Introduction
Over the years, money laundering has become an enormous problem for the global economy. It is believed that up to five per cent of the world economy could be implicated in this practice at some stage. For those who have never encountered it, it is obviously not an issue. However, if you are in business, you cannot be completely immune – especially if you are in the financial sector or deal with international companies. The following will give you an idea about what money laundering is and how to stop your business being a target.
What is money laundering?
Simply, it happens when criminals or their collaborators pass the money gained by illegal means through a legitimate business (usually financial institutions who deal with vast quantities of funds on a daily basis). The proceeds are then ‘washed’ through the system(s) to camouflage and conceal who, where and how they were ‘earned’, and emerge as ‘clean’ money to be pumped back into the economy.
How is money laundering carried out?
There are multifarious ways of doing this these days as the methods have become increasingly sophisticated. The funds are usually proceeds from serious and organised crime syndicates and they go to great lengths to protect their illicit assets. However, there are basically three stages of money laundering:
- Placement – the funds are deposited into the financial system
- The money is ‘washed’ by one or more procedures to hide the owner’s identity and how and where he/she came to acquire the money
- When it is ‘clean’, it re-enters the economy.
Where does the illegal money come from?
It can come from anywhere in the world. Crime is international, but most money launderings are attempted by serious and organised criminal syndicates. They can make serious amounts of money through illegal activities such as drugs trafficking, prostitution, terrorist funding, arms smuggling, fraud, robbery, bribery and corruption. They obviously need to change this so-called ‘dirty’ money into ‘clean’ money and therefore conceal how it was obtained.
How can we fight against money laundering?
The government is working very hard to identify and prosecute those involved, and to prevent the practice. They have published their Money Laundering Regulations to help businesses fight against being used inadvertently to process these illegal funds. The aim is to greatly decrease the incidence and effect of serious and organised crime and terrorist financing.
Organisations such as Money Laundering Compliance can offer businesses ways to help them to avoid falling victim to money launderers. These services include Bribery Act compliance, training, useful information, guidance and support. Forewarned is forearmed. We are members of the Business Tax Centre group of companies and are operated by qualified professionals in Accountancy, Business Law and Money Laundering Compliance.
This post was was brought to you by www.moneylaunderingcompliance.com. for more information call them on +44 (0) 161 796 6090 or email [email protected]. They will be pleased to discuss your business requirements in regard to the scourge of money laundering and are confident they can help you.
