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Anti-Money Laundering Protocols Every Small Business Owner Needs to Implement

Posted in News on November 16, 2018 | Share

Money laundering is a federal crime that can land a business owner in prison for years and cost him or her potentially tens or even hundreds of thousands of dollars in penalties. 

While it might sound like the stuff of Hollywood films and binge-worthy televisions series – think Netflix’s Ozark – money laundering is a high stakes, potentially dangerous game that many small businesses could be playing, whether they know it or not.

It is important that small businesses – especially those that are involved in cash transactions – understand how money laundering works and how to set up protocols to prevent it from infiltrating their business structure. A Washington DC criminal tax lawyer can help you determine your risk and how to protect your company.

What is Money Laundering?

In a nutshell, money laundering occurs when someone conceals illegally obtained money by taking certain steps to make it appear as if it came from legitimate sources. But money laundering is more than merely secretively taking in and then spending ill-gotten gains. In order to commit the crime of money laundering you must hide the source, location, ownership, nature, or control of the money.

Money laundering usually involves three steps:

Placement

Illegally obtained funds need to be moved somewhere that won’t garner suspicion. They may be deposited in small amounts into different accounts or they may be used to fund a legitimate business enterprise.

Layering

The money may then be further concealed, or layered, through transfer to different accounts; or it may be used to buy goods that can then be later liquidated, with the proceeds entering another financial institution.

Integration

The ill-gotten gains have changed character and hands several times so they now appear “clean.” They end up integrated into a legitimate financial system.

What Kinds of Businesses Are Ripe for Money Laundering?

Typically, cash intensive businesses are susceptible for money laundering. Some examples are:

  • Restaurants
  • Buy Here – Pay Here vehicle dealers that offer self-financing
  • Casinos
  • Adult entertainment venues
  • Car washes
  • Non-profit charitable organizations
  • Check cashing facilities
  • Rental homes and apartments
  • Law firms
  • Accountants
  • Independent retail stores
  • Privately owned ATMs

This list is certainly not exhaustive. Practically every business is potentially at risk for being an instrument for money laundering.

How Can I Prevent Money Laundering in My Business?

Consider setting up anti-money laundering protocols that include:

  • Creating internal controls and procedures that address the specific risks of your particular business
  • The appointment of a person responsible for overseeing the company’s anti-money laundering policies and keeping them updated
  • Employee training on recognizing and preventing potential money laundering
  • Internal anti-money laundering compliance reviews

A Washington DC criminal tax lawyer can assist you in developing a program that addresses potential issues faced by your specific industry. Working with an attorney, especially during the internal anti-money laundering compliance reviews, not only affords you the knowledge base to tackle compliance issues, but also may protect any adverse findings under the attorney-client privilege as you work with counsel to correct and, if necessary, disclose any problems.

Seeking Assistance From a Washington DC Criminal Tax Lawyer

If you suspect that your enterprise could become unwittingly involved in money laundering, contact Washington DC tax attorney Kevin Thorn at Thorn Law Group to set up an appointment for a confidential consultation. You can reach him either through our website or by calling 202-349-4033.


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