As a business owner, you need to do everything in your power to protect your business from anything that may harm its image. One such thing that can harm your business’ image is money laundering. Money laundering is a very common term in the business world. But what is money laundering, why do you need to protect your business from it, and how can you protect your business from it? Well, keep on reading this article as we discuss all of these.
What is money laundering?
Money laundering simply means the illegal process of making large amounts of money generated by illegal means, such as terrorist funding or drug trafficking, appear to have come from a legitimate source. Money laundering is a serious financial offense employed by white-color as well as street-level criminals.
Why is it important to combat money laundering?
Now that you have understood what money laundering is all about, why should business owners protect their business from money laundering? Let’s find out.
Anti money laundering [AML] seeks to deprive criminals of their profits from their illegal deals, hence eliminating the major motivation for them to engage in such wicked activities. Of course, dangerous and illegal activities, such as people smuggling, drug trafficking, extortion, fraud, and smuggling endanger the lives of many people across the globe and impose significant social and economic costs in society. Since the proceeds of such activities are legitimized by money laundering, stopping money laundering can result in a reduction in criminal activities, posing a significant benefit to society.
Ways to protect your businesses from money laundering
Here are some of the measures business owners can take to prevent their businesses from money laundering.
- Ask many questions
As a business owner, when approached with a business idea, there are a number of things that you need to ask to confirm that it is indeed a legitimate partnership or if it hints at any potential money laundering. You need to ask about the source of the money and amount involved as well as the investors involved. Vague answers should raise an alarm.
In addition to that, if someone has contacted you all of a sudden and they want to invest in your business, ask them why and start doing your due diligence. Also, ask them about cash payments or why they prefer giving you cash. If the answers seem not convincing or they are too good to be real, it is advisable to pass on the deal.
- Understand more about money laundering schemes
Criminals are continuously developing new tactics. The more you know about these tactics and share them with your employees, the safer you will be because you will be able to detect any attempt at money laundering.
There are plenty of ways to launder money. Money laundering involves putting illicit cash in your account, conversion of cash to a financial instrument, etc. Prepaid credit cards are also something normally used for these schemes, so it is advisable to avoid accepting them. Knowing these tricks can go a long way in helping you stay clear of becoming part of money laundering.
- Do your due diligence
Another important thing you need to do is to do your due diligence before any financial transaction. You need to investigate all the people involved in a financial transaction. Check if any of them have been involved in any investigation or charged with a crime. Another thing, if a total stranger approaches you and tells you that you have won a large amount of money for doing- that could be a money-laundering scheme. Also, if you are considering partnering with another person, be sure to check how their company is registered.
- Come up with a formal anti-money laundering policy
All businesses regardless of their sizes should have a formal policy about its anti-money laundering strategy. The policy should include instructions on specific actions to take or avoid. It should also state that you don’t have a cash policy on particular transaction sizes.
This can help shape and train your team members to understand what a money laundering scheme is all about as well as emphasize its serious nature. And if you suspect any suspicious activity, you should report it to the authorities.