The term “anti-money laundering” refers to both efforts to stop people who are trying to launder money, as well as the measures taken when someone has attempted or succeeded at laundering money.
The objective in anti-money laundering is not just detection but deterrence too. It aims not only at blocking known forms of abuse but also at changing behavior so that potential abusers will choose other ways of achieving their goals.
The following list is an example of the type of behavior that you should be aware of when anti-money laundering is concerned:
- Transferring money to a country with no anti-money laundering laws.
- Using illegal currency exchanges, usually found on street corners and in back alleys.
- Attempting to purchase large quantities of small denomination bills such as $20 or $50 notes instead of larger denominations like $100 bills because they are easier to smuggle across borders without having them detected by customs agents.
- Attempting to deposit large amounts of cash into a bank account without providing explanation or documentation.
- Using multiple accounts and identities for the same purpose.
- Engaging in wire transfers with banks that do not require identification such as offshore, private banking institutions (ex: Swiss Bank)
- Purchasing expensive items like cars, boats, and jewelry with no intention of paying back the loan associated with them once they are purchased.
If suspicious activity is detected, it should be reported right away by calling the authorities.
The Government and money laundering
Anti-Money Laundering (AML) is a set of regulations and procedures that governments implement to prevent money laundering. The purpose of anti-money laundering laws is to stop criminal activity from using legitimate financial systems to generate or hide the proceeds from their crimes, including terrorism financing.
Anti-money laundering efforts have been around for decades, but after September 11th, 2001, Congress passed new legislation to crack down on terrorist activity within the United States. This law requires all US-based companies doing business with foreign entities need proper AML compliance programs in place before conducting any transactions via wire transfers. Failure by banks and other institutions could result in fines up to $500k per transaction.
Final Thoughts
The United States has a large number of laws that exist to help prevent the laundering of money obtained from illegal activities. These include the Bank Secrecy Act, The USA PATRIOT Act, and more recently, AML or Anti-Money Laundering rules as established by FinCEN (Financial Crimes Enforcement Network).
It is important for people who live in this country as well as those involved with financial transactions such as accepting credit cards payments on an e-commerce website; they should know about these laws and abide by them accordingly. There are also penalties if companies choose not to do so even unknowingly.
