Money laundering targeting small businesses

Could you be a target for money laundering?

Money Laundering is a crime in itself. Its about taking dirty money, getting it into the legitimate system and then to be able to use it without anyone knowing that it comes from criminal activites. Banks and the financial services at large have far reaching systems and legal obligations to monitor and report suspected behaviour. That means that many criminals are seeking to wash their money with smaller businesses, in particular the cash intense ones.

How does money laundering occur?

Money laundering typically happens in three stages, we break them down here:

1. Placement

   The first step will be placement. Its taking the illigally obtained money and placing it into the legitimate system. This should of course be done in a way that does not lead to detection.

   
   

2. Layering

   The second stage will be the layering. Here the aim is to create legal paper trail making the trace back to the origin of the money hard or impossible to detect. It involves moving the money, disguising its origin, and having it co-mingled with legitmate transactions.

   
   

3. Integration

   Here is the final step that is closely intertwined with the layering process. The money is now re-introduced as "clean" into the system. The money should now have been integrated and hence appear as legitimate, ready to use.

Money laundering regulation is constantly updated as to ensure it stays relevant, so do keep an eye open to ensure you understand your obligations. In particular if you operate in a high-risk industry and/or cash intense business must you be mindful and ensure compliance.

Some of the typical examples of money laundering targeting small businesses along with measures to protect yourself can be found here.