Business Verification for Banks

The list of International Banks being found culpable of Money Laundering just keeps rising, the fines are astronomical and it seems that nearly every well know banking brand has been involved. But why is this happening?

Money Laundering is big business, The United Nations Office on Drugs and Crime (UNODC) conducted a study to determine the magnitude of illicit funds generated by Drug Trafficking and Organised Crime and to investigate to what extent these funds are Laundered.  The report estimates that in 2009, criminal proceeds amounted to 3.6% of global GDP, with 2.7% (or USD 1.6 trillion) being laundered. 

In the initial - or placement - stage of money laundering, the Launderer introduces his illegal profits into the financial system. This might be done by breaking up large amounts of cash into less conspicuous smaller sums that are then deposited directly into a bank account, or by purchasing a series of monetary instruments (cheques, money orders, etc.) that are then collected and deposited into accounts at another location.

After the funds have entered the financial system, the second – or layering – stage takes place. In this phase, the Launderer engages in a series of conversions or movements of the funds to distance them from their source. The funds might be channelled through the purchase and sales of investment instruments, or the Launderer might simply wire the funds through a series of accounts at various banks across the globe. This use of widely scattered accounts for laundering is especially prevalent in those jurisdictions that do not co-operate in Anti-Money Laundering investigations. In some instances, the launderer might disguise the transfers as payments for goods or services, thus giving them a legitimate appearance.

Having successfully processed his criminal profits through the first two phases the Launderer then moves them to the third stage – integration – in which the funds re-enter the legitimate economy. The Launderer might choose to invest the funds into real estate, luxury assets, or business ventures.

SmartSearch the multi award winning AML platform can assist Banks in complying with the Anti-Money Laundering Legislation; it’s the only platform that allows for the identification and verification of Directors and Beneficial Owners, all with full Sanction and PEP screening and ongoing monitoring.