Top strategies for preventing your business from being involved in a money laundering scheme
Category Commercial and Industrial News
Money laundering does more than make criminals wealthy: it damages the financial sector institutions that are critical for economic growth and reduces the efficiency of both global and local economies. Defined as "the concealment of the origins of illegally obtained money", money laundering often involves legitimate businesses. 3Cube Property Solutions provides this list of ways to ensure that your business does not become a vessel for "dirty" money.
Be wary of cash transactions
While cash is still commonly used in South Africa and is not necessarily a sign of money laundering, individuals insisting on using cash for large transactions should be viewed with suspicion. Examples include buying a car, a piece of industrial machinery or an expensive piece of jewellery. Since it's almost impossible to ascertain the true source of cash, it can be easy for criminals to use illegitimate cash to buy a legitimate asset such as a house or a luxury car. To combat this, cash threshold reporting is required to be undertaken in terms of FICA laws. Any single cash transaction valued at R49 999 or more is required to be reported.
Treat those selling and reselling assets with suspicion
A simple way to make "dirty" money look legitimate is to buy a big-ticket item using cash and then quickly resell such items to make their money look transaction-based. This can apply to real estate, luxury cars, yachts and expensive jewellery. Another strategy involves setting up businesses supposedly to sell items that have been purchased using cash. For this reason, commercial and industrial property practitioners should perform FICA checks before letting an office or shop space. The FIC Amendment Act (FICAA) requires accountable institutions to adopt a risk-based approach, which involves performing customer due diligence. In other words, companies are required to analyse information about individuals or legal persons from multiple sources and ensure that they really are who they say they are.
Watch out for complicated business structures
Shell companies and complicated business structures can be telltale signs of money laundering activity. Such companies and trusts are often established in offshore jurisdictions to capitalise on gaps in financial systems and international regulations. Criminals are known to use companies, trusts and other similar legal arrangements to retain control of ill-begotten gains. When the original source of funds is hidden in complex corporate structures, it can be difficult to identify where the money came from and who the relevant beneficial owners of the relevant companies are.
Be aware that professional services are often targeted
Criminals often abuse the professional status of various professionals such as attorneys, conveyancers and estate agencies to make their illicit transactions look legitimate. For example, a common money laundering strategy is "real estate laundering", where ill-gotten gains are used to buy or rent property to create an illusion of legitimate financial transactions.
Common money laundering efforts involving professional services include unusual payments to an attorney's trust account, clients changing legal practitioners a number of times within a short period, transactions involving crypto assets and capital amounts which do not match the client's source of funds - to name but a few. Another popular scheme involves a client buying a property with cash and using the property as security for a loan soon afterwards.
3Cube Property Solutions is committed to ethical business practices - and to finding your business the right premises in Gauteng or the Western Cape. Contact us today for more information about where your business should be based.
Author: 3Cube Property Solutions
