Money Laundering is the method of hiding the true origins of funds obtained illegally by transferring them through a complicated series of legal transactions or bank transfers. The entire scheme of the system ultimately returns the “dirty” money to its real source. These are often obtained in various forms such as bank transfers, wire transfers, trading accounts, cashier’s checks, etc. However, most of the funds obtained from these illicit sources are quickly and easily tracked down by law enforcement authorities.
It is essential for business establishments to regularly conduct a thorough analysis of their transactions to determine which financial institutions and entities they do business with. A careful examination of this data will help an enterprise identify suspicious transactions indicative of money laundering activities.
There are several federal and state laws in place to combat money laundering. Some of these Anti Money Laundering include the Bank Secrecy Act (BSA) and the Sarbanes-Oxley Act (SOX). These statutes are designed to protect individuals from financial institutions, corporations, banks, and other financial institutions, such as insurance companies, from engaging in money laundering activities.