Understanding Money Laundering & What is Suspicious

As a seasoned Financial Crimes Investigator, I have seen many changes come up in this space, recently the 5th EU Money Laundering Directive.  My favourite regulations personally are the 4th EU Money Laundering Directive 2017 and the United Kingdom’s Proceed of Crime Acts 2002 (POCA).  The greatest feeling of accomplishment for me is when money laundering and terrorist violations are found, the feeling that you are valued by law enforcement and the government.

Defining Money Laundering

Let me simply say this is the practice of disguising the origins of illegitimately obtained money.

What is Suspicious Activity?

It is virtually impossible to quantify all activity that is considered suspicious. However, the following below are some examples of suspicious activities that should be monitored. (Please note certain high risks businesses as highlighted below should include site visits so as to determine legitimacy of its stated business type :

1.  “High-risk” businesses – such as cash checking, currency dealers, convenience stores, adult entertainment clubs restaurants, car washing facilities, money service business and the likes, this is not an exhaustive list. 
2.  Other business with high wire transfer activity, particularly wires to foreign entities and banks
3.  Cash intensive businesses
4.  Frequent consumer foreign wire transfer activity
5.  Frequent large cash consumer deposits and withdrawals.


Protecting your business

No matter what your business area is, Money Laundering can influence your bottom line, this crime is not limited to financial institutions or government organisations as criminal techniques has become a lot more sophisticated.  In no particular order, the below are useful tips to safeguard your business but please note this is not an exhaustive list.

• Establish an Anti-Money Laundering culture.
• Leverage on the use of technology.
• Always perform due diligence checks on new customers, clients and vendors.
• Have an effective data management system and process in place 
• Always obtain and retain records of all supporting documentation for at least 5 years.  
• Report any concerns or suspicions to the designated law enforcement in your country.



Gbolahan Babalola offers expertise and advise in Fraud, AML, Investigations, and Terrorist Financing. He is a qualified Certified Anti-Money Laundering Specialist, Certified Fraud Examiner and an Accredited Counter Fraud Specialist together with a Masters Degree in Criminology He is also a member of the Association of Certified Fraud Examiners, Fraud Advisory Panel United Kingdom and the Association of Certified Anti - Money Laundering Specialist.

As highlighted above, together is best when it comes to Anti-money laundering (AML) and Anti - Fraud. AML traces the origin of funds to ensure illegally earned money has not being disguised as legitimate, simply put any attempts to make dirty money look clean. In contrast, the aim of Fraud-prevention is to prevent or reduce monetary losses caused by criminal acts of deception, such as identity theft and forgery.

Despite the evident overlap of the AML and Fraud functions within businesses/ organisations, these two teams are often traditionally separated. It is worthy to note that AML and Fraud teams need to effectively work together and share best practices on the risk/ threats they face as on many occasions the threat one faces has the potential to affect the other. A good example could be in the case of a credit card fraud where the fraud prevention team suspects the culprit/ those involved might also be involved in laundering money, this suspicions can be escalated to the AML team for review, verification of any red flags and application of appropriate mitigation controls.

In conclusion for effective collaboration, intelligence sharing is a must between AML and Fraud functions and there must also be strong financial crime controls in place. This list is not exhaustive, however the following as listed above would reduce the effects of criminal activity and promote integrity and stability within the financial space.

If you would like to know more about this subject matter, you are most welcome to get in touch with me via email contact@emgfinancialcrimeblog.com