Are You Facing Money Laundering Claims?

Could this be the first time you are coming across the phrase money laundering? Well, this can be briefly defined as the process of making dirty money appear clean. What do I mean by dirty money? The kind of money derived from illegal activities such as drug trafficking and terrorism. Money laundering is aimed at making this money appear like it is from a legal source or activity. Although it is a serious crime, money laundering happens in almost every country.

The main objective of this activity is to have the banks and other financial institutions treat you without any suspicions, this will in turn reduce the chances of having law enforcers on your neck trying to trace the sources of your finances.

How Is Money Laundering Done?

This process of ‘purifying’ this money is done in three major steps. These are: 

Placement Introducing the money into a financial system
Layering Complicated transactions aimed at disguising the illegal source of money
Integration Getting in touch with the wealth generated from layering

Forms of Money Laundering

It can take different forms. I will look at some of the major methods used by criminals

Smurfing

This method involves breaking the money into small deposits which are then introduced into the financial institutions in bits. This is done to reduce chances of suspicion due to bulk deposits by financial institutions like BPA BANK.

Smuggling

Here, cash is smuggled in bulks to a financial institution with less follow up on money sources. Such a bank could be defined as one with high secrecy levels.

Cash-Concentrated Businesses

This is where a business mainly involved in receiving cash like, let’s say, after service delivery, uses its account to deposit both clean and illegitimate cash alike. This is much easier for such businesses as they have no variable costs.

Valuation

This involves over-valuing or under-valuing issued invoices. A staff overvalues an invoice to appear like the charges were higher than the actual value.

Shell Companies, Trusts

These companies are not obliged to disclose the true owner of an asset or money. This provides a safe haven for money launderers.

Casinos

This is another hideout for money launderers. He just gets into a casino, buys chips, gambles for a while, cashes the chips into some receipt or cheque, and then walks out claiming his are gambling dues.

Black salaries

Unregistered employees of a company are paid using dirty money. In most cases, these employees will not even be legally contracted. Now when the management of a company lets this go unpunished, one can’t help but wonder, are they Bribed to launder money, was it blackmail?.

Insurance and Money Laundering

Money service businesses such as the insurance industry are highly vulnerable to money laundering. Finance business insurance is likely to enter into deals involving laundered money. This may take the form of

Purchased Annuities

Top-ups to an existing contract

Contributions to Personal Pension Contracts

Money launderers then make bogus claims in order to recover some or all of the invested money. This kind of money could also be deliberately placed on a reinsurance company. This is done to purposely disguise the source of the funds.

This may also be done by establishing a fake insurance firm which will in turn take advantage of legalized reinsurance companies by placing the dues of an illegal activity with them.

So, How Do We Deal With Money Laundering In Finance Business Insurance?

To help curb money laundering establishing itself through finance insurance, insurance intermediaries ought to play a role. Realize, these are the link between an insurer and the insured. The same guidelines governing the financial institutions should be applied to the intermediaries.

This will in turn raise their responsibility and accountability. It will reduce the chances of an intermediary being used as an avenue to have dirty money find its way into the insurance industry.

What A Finance Business Can Do To Combat Money Laundering

It’s a bitter truth, money launderers are smart brains. Billions of money has been spent in different efforts directed to fighting this vice. Some have been successful, others have flopped helplessly. Fighting money laundering in any institution, whether financial or non-financial, calls for concerted efforts. Here are a few measures an insurance firm can absolve to deal with money laundering.

Issue a clear lay out of its policies in regard to money laundering to its entire staff. Perform regular internal audits and inspections. It should give training sessions on how to deal with suspicious monies, and the consequences of laundering as outlined in the BPA Bank Andorra Class Action.

Review policies regarding money laundering regularly as they are aimed at fighting a crime that’s dynamic in nature.

Keep their overseas branches, if any, abreast with any policies regarding money laundering

In an effort to curb money laundering, institutions both financial and non-financial are required to report any transactions they suspect to be illegal. To help them do this, they are required to know their customer and their financial behavior. This will help them detect any anomalies with ease and be in apposition to raise an alarm if need be. 

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