What is money laundering? How it can be prevented?
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Money laundering is the act of concealing the transformation of profits from illegal activities and corruption into ostensibly "legitimate" assets. The dilemma of illicit activities is accounting for the origin of the proceeds of such activities without raising the suspicion of law enforcement agencies.
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According to rules on measures to prevent money laundering and terrorist financing, copies of personal identification and other particulars on the customer which have been gathered must be preserved for at least five years from the time occasional transactions or a permanent business relationship concludes.
The legal expert said you can highlight examples of money laundering by asking the following six questions:
- Has someone been vague or reluctant to talk about the exact sums of money involved in a deal, or who the investors are? You need to flag it up.
- Have some unusual instructions or conditions been introduced into a deal? Find out why.
- Has somebody contacted you out of the blue to express an interest in investing money into your company? Do your research. Do they have an ulterior motive?
- Have there been sudden changes to your working relationship with partners or other businesses? Do some digging.
- Has money been moved without a proper announcement of where it’s gone and why, or has there been a request to use a different account? These are clear warning signs that you should act on.
- Have assets appeared suddenly or has somebody floated the idea of making a loss? Also, if someone has asked to make payments in cash, you should immediately be on your guard.
Even if you are completely innocent and money was being moved around behind your back, you can still receive a substantial penalty if your business is taken to task.
As well as asking the six questions above, Mr Rahman offered a six-point action plan to ensure money laundering cannot happen on your watch.
- Devise a clear anti-money laundering policy and appoint an anti-money laundering officer who is aware of the company’s legal obligations to report anything suspicious to the authorities.
- Make thorough checks on the identity of a client, trading partner or anyone else involved in moving money into, out of or around your company.
- Take the time to identify the real beneficiaries of a deal or the exact nature of a business relationship between two parties.
- Introduce accounting and cash handling procedures into the workplace that make it as hard as possible for money laundering to happen within your company.
- Enforce a no-cash policy on transactions of a certain size.
- Appoint senior staff to scrutinise the source of funding for deals or investment – or devise a procedure for third parties to disclose their funding sources.