Money laundering is a financial crime where people attempt to hide the source of any illegally acquired funds from the financial and regulatory bodies. In order to turn the illegal funds or ‘Black Money’ into legal funds people invest them it into legitimate businesses. Most of these businesses are small-medium-sized. They have a higher risk of becoming a victim of money laundering compared to larger corporations.
One of the major reasons for criminals to go after small\medium-sized businesses is that they lack experience and knowledge of such activities. More often than not, money laundering schemes are disguised to look like investments in your business or sudden and considerably large transactions. There are several precautionary measures that you can take in order to avoid any threats of money laundering and protect your business.
If you own or run a small/medium-sized business, here are a few things you can do to avoid the threats of money laundering!
Tips for Protecting Your Businesses from the Threats of Money Laundering
Be Thorough & Ask Questions
Whenever an organization or entity approaches you with a business proposal or transaction request, make sure that you do thorough background checks. Moreover, there are different things that you have to ensure to see that the partnership is legitimate and there are no potential threats of money laundering.
As business owners, you should ask a lot of questions and inquire about their business, amount of money, and investors. If you sense vagueness in the responses and replies, consider it a red flag and dig deeper. Sudden and abrupt investments and transactions should also raise concern and you should investigate them thoroughly.
Do Research & Learn About Money Laundering Schemes
There is no one way for criminals to turn their illegitimate money into legal and spendable funds. They always keep coming up with newer ways and tactics to trick people into such schemes. You need to make sure that you learn everything there is to learn about money laundering schemes and keep your team in the loop. This will help you in detecting any money laundering attempts and protecting your business against them.
Make Sure to Conduct Regular Reviews
It is very important for firms and businesses to regularly review their finances and transactions. This helps them prevent or stop any money laundering activity midway and cope with the litigations effectively. You can even introduce a financial crime compliance program to identify the transactions within the firm that pose a threat.
In a Nutshell
To put it simply, money laundering is a constant threat for small/medium-sized businesses. One of the key things that business owners need to be mindful of is that they need to have knowledge of every kind of money laundering activity or scheme out there. They also need to do their due diligence and investigate all transactions beforehand, especially the ones that seem fishy.
So, be thorough and ask a lot of questions about their business, investors, amount of money, etc. In the end, it’s on you to make sure that you decrease the threats of money laundering for your business and protect your employees.