Money laundering is the act of taking illegally gained money and “cleaning” it by making it appear as if it originated from a legitimate source. Numerous methods exist to launder money, and it continues to be a prevalent problem across the world.
The added issue is you don’t even have to be directly involved in money laundering. If customers are using your business to facilitate their own criminal activities, you can still land in hot water – even if you’re unaware of what they’re doing.
Yet if caught, just how much impact can money laundering have on your business? Below are the main consequences.
Even if clients have had a long-standing, fruitful bond with your organization, any type of scandal can place that relationship under serious strain. Due to this, a public case of money laundering can cause your business to lose a substantial number of clients.
Simply put, a client will often not want to associate with a controversial business. Even if it’s only second-hand association, they realize any type of negativity can rub off on – and ultimately hinder – their own operations.
If a company is found to be money laundering, it’s only natural this can lead to serious financial penalties being imposed. The maximum penalty for this offense is a fine of $500,000.
These financial penalties can impact businesses in different ways. For large organizations, a six-figure fine can disrupt their plans and lead to restructuring to offset the loss in profit. For smaller companies, the same type of penalty could put them out of business for good.
Money laundering is not something you can keep a secret. This is the case if you run a prominent business in your chosen industry. Once word gets out, your organization will attract an ample collection of negative headlines. That’s bad news, literally – particularly if it reaches the national press.
This can result in terminal damage to your company’s reputation. Negative public perception will typically cause potential customers to avoid your outlet, instead opting to choose one of your competitors instead.
In the most serious of cases, it’s also possible that money laundering can lead to a lengthy sentence behind bars. If you’re found guilty of money laundering, each violation carries a maximum sentence of 20 years of incarceration in the United States.
How do you prevent money laundering cases?
With all of the above points in mind, there’s one clear objective in mind: avoid money laundering at all costs. Even if you’re indirectly involved, the results can be catastrophic for your business. This is why it’s essential you follow the best practices for AML compliance.
There are various methods available to improve your anti-money laundering (AML) efforts. These methods include the development of policies and procedures, ongoing training for employees, and the use of specialist AML compliance technology. The latter is particularly useful to screen customers, monitor transactions, and manage cases.
With the right approach, your business can minimize the possibility of money laundering – and avoid all the baggage that comes with it when caught.