What is Money Laundering?

Money Laundering is the process of taking the proceeds of crime and passing it through some sort of financial transaction or instrument so when it comes back out it appears to have some degree of provenance or legitimacy.

Why do people Launder Money?

It is obviously illegal to benefit from the proceeds of crime, so when people have large sums of money derived from criminal activity such as drugs, other criminality or even tax evasion it is important for them to pass this money off as being perfectly legitimate. If someone has made money from criminal activity, without telling the truth, they will not be able to account for its whereabouts. Consequently these people will make every attempt to move this money through a third party so they can eventually say it came from a legitimate and lawful transaction.

More importantly money laundering can be used to finance further criminal activity such as terrorism and drugs to name the headliners.

What types of transactions can be used for Money Laundering?

In short almost any transaction can be used for money laundering. Car and house purchases, financial instruments such as insurance, loans, investments and mortgages. Some people launder money through bars and restaurants that take large quantities of cash.

Why do I need to be concerned?

It is a criminal offence to be involved in any type of money laundering and in some cases you don’t even have to be aware of it to be guilty.

Most importantly you have to be concerned about the Money Laundering Regulations of 2007 which state that all businesses that are covered by the regulations have to have systems and controls in place to mitigate the chance of being involved in money laundering.

Failure to have adequate and appropriate systems in place can be an offence in itself.

Who is covered by the Money Laundering Regulations of 2007?

Financial businesses such as mortgage and insurance brokers, financial advisers, Solicitors, Accountancy service providers, Estate Agents, Trust or Company Service Providers even car dealers have anti money laundering controls in place to ensure they are not duped into taking the proceeds of crime.

What should I do?

To quote the HMRC web site, if you’re business is covered by the regulations you must put in place certain controls to prevent it from being used for money laundering. These include:

• assessing the risk of your business being used by criminals to launder money
• checking the identity of your customers
• checking the identity of 'beneficial owners' of corporate bodies and partnerships
• monitoring your customers' business activities and reporting anything suspicious to the Serious Organised Crime Agency
• making sure you have the necessary management control systems in place
• keeping all documents that relate to financial transactions, the identity of your customers, risk assessment and management procedures and processes
• making sure that your employees are aware of the regulations and have had the necessary training

How can ValidID help me?

ValidID assists firms in verifying peoples identity against various sources such as the electoral roll and credit reference agencies. Furthermore ValidID validates a myriad of documents that can be produced by clients to ascertain their authenticity. For more information of what we validate and check please see our prices page.

Most importantly we offer a simple, affordable and compliant complement to any Anti Money Laundering process your business chooses to have.