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Whether you’re a newbie or you already started your very own business, this the topic that should concern you the most. Unfortunately, scammers are everywhere. You never know when you might get in contact with someone who is trying to launder money. Although it is hard to detect money laundering, it is possible to do it. But, you first need to inform yourself about this matter as much as possible. This is where our guide comes in! We’ve answered four questions to help you understand what is this illegal activity, how it’s done, and how to protect your business from it. So, if you’re ready to learn about this, make sure to keep reading.

#1 What is Money Laundering?

Money laundering is an illegal process criminals use to hide their real source of income. Basically, in this process, dirty money becomes clean. Hence the term laundering. In order to “clean” money of its original illegal source, criminals are passing it through complex transfers and transactions. After its “cleaned”, this money can be used for legal business operations and appears as a legitimate business profit. This is a very serious and big problem that’s present in almost every part of the world.

#2 Why do People Launder Money?

Well, the answer to this question is pretty obvious. Those who obtain revenues from illegal activities can’t use them freely. That’s why they launder money. Through these operations, they manage to hide the money’s source and change its shape to make it look like a legitimate profit. And, by hiding the real source of income, people try to avoid being sentenced to imprisonment. Of course, most of them don’t succeed in this but some of them do.

#3 How Does Money Laundering Scheme Work?

The entire idea behind laundering money is to get it into the financial system without revealing its real source. This is a complex operation that has three stages or phases.

  • Placement – A process that involves introducing “dirty” money into the financial system. This is the initial movement of an illegal income into legitimate financial institutions or networks.
  • Layering – Washing dirty money through multiple transactions to make it almost impossible to trace the money back to its real source. So, in the second stage, the source is being disguised.
  • Integration – Re-introducing money into the economy. Money is then mixed with funds of legitimate origin. Launderers can now use this money freely.

#4 What Do You Have to Do to Comply With Anti-Money Laundering Laws?

As you can see, money laundering is a big problem in every society. Unfortunately, you can still become a victim of scammers, even if your business is not a part of the money industry. That’s why you need to do everything you can in order to comply with AML policies and protect your company. We, at Codeuniverse, can help you do it! Reach out to us and we will help you set up the right structure for your company. You will be able to run a business without worrying about its safety and potential frauds.