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How to Protect Your Business from Money Laundering

How to Protect Your Business from Money Laundering

Small businesses may feel that they are unlikely to be targeted by criminals of any form for the simple reason that they are small and hence offer small pickings to criminals. While this attitude does have certain logic to it, the truth is that small businesses can be easy pickings and are therefore very attractive targets for financial criminals.

What’s even worse is that if you do find yourself becoming part of a money-laundering scheme, then criminal prosecution may turn out to be the least of your worries. You may find yourself far more concerned about what the criminals will do to you or the people you love. The good news is that protecting yourself from falling victim to a money-laundering scheme is largely a matter of common sense, with a few key things to look out for. As an experienced Criminal Barrister, here are some tips to help protect your business from money laundering activities.

Keep Solid Financial Records and Use Them to Inform Your Actions

The key points you need to know about any transaction are who made the payment, how much they paid, and what form of payment method they used. In most circumstances, you will only offer a refund up to the amount paid (there may be some situations where you may find it reasonable to offer a good-will payment, but these will presumably be the exceptions rather than the rule) and you will typically only refund upon presentation of a receipt which will show you the method used for the original payment.

The safest course of action is to refund using the same payment method. For example, if someone makes a payment in cash, do not refund via payment card (or vice versa), and if someone makes a payment via payment card A, then do not refund onto payment card B (or vice versa). There may be the odd occasion when you have to make an exception to this, for example, if someone cancels a payment card, but, again, these should be the exceptions rather than the rule. You might also want to subject cash (and cryptocurrency) payments to certain transaction limits.

Know Your Customer

The term “know your customer” is widely used in financial circles as the mainstay of anti-money-laundering strategy. You do not need the extensive training received by some financial-services professionals (although you may find it both interesting and educational to do some further reading on the topic), you just need to apply basic common sense and remember the old saying that if something seems too good to be true, the chances are that it probably is. Ask as many questions as you need to make an informed decision on any business transaction and only accept answers with an appropriate degree of detail. Above all, never let yourself be pressured into making a hasty decision. As the old saying goes, “Act in haste, repent at leisure”.

Secure Your Privacy

Your privacy is your shield against someone finding out your weaknesses and exploiting them for their own ends. The more sensitive your data is, the more important it becomes to give it adequate protection. There is plenty of online advice about cybersecurity. Remember, however, that physical security also matters. Consider employing the services of a document-shredding company or, if you only have a very small amount of paperwork, then consider investing in a proper, cross-cut shredder.


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by Matthew Lawson // Matthew Lawson is an experienced Barrister based in London, specializing in business fraud, financial crime, and criminal law.

Opinions expressed by contributors are their own.