When people commit crimes, the aim is often to generate a profit. The profit gained from any criminal activity is illegal, and therefore criminals look for ways to place, layer and integrate their proceeds of crime to hide their illicit origins.
Money laundering is the term used to describe the process criminals use to clean the proceeds of crime. Legitimate businesses can find themselves the target of money launderers who want to pass their criminal proceeds through their company.
People who launder money are sophisticated in their methods. It can be extremely difficult to spot money laundering as the person your business deals with may seem believable and convincing.
Although money laundering can often be a hard to identify, there are important factors that companies must consider when conducting business with individuals and other companies.
Jurisdiction
If you’re dealing with a customer who is resident or operating from a less regulated jurisdiction, you might conduct more in-depth due diligence. People who are trying to launder money may not be able to provide sufficient evidence which could give rise for suspicion.
High-risk occupations
Many businesses handling money consider certain industries to be of high-risk. Mining, oil and gas, and pharmaceuticals are examples of industries that may raise a red flag.
Unnecessary complication
In some cases, money launderers will try to make their transactions unnecessarily complex. This is called layering and if successful, the laundered money can be even harder to trace back to the perpetrator(s) involved.
For example, individuals or companies may try to spread their money across numerous corporate structures. This may go against the guidance that your business provides and be a red flag that they are acting suspiciously.
No commercial rationale
Often the way in which money launderers try to use their money will have no commercial rationale to it. For businesses handling monetary transactions, it may be obvious from the customer’s instruction that what they want to do makes no sense or has no seeming commercial benefit.
You May Need A Lawyer If You’re:
- You want to put preventative measures in place to protect your business from money laundering
- Allegations of money laundering have been made against you or your business
- Your business has unknowingly been involved in money laundering and you’ve been contacted by the authorities
- The police have executed search warrants in your offices or home
- You have your property seized and/or frozen by the imposition of restraint orders