How To Keep Your Business Safe From Money Laundering

To launder money means to take money that was made through illegal gains, and pass it through our financial systems to hide its origins. The object of money laundering, is to make ill-gotten funds appear legitimate; thereby making it spendable.

Smaller businesses are often used for cash laundering. Employees and executives who work for small companies that do much of their business in the form of cash, instead of credit and debit transactions; can be easy targets for those with a need to hide illegal funds. Because a lot of these types of businesses lack financial paperwork; it is easy to lose track of what is being received.

What steps can businesses of all sizes take to help protect themselves from money launderers?

Since 1970, lawmakers have played a huge role in curbing money laundering acts. The Bank Secrecy Act requires that banks and other businesses, report transactions in excess of $10,000 in cash or negotiable bearer instruments, being received or exiting the U.S. IRS Form 8300, is used for this type of reporting and is considered a “hot button” issue for the IRS.

The Bank Secrecy Act was amended in 1994, to restrict institutions from honoring money orders and cashier checks over the amount of $3000, unless the purchaser’s identity could be sufficiently verified.

Banks also play a huge role in stopping money laundering. The policy of knowing your customer is key for banks and financial institutions. Only through knowing who your customer is, can a bank detect suspicious activity.

Business owners and employees can do their part to deter money laundering by taking the following steps:

1. Knowing your customer. Making sure that you conduct transactions with people who are reliable, trustworthy, and whose identity can be verified.

2. Be comfortable with the transaction you are conducting for a customer. If it does not feel right, then ask the appropriate questions.

3. Ask the question, “Is this a normal type of transaction for this particular customer?” If it is not, let the customer know, that for their own protection, you will need to verify information.

Being diligent in record keeping of receivables and debts, and knowing what types of transactions are normal or usual for your business and customer is the best way to deter your business from being targeted by money launderers.


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