In the United States, the Financial Crimes Enforcement Division was created under the Homeland Security Act of 2021 to coordinate and promote information sharing among government agencies concerning money laundering. Any financial institution that fails to get money laundering information from the government within a reasonable time period is required to inform the Department of Justice. Failure to comply can result in penalties or charges. Money laundering does not only affect multinational corporations, but even small banks and even individual residents that do money laundering on a small scale.
The recent financial crisis resulted in a number of crimes including fraud, laundering risks, manipulation of the currency market, and illegal procurement of company information. As such, the results of the crisis have led to a marked deterioration of trust in the financial system. As a result of the financial crisis, consumers lost confidence in banks and financial institutions, and many businesses and homeowners opted to file for bankruptcy. Furthermore, organizations that handling significant amounts of cash were forced to shut down. As such, organized crime was also on the rise, with unscrupulous individuals stealing money and assets from financial systems all over the world.
Risk Vs Gain
As the global economy continues to recover, laundering risks will likely continue to exist. To protect against illicit activity and other financial crimes, financial institutions and other institutions around the world will continue to implement policies aimed at reducing and monitoring any type of financial transactions that are fraudulent. These include implementing techniques that prevent money laundering through the use of protective measures such as physical security and fraud deterrence programs. Additionally, financial institutions will work closely with law enforcement agencies and government agencies to increase public awareness of their proactive ways of reducing money laundering risks.
In essence, laundering is the act of funding any transaction that involves the concealment of one or more of your financial assets. Simply put, this means that a financial institution must assess the potential risks involved in certain illicit activities (including terrorist financing and money laundering) so that they can fairly allocate corresponding financial resources… To put it simply, if you go into business with a friend, you will both have to share the financial risks that may arise from conducting your business relationship. The risks inherent in money laundering/ Terrorism are very real and present significant dangers to innocent parties and institutions alike. It is very important that law enforcement agencies and prosecutors around the world work closely with each other to bring individuals and organizations that engage in this act to justice. For those interested in following this topic on a more personal level, you may want to read the article: Money Laundering Risk: Protect Yourself and Your Loved Ones.