What is Money Laundering?
Money laundering is a process by which illegal income generated through criminal activity is disguised by first placing it with an unsuspecting financial institution or business.
Next, the money is moved through layers of financial transactions until the original source of the money becomes obscured or impossible to ascertain. Finally, themoney is integrated into legitimate transactions or businesses.
The goal is to make a confusing audit trail so it becomes difficult to detect the source of the funds.
What is Terrorist Financing?
Terrorist financing might not involved the proceeds of criminal conduct,but rather an attempt to conceal the origin or intended use of the funds, which will later be used for criminal purposes.
Examples of Money Laundering
Here is an example of money laundering illustrated how payments made through a company service could potentially launder illegal funds:
- A citizen overpays his or her obligation in order to receive a refund check with clean funds.
- A user makes multiple payments so that he or she receives a refund check from company client.
Money Laundering Red Flags
You must ensure your company employees receive training and gather the information necessary to help prevent
and detect money laundering.
Every staff must work together to help prevent money laundering and terrorist financing.
In order to detect money laundering, we must watch for indicators of suspicious customer activity (red flags).
Red flags are warning signals that should bring attention to a potentially suspicious cutomer activity are:
- Payment that are inconsistent withthe customer's needs or normal practices
- Reluctance to provide identifying information or providing seemingly fictitious information.
- Repeated or excessive payments
- Unusual payment methods
You may observe unusual concern for secrecy or concern about reporting requirements. Or purchases or transactions that don't
make economic sense.
Or Payments from outside the country - United States,District of Columbia or Puerto Rico. Or high intensity financial crimes areas.
Reporting Suspicious Activities
The employees are often in the best position todetect suspicious activity. If you suspect suspicious activity, you must
notify your immediate supervisor and/or the Anti Money Laundering (AML) Compliance Offer immediately.
The AML compliance officer willdetermin if the activity must be reported to the authorities and will submit any required reports.
If you suspect money laundering, terrorist financing or other suspicious activity...
- Do not accept the suspicious transaction
- Do not discuss your suspicious with a client or customer, except to clarify their intent.
- Notify your supervisor and/or the AML Compliance Officer immediately
If you have questions or concerns, contact the AML Compliance Officer.
Penalties for Anti Money Laundering
- Numerous penalties:
- Cease and Desist (stop doing business)
- The criminal status impose fines of up to £/€/$1 million and imprisonment for up to 10 years for laundering.