Tips to Prevent Money Laundering

Money laundering is an illegal practice, usually performed by criminals to disguise the unlawful source of their cash (or ship it to criminal organisations). However, it’s sometimes used to hide legal funds illegally, such as during wealthy divorces, when one party wants to protect their money from their (ex) spouse.


It begins by placing money illegally into a bank account or purchasing items with it. This is followed by the obfuscation of the asset, through wire transfers or selling high value goods bought with the money.


With the online world, money laundering has never been so easy. The internet, offshore banks, and shell companies are used frequently to hide illegal funds. Because of national secrecy laws, criminals often find their money protected from the prying eyes of authorities.


The island of Nauru only has a few thousand citizens, but no less than 400 registered banks. As such, it’s believed to be a conduit for Russian mafia money. But generally speaking, criminals prefer large cities, where so much money changes hands that they’re lost in obscurity.


In many cases, money that goes towards terrorist organisations comes from legit sources, so there’s nothing to alert the authorities to criminal laundering. Banks are now ordered to report anything that looks suspicious, although what constitutes ‘suspicious’ isn’t always easy to ascertain. Any amounts of money leaving the country, above $10,000, must be convincingly accounted for and reported to the authorities.


Smurfing is a new laundering trend that seeks to outmanoeuvre this law – a sum, just below the ten thousand threshold – is pushed through on multiple occasions, so launderers don’t have to immediately answer to the law.


You Have A Role To Play In Preventing Money Laundering


Generally, financial institutions are the first line of defence, but if you’re a business person, how would you identify a money launderer in your midst?


Always ask yourself if your customer appears to be a walking discrepancy. And be wary of any repeat visits to purchase expensive materials. If you know (or highly suspect) your customer couldn’t possibly afford to spend that amount of money, alarm bells should be ringing.


A lot of emphasis is placed on ‘knowing your customer.’ The police and customs have the authority to seize any cash they believe could be the proceeds of money laundering, so if you suspect something unlawful is occurring, report it. If the authorities find out that you were suspicious of an individual and didn’t report it to the authorities, you could also be charged with aiding money launderers.


Liberty Reserve


One of the largest organised busts of a money laundering business occurred recently, with more than $6bn finding its way to criminals throughout the world. It dealt with more than one million users and processed over 12m transactions annually.


It’s estimated that anything from £27 to 57 billion is laundered in the UK every year. This is a huge criminal institution and has only gone from strength to strength with the emergence of the internet.


Burton Copeland money laundering solicitors are specialists in assisting your case if you have been involved.