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Money laundering is a major crime that comes with punishments. Organizations and businesses that are unaware of anti-money laundering regulations, may unintentionally find themselves caught in the middle of a criminal investigation. This is why every company needs to be aware of money laundering rules and activities that alert financial institutions of suspicious activity and can get a business in trouble.

Meverly Benjamin

Meverly Adjhei Benjamin. Courtesy of Meverly Adjhei Benjamin Consultancy ®

Examples of Major Money Laundering Cases

A quick Google search will bring up many real-life cases where a company has gotten in trouble with fierce financial consequences and imprisonment for not having tight enough controls to prevent and detect money laundering within their organization. Recent examples include:

  • Deutsche Bank paid a $7M penalty for not placing required restrictions on Syrian customers.
  • Credit Suisse was penalized $2.1M due to them failing to prevent money laundering activities by a drug cartel.

What is Money Laundering?

Money laundering is the practice of taking money that was earned through illegal activities and pushing the funds through the financial system in a way to conceal its original nefarious source. The money is then withdrawn in a way that makes it look like the money was earned through legitimate means.

An example would be: A customer takes $600K in cash profits from his drug trade, and uses it to buy a house. Later, the house is sold, and the criminal gets his $600K back. Except now, if the criminal is asked where he got the $600K, he can simply say it came from a legitimate house sale, and have the receipts prove it. This way, the dirty drug cash has been successfully laundered to look like clean real estate cash.

The company selling the house, which accepted the $600K drug money without asking any questions, can be found guilty of enabling money laundering, even if that company had no intention of breaking the law.

A company can be found guilty of money laundering simply by failing to have policies and controls in place to identify and prevent their company from being used as middlemen in a criminal’s nefarious scheme.

Who is at Risk?

All companies need to evaluate their business model to determine how exposed they are to the risk of being unintentionally involved in a money laundering scheme.

Companies with the greatest risk:

  • Handle large volume and/ or dollar amounts of electronic payments.
  • Receive large volumes of cash
  • Send large amounts of money back to customers, or sell a product that can be easily converted back to cash
  • Do business with foreign customers, especially in high-risk countries such as Iran, North Korea, Syria, Turkey, Cyprus, and many more
  • Companies that work in industries that offer anonymity such as cryptocurrency

Know Your Customer (KYC)

The best defense against money laundering currently used by major institutions is Know Your Customer (KYC). This strategy encourages organizations to learn their customer’s true identities and to understand what the source of the customer’s money is. It is also important to understand the customer’s buying behaviors and whether they are different than your industry norms. If a customer suddenly shifts their behaviors, it is important to detect and scrutinize these cases. The goal of KYC is to simply identify suspicious customer behavior.

While it is tempting for a business to avoid prying into the private lives of their customers, your business must acknowledge that failure to Know Your Customer could lead to huge negative impacts on your business, and thus your own livelihood.

Hire an Expert

Given the complexities of business finance and the craftiness of criminals, no internet resource can provide comprehensive advice. Understanding your company’s money laundering risk and operational weak points requires an in-depth consultation.

If your business is not large enough to justify a full-time Compliance officer position, then your best bet is to hire a Compliance consultant such as Meverly Adjhei Benjamin Consultancy Firm. The firm has cutting-edge expertise, educational background, and experience in real-world money laundering risk mitigation. Contact Meverly Adjhei Benjamin today for a free initial consultation, and learn about anti-money laundering prevention opportunities your business can apply for protection and money laundering risk mitigation. 

Tags: financial consultant, ABN AMRO, KYC Compliance, Financial Literacy, Credit Suisse, AML, Know-Your-Customer, anti-money laundering, Deutsche Bank, fraud prevention, big 4, big four accounting, business consultant