Money laundering has been a major issue for authorities, and the problem is only getting worse. It harms the global economy because large sums of money are being used to finance illicit practices and terrorism. According to Shufti Pro News, the highest fine for not complying with AML policies in 2020 was 9.39 euros and was imposed on Goldman Sachs. Anti money laundering restrictions, rules, and regulations must be followed to identify malicious financial transactions and track down the illegal money’s origins. Let’s look at the top five ways perpetrators launder money and avoid government vigilance.
1. Instant Messaging
Who’d have guessed that the text messaging system will become a common pick for felons looking to launder their cash? Lawbreakers use instant messenger apps that go beyond messaging apps and provide assistance that includes payment options.
Money transfers have been greatly reduced thanks to online payments. Because of the large number of transactions that take place on messaging services, companies must be extra cautious and help locate fraudulent activity and fake accounts. To identify such suspicious transactions, businesses will need resources and a team.
AML monitoring can help businesses stay on top of the criminals by identifying whether or not their messaging platforms are being abused. Training will provide them with the most up-to-date expertise on the software in use, allowing them to take a practical approach to detect any suspicious transactions as soon as possible.
2. Online Games
Today’s modern internet gaming industry is expanding at a breakneck pace. Lawbreakers have discovered that gaming portals can be used to launder money. Virtual currencies are used in the games, which can be exchanged for real cash.
Because there are no strict provisions for electronic sales in the video games industry, criminals create multiple profiles in various jurisdictions to move money. They buy in-game currency and then use it to launder money. They also make fake profiles or hack existing customers to steal credit points from other players, all in the hopes of increasing digital currencies that they can later swap for cash.
3. Gift Cards
Gift cards are highly common. After activating the card, malicious actors rapidly transfer the money or use them to purchase products that are sold for money. Prepaid cards are frequently purchased with looted debit or credit cards, which are then sold for cash.
The perpetrators’ strategy is to duplicate the cards’ serial numbers, scrape the passcode, and then hide them away. As a result, it’s critical to apprehend the thieves when the cards are looted because they can be used to commit fraud. Vendors cap the number of card payments a person can buy in a day as a means of preventing prepaid cards from being used for money laundering.
Cryptocurrency is among the widely used digital currencies, and felons are taking advantage of it to evade taxes and launder the money. Encryption to secure this virtual money hinders double-spending. However, because this monetary system is not authorized by the authorities and is not controlled by it, it has become a popular method of money laundering. It is also prohibited in some jurisdictions.
For example, the Chinese government had announced that all crypto transactions are null and void. And while cryptocurrency may not present a severe risk to a nation’s currency, its growing popularity and acceptance as a mass-market platform of value exchange is cause for concern.
5. Shell Companies
Fraudsters frequently use front enterprises or shell corporations to launder money to conceal the real benefactor of the revenue or profit from illicit behavior. The strategy is to sell products at a loss while claiming false revenues. To help them look legitimate and deflect criticism, the legitimate and illegal cash is mixed together. This money is utilized to support criminal activity.
Authorities depend on the most up-to-date devices and system strategies, such as the AML screening system, which is devoted to recognizing and designed to detect money-laundering actions. Money laundering offences are being effectively combated using blockchain technologies. Meanwhile, bad actors are taking advantage of technology and inventing new methods to launder money. Meanwhile, AML verification systems also come in handy during digital onboarding. According to Shufti Pro Funding, about 5 billion USD was demanded by authorities for an internal budget, which was to be invested in AML sanctions in the USA.
Fraudsters will go to any length to ensure the triumph of their fraudulent strategies. As a company owner, you must take an active role to help your company stay on top of the criminals. It’s critical to have a strong anti-money laundering safety policy, as well as access to information and the right players to accurately determine fraudsters.
It’s preferable to be ready and utilize a reputable AML solution provider who can add value to your business with their wide variety of benefits. From the paperwork of AML/CFT policies, control mechanisms, and procedures to the formation of risk evaluation reports and AML health checks.