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Money Laudering Detection Business

An account for a small retail business that was started less than a year ago was opened. It is owned by one individual who lists the address of the business as an office on the second floor of an building on a highway. The owner has the proper paperwork and is a sole proprietor with a valid certificate from the state and a driver's license with picture ID. A deposit account is opened, and the business is also signed up for online banking including bill pay and electronic funds transfer.

- What steps would you take to make sure the business is legitimate?
- What questions would you ask?

A few months later, the internal auditors find that this business is a money service bureau, which your bank has a policy against.

- What were some of the red flags that you should have looked for after the account was opened that could have been suspicious?
- What risk-based assessment did the auditors probably use?
- Is this the type of activity a start-up small business would have?
- If this was suspected from the beginning, how should it have been escalated?
- Discuss the regulatory issues for banks that do allow money service bureaus to become customers.

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Steps to ensure a business is legitimate

The first in identifying whether a business is legitimate is establishing whether the firm has an authentic address and business telephone number. A legitimate business should have a legitimate physical address and you should avoid firms that use post office as a business address and those that do not have a direct contact center. The next step is confirming if the business in question is registered in reputable business directories. A credible business is normally registered in major directories. The next step is critical and it involves investigating whether the business is licensed by the government. Each business is required to register and maintain its name and details in government records. Determining if the business is a signatory to any professional association can assist in establishing credibility. You can also check whether there are any complaints about the firm in local consumer affairs office.

Red flags for suspicious activity

Money laundering is characterized by transfer of money so that the source remains unknown. Indicators of suspicious activity include the use of sequential traveler's checks and also checks that have a value greater than $ 1000. This would raise a red flag because ...

Solution Summary

This solution discusses steps to ensure a business is legitimate, red flags for suspicious activity, risk based assessment, start-up small business activities, and regulatory issues for banks - 709 words.

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