There is no definite number on the monetary losses incurred by money laundering. The number of financial damages ranges from $800 billion to $2000 billion. These are only the financial losses as the impacts of laundering are also tangible in nature. This is because money laundering is used to cover up other serious crimes like terror financing, drug trafficking, and smuggling.
There are multiple stages of money laundering and with each stage, cunning methods to commit financial crimes are related. Thus, to impede multiple strategies to commit financial crimes, anti-money laundering solutions are necessary. Banks, travel companies, government agencies, and online businesses all over the globe have to comply with AML and KYC laws, and these solutions efficiently perform this task for them.
Some Elaborate Money Laundering Strategies
Cyber Currency Fraud
Cyber currencies like Bitcoin, Etherium, etc. are a lot less regulated than physical currency. That is why they are increasingly used to disguise the movement of illegally earned money. Transactions made by cyber currency are undertaken behind the curtain of anonymity. It becomes quite difficult for government bodies tasked with tracking the movement of money in cyberspace.
The world is moving towards major changes regarding the regulation of cyber currencies but these measures will take time to work properly. For instance, Financial Crimes Enforcement Network (FinCEN) is working on implementing new procedures and regulations to regulate the transactions made with cyber currencies so that money laundering activities can be curbed right from the root.
Synthetic Identity Fraud
At the point when crooks get their hands on a genuine piece of ID information, they make up counterfeit credentials and open accounts utilizing this information. To organizations, these fake identities appear to be genuine, if they don’t perform proper screening checks on their clients. At the point when this kind of fraud is identified, it gets difficult to track it back to the culprit. However, anti-money laundering solutions efficiently perform AML checks and impede occurrences of any financial crimes.
Smurfing
In this technique, crooks utilize dark money to purchase under the radar monetary instruments like bank drafts and money order. This kind of buying activity goes undetected by the organizations and doesn’t even alarm the law authorities. Among the stages of money laundering, this is the first step known as the placement of dark money. Therefore, AML verification solutions are employed to curb this menace once in for all.
Email Phishing Attacks
In this strategy, the criminals target the less informed and gullible users. Criminal hackers get access to the private information of organizations without their knowledge through email phishing attacks. Then they utilize this information to commit money laundering. Among the three stages, this money laundering strategy falls under the ‘layering of money’ stage.
Some Orthodox Money Laundering Strategies
Physical Smuggling
This strategy is considered a run-of-the-mill money laundering technique being employed by money launderers and the bad news is that they are still getting away with this. In this process, the criminal physically takes the illegally earned cash from one place to another. It usually happens on terminals with lenient security checks. Once they are in a foreign place, they run the money through the banking system. The foreign countries in this conversation are usually the ones already under the burden of extreme corruption.
Cash-Run businesses
Cash-run businesses like nail salons, strip clubs, online gaming zones, etc. deal with a significant amount of physical currency coming in on a regular basis. With only manual receipts, LEAs find it quite difficult to track the trail of money. Hence, money launderers mix their illegal money with legitimate money to fool all LEAs. These cash-intensive businesses are also known as front businesses for money laundering activities.
Invoice Tampering
Invoice manipulation is a strategy of laundering money that involves people in high places and with powerful references. Invoice tampering means undervaluation or overvaluation of invoices to hide illegal money. It is mostly linked with auction houses and art pieces that do not have a specific price. The activities taking place in these places are kept hidden from the outside world which includes LEAs too. Therefore, it becomes quite a stringent task to detect these criminal activities.
How Anti-Money Laundering Services Tackle Them?
It is incumbent upon the businesses to ensure no money laundering-related activities are attached to their name. The regulatory authorities are tasked with enforcing anti-money laundering measures. If the businesses step out of line, they are slapped with punitive restrictions and hefty fines. However, the anti-money laundering services prevent these unfortunate events.
These services work on top of AI models to detect even the most cunning techniques of money launderers. Moreover, AML compliance no longer remains a hassle for businesses. The only question for businesses should be: Which third-party AML provider should be employed? Well, the short answer is: go for the one with the highest accuracy rates and public pricing models.
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