password can provide you great security. It is also important for businesses to invest in an anti-money laundering system that can tailor fit to the business needs.
5. Establish an anti-money laundering policy
An anti-money laundering policy is required to monitor financial transactions and the flow of money, accounts, and activities. The policy must contain instructions on which ones to avoid, and how to take action.
Whichever the type of business it is, you must thoroughly indicate the procedures of the policy and determine if you wanted a certain handling procedure to be followed.
A strong basis can help you decide which ones to deal with or have a partnership with. It can assist your team to mold their knowledge, understand each transaction, and identify if they are dealing legally, or might be involved in a money-laundering scheme.
Any suspicious activity must be reported to the authorities to avoid the impact it might give the business.
6. Provide AML training for employees
Given that money laundering is rampant, it is becoming a global issue. The people involved in such are becoming more notorious, technologically updated, and more shady about it.
To keep the business safe from money laundering, such an establishment must provide training to each employee including the business owner to have strong knowledge about AML. This can also help them cite a real-life example such as how to detect dirty money, and how to deal or resolve it so that people can have exposure to it.
The importance must be instilled to all, and be compliant with the rules and regulations to keep the business’ reputation intact. Therefore, it might save your business from risk and potential loss.
To Sum it Up
Knowledge about preventions of the money laundering act is indeed a vital practice each business must observe.
Since we know that it’s very hard to chase the criminals and the mastermind of the crime, safety precautions must be instilled, proper monitoring should be made, and report anything suspicious to keep the business’ reputation intact and have financial stability.
A strong anti-money laundering scheme should be made to avoid luring criminals.