The State of Financial Crime 2022 - Read our global compliance survey

money launderingOver the past few decades, money laundering has been a growing global issue. Billions of dollars are smuggled across borders each and every year, and thousands of criminals walk free without facing prosecution. Because of this, money laundering is a high priority for the legislators and officials who monitor the world of finance. New anti-money laundering strategies are constantly being created to track down and stop money launderers, and the technology used to do so is evolving at a rapid pace.

One reason that money laundering can be so difficult to track down is that it is necessarily related to other crimes. Money laundering is defined as the process of covering up, or “laundering”, illegally obtained money to wipe away traces of criminal activity and make it appear legitimately obtained. Of course, this means that criminals who launder money first committed another crime through which they obtained their illicit funds. When multiple counts of laundering and interrelated criminal activity become interwoven like this, a complex network of illicit activity is created that is problematic to fully track and break down.

Given this difficulty, which is only growing as criminals increasingly operate online and step up their use of various technologies, the authorities in charge of regulating money laundering have themselves turned to technology to help them in their endeavors. Technological innovations have made it substantially easier to discover when the financial system is being abused, as well as to gather information about the individuals who are abusing it. Manually searching for data and monitoring accounts is tedious, inefficient, and often ineffective. Fortunately, screening systems have replaced this old-fashioned process, and have made it easier than ever before to monitor clients and determine if someone is laundering money.

To aid the fight against money laundering, many governments now legally require all financial institutions and many companies to report any suspicious activity that they notice among their customers. These institutions include banks, insurance companies, casinos, money exchange companies, and numerous others. It would be impossible for governments to catch all the criminals involved in money laundering independently, and the same can be said for business and financial institutions. But when both the private and public sectors work together in order to combat this ubiquitous crime, their success rate dramatically increases.

If a company or financial institution inadvertently completes a transaction that pertains to money laundering, they can face extensive legal and financial repercussions. Even if their mistake is entirely accidental, they may still be prosecuted. If corrupt employees actively aid money launderers, the employees are dealt with very harshly on an individual level and the institution may still incur liability. Because of these risks, most institutions go to great lengths to make sure that they properly monitor clients and their accounts. For businesses and banks, it is simply not worth the risk to be negligent and accidentally wind up involved in money laundering.

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Disclaimer: This is for general information only. The information presented does not constitute legal advice. ComplyAdvantage accepts no responsibility for any information contained herein and disclaims and excludes any liability in respect of the contents or for action taken based on this information.

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