Business fraud isn’t always intentional; sometimes it happens when you’re unaware of the law or when you don’t have the necessary fail-safes in place to protect your business. One particular business fraud is money laundering: the exchange of money or assets that were acquired through criminal activity for money/assets that have no links with criminality. Money laundering, intentional or otherwise, can spell disaster for your business, so being aware of government regulations is key to ensuring that you stay in the clear.
If you make your money in the business sector, for example, if you own a financial or credit business, an accountancy firm or an estate agency, the Money Laundering Regulations that were put in place in June 2017 apply to you. To call them by their proper title: the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations were established to ensure that businesses are aware of what constitutes as money laundering fraud within their firm so that they can stay protected against money laundering criminals.
As a business owner, it’s important that you are aware of these regulations and that you comply with them in order to protect your company and avoid fraud. Here’s what you need to know:
Which regulations should you be aware of?
Money Laundering Regulations apply to firms that are involved in transactions such as:
- Buying/selling property or business entities
- Managing money or other assets on behalf of clients
- Opening/managing bank, savings or securities accounts
- Dealing with contributions that can be used for the creation, operation or management of a company
- Creating, operating or managing trusts, companies or foundations
Lawyer costs, attaining legal advice, litigation participation and Will writing are not considered part of Money Laundering Regulations as the risk of money laundering in these instances is fairly minimal. However, do be aware of the regulations that apply to your firm in particular, and be careful to ensure that your internal business risk assessments (more about this in a minute) reflect the work that you do so that you can determine whether or not you are at a high risk of being targeted by money laundering criminals.
Risk assessments are vital
Conducting a money laundering risk assessment can help you detect money laundering issues within your business, if there are any, and can also help you prevent them from occurring in the future. Take a look at the regulations that apply to your business and create a risk assessment accordingly. It’s important to review your risk assessment regularly and make changes to it where necessary. Your risk assessment should outline the procedure you aim to take to reduce the money laundering risk to your business. You should include the policies that you will incorporate into your business, any controls and procedures you are aware of, and also explain what your course of action will be if you identify a high-risk client or evidence of money laundering.
Here are some policies and controls that you can put in place, and also list in your risk assessment, to help prevent your business from succumbing to money laundering:
- Assess the overall risk of your business being used by criminals to launder money
- Always check the identity of your customers
- Always check the identity of corporate bodies and partnerships – especially those who can be considered “beneficial owners”
- Monitor the business activities of your customers and report any suspicious activity to the National Crime Agency
- Keep all documents that relate to financial transactions, customer identities, your risk assessments and business management procedures/processes
- Ensure that your employees are aware of the Money Laundering Regulations and the risk assessments, and keep their training up to date
It is also important to appoint a nominated money laundering reporting officer within your business who is responsible for informing the National Crime Agency if they, or any other employee, suspects money laundering to have taken place.
More money doesn’t have to lead to more problems
Business fraud can potentially be a major issue for your company. Being aware of how fraud, such as money laundering, can affect your business is crucial to ensuring that you make the right business decisions in the long run. At Blackhawk, we offer a range of financial fraud services that can help you identify if fraud has taken place and can work with you to develop a plan to keep your business safe.
For more information on how Blackhawk can help identify, combat and prevent fraud in your business, call us today on 020 7788 8983.