“Know Your Customer” Makes it Difficult on Money Launderers
Posted by Doug in Uncategorized at 8:55 am Money laundering has to do with the process of making large sums of money disappear. This is done when one is either trying to avoid paying taxes, avoid paying a creditor or an ex-spouse, or when the actions it took to make that money involve some form of additional illegal activity. Shell companies and foreign bank accounts are used often times in order to just make the money disappear. The first step is in just that, making it disappear, and the second step involves ensuring that it does reappear at some point for personal use, but in a way that is not detectable to either those you are hiding the money from or a law enforcement agency that may have become suspicious.
When money is in a large sum of cash, some may choose to simply tuck it away in a safe deposit box. There would be no transaction record and it would remain hidden for as long as one needs it to be. However, in this manner of hiding the money is not being invested and so there is no chance to earn income. It is for this reason that many people decide to deposit the cash into foreign financial institutions. Many people deposit into the accounts of banks located in Liechtenstein, Austria, Switzerland or the Cayman Islands. However in this day and age, banks are starting to follow the lead of the United States in the way of the filing of a suspicious activity report. This is filled out by some institutions when large sums of cash deposits are made.
In the United States, a bank employee may not even be suspecting suspicious activity, how ever they must file a report when a deposit is over a certain amount of money, just in and of itself. There have been many scandals in involving banks over the last few years, that have made it into the news and into the courtroom, and getting away with “doing away” with cash in the foreign banking institutions is not as easy as it used to be. Not only is there the suspicious activity report, but bank managers have adopted procedures such as “know your customer” and “due diligence”. Many banks will thoroughly investigate potential new customers, as well as ensuring that steps are being followed properly by their employees.
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