Money Laundering: What it is and How to Avoid It
There are many ways in which a business can be caught up in illegal activities. Money laundering is one of these. Although it has been glamorised by TV and film, money laundering is a serious crime.
Money laundering often goes hand in hand with organised crime and it is often tackled on an international level. Financial institutions employ anti-money laundering (AML) policies to detect and prevent this crime. Let’s take a look at what money laundering is and how you can avoid getting involved.
Understanding money laundering: definition and process
Money laundering is the process of making large amounts of money that has come from illegal activities such as drug trafficking appear to be legitimate.
There are three typical stages to the money laundering process:
1. Placement – where the dirty money is placed within a legitimate system,
2. Layering – which references the complex bookkeeping tricks to conceal the illegal activity,
3. Integration – when the cleaned money leaves the legitimate account to the wider economy.
The legal consequences of money laundering
Money laundering is a serious offence, and this is reflected in the legal consequences you may face if you are found to be involved. The severity of the accused offence means the trial can take place at different courts. Less severe accusations can be tried at the Magistrates Court where there is a limit on prison sentences, but the Crown Court can impose longer sentences.
Depending on your offence, your punishment could range between a fine and 14 years imprisonment – and sometimes both. Failure to comply with anti-money laundering regulations can lead to warnings, fines and prosecution.
Not only does your business face financial issues, but your reputation will be ruined as well. This will lead to a lack of customers, trouble continuing your business and even difficulty finding another job in the same sector.
If you ever find yourself accused of money laundering then seek legal advice immediately. Specialist lawyers can help you to navigate the legal processes whilst minimising damage to your company and reputation.
How to avoid involvement in money laundering
One way to avoid being involved in nefarious activity is to regularly review your AML processes and policies. Many businesses utilise pre-written ones, but they don’t always fit your business model. By reviewing it you can be sure it is robust and stands up to scrutiny.
Alongside a robust policy staff should be trained properly in identifying and reporting issues. Make this a part of your recruitment process so that everyone has the same understanding. You could also make it mandatory to have their training refreshed annually. By making it a company-wide issue you increase the chances of reports being identified and dealt with quickly.
