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Money Laundering and Fraud: How to Reduce Your Risk

By: Lesley Pettrigrew Mar 26, 2021 9:15:00 AM


What is Money Laundering?

Money laundering is a crime involving the movement of illicit funds to legitimate channels to disguise it’s illegal source.

What is Fraud?

A type of criminal activity involving the deception of another for personal gain. Forms of fraud include: wire fraud,
business email communication fraud, tax evasion, and identity theft.

Why do you need to be concerned?

Criminal groups are opportunists and scan the internet for online businesses they can use to facilitate money laundering or fraud. Actors will disguise themselves as legitimate customers to use your systems to layer or integrate their illicit funds in and out of the financial system.

The Consequences of Money Laundering

Money Laundering can effect your company in a variety of ways which include:

  • Damaged reputation

  • Loss of trust with partners, investors, and banking partners

  • Legal ramifications

  • Fines and regulatory infractions

How to Protect Yourself

1. Create and implement an anti-money laundering/fraud culture

  • Incorporate anti-money laundering (AML) training to empower your staff through education.

  • A company culture with a zero tolerance policy for money laundering and fraud will reduce risk and be less attractive to bad actors.

2. Understand your risk and vulnerabilities

  • It is important to understand where your business may be vulnerable to money laundering in order to adequately protect against it.

3. Create robust internal controls

  • These controls can include collecting client information, verifying identities, and management reporting.

4. Don’t ignore red flags 

  • Complacency is a gift to money launderers and fraudsters. AML training and internal controls will help identify red flags as they occur.

What are Money-Laundering “Red Flags”?

  • An inability to properly identify the customer or questions surrounding the customer’s identity

  • The client is persistent and shows undue urgency when opening an account

  • Refusing or avoiding providing required information

  • If information is provided, it is misleading, vague, or difficult to verify

  • A sudden change in customer’s profile, pattern of activity or transactions

  • Suspicious or unusual patterns emerge from a customer’s transactions

  • Client exhibits knowledge of reporting thresholds

  • Conducting transaction(s) while accompanied, overseen or directed by another party

AML/Fraud Resources

There are a variety of government and third-party resources that can help you create a strong AML strategy, including:



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