When was the last time you heard of a
drug dealer who accepts payment by credit card? Or an arms smuggler
who delivers a shipment of guns in return for a duffel bag
containing...a personal check? The fact is, most illegal activity is
fueled by cash. The bosses who run these businesses make millions
each year, almost all of it in the form of cash.
The Dirty Secret.
Too much cash??!! It's a problem we'd all like to have. But
think about it. If you're a criminal with roomfuls of ill-gotten
cash, how do you spend it all without raising suspicions about where
it came from? There's only so much cash one can throw around
before others get curious, jealous or both. One careless comment from
a bored bank teller or an inquisitive neighbor, and you might have
folks from the IRS or the Financial Crimes Enforcement Network
(FinCEN) snooping around. So you find ways to introduce these illegal
gains into the legitimate money system, covering your tracks, so the
money's original source cannot be traced.
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That is the goal of money laundering.
Time to Do the Wash
Money laundering takes dirty money and
makes it seem clean. It is the process of structuring deposits so
they don't attract attention, creating layers and counter layers of
transactions to hide their source. Although there is no exact way of
knowing, the federal government estimates that more than $300 billion
gets laundered worldwide on an annual basis.
While many people think money
laundering is only the problem of drug lords or mobsters, the truth
is, it affects us all. Besides allowing criminal activities to
flourish, money laundering forces the government to tighten bank
disclosure requirements, which threatens everyone's right to privacy
and our ability to conduct quick, convenient financial transactions.
How Clean Hands Get Soiled
Your business can become involved in money laundering activities
simply through the actions of a low-level clerk
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who has the ability to handle cash. Even if it occurs only at a low
level, the taint of money laundering could ruin your firm's reputation
and open you up to all sorts of liability. It's important to know who
is most vulnerable to money laundering activity, to recognize how it
is carried out and what can be done to prevent it.
The businesses most at risk for becoming
unwittingly involved in money laundering are obviously those that
transact business in cash. Both traditional and non-traditional
financial institutions contribute to the daily flow of money. Dealers
and agents of big-ticket items such as cars and real estate are also
susceptible to becoming unwitting participants in such schemes.
Numerous retailers have been indicted over the years for allowing drug
money to be used to purchase high-priced assets. Below are some
businesses commonly used by criminals to launder their cash:
Banks
Brokerage firms
Insurance Companies
Gambling establishments
(continued on page 5)
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