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Going Global
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Are Multi-Nationals Becoming Another Money-Laundering Layer?
By Michael D. Shepard
Before the recent scandal involving former New York Governor Eliot Spitzer, whose funds transfers for his alleged illicit liaisons were reportedly red-flagged by the anti-money-laundering compliance program at his bank, few outside the financial services and banking community understood - or cared about — money laundering and AML compliance programs. Yet the risks posed by money far beyond the finance and banking industry.
Federal regulations require that U.S. financial institutions such as banks, broker/dealers, insurance companies and dealers in precious metals develop and maintain effective AML compliance programs. These financial institutions are subject to ongoing regulatory inquiry regarding the effectiveness of their AML programs to detect and report money-laundering activity.
While both money-laundering schemes and the AML regulations in place to combat them are ever-changing, the financial services industry has long known that criminals attempt to legitimize and hide their ill-gotten gains by placing them into the financial system, "layering" or moving the funds further from the illegal source, and later integrating them into the general economy.
Other industries should pay attention to the same concerns.
Although not subject to the same AML regulations, multinational corporations, as well as any export companies, are exposed to the risk of money-laundering schemes. Criminally derived funds may already be in the financial system, but that does not make them "clean." Purchasing goods from a global corporation — or any company for that matter — can be considered money laundering if the ultimate source of funds is illegal activity and the requisite intent is present.
While the indicators of money-laundering schemes differ from those seen by financial institutions, it's no less critical for companies doing business on a global scale to protect themselves f...
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