April 01, 2020

Signs of Money Laundering

Money laundering is the act of obscuring where a sum of money originated from. While it is often associated with organized crime and cash businesses, it frequently occurs within the financial world and securities industry.

The people in the best position to spot corporate money laundering are likely to be accountants and auditors. Investment advisors can also sometimes encounter would-be money launderers. Reporting money laundering to the Securities and Exchange Commission (SEC) can then result in a substantial financial award for these individuals if the resulting investigation inflicts sanctions in excess of one million dollars.

With that in mind, it pays to be aware of some of the most common signs of money laundering.

Unnecessary Secrecy and Evasiveness

As money laundering’s entire point is to confuse where the money came from, money launderers are typically very evasive regarding these types of questions. If your client or employer is unable to explain where a cash sum originated from or merely talks in circles, it’s possible that he or she is trying to hide something.

Investment Actions that Make No Sense

Sometimes fund managers are the point person for a money laundering scheme. When this happens, a group of investors puts the fund manager in charge of their assets only to “lose” everything due to poor investing decisions. Then the exact same group of investors makes even more investments through the same fund manager.

When investment actions don’t make sense, it can indicate that something else is going on. In this case, the fund manager could be facilitating money laundering for “investors” through a series of trades that serves to complicate the money trail.

Inexplicable Transactions

When transactions occur between two entities that appear to have no relationship, it could be a sign of money laundering. For-profit enterprises don’t pay out money they don’t have to, and if there isn’t a commercial relationship between the entities in question, the transaction might simply be a step in the money laundering process.

Shell Companies

Shell companies are essentially “empty” entities created to fulfill a purpose rather than to conduct business. They are prevalent in money laundering schemes, as a shell company can be used to transfer funds from one shell to the next without employees asking questions.

If an Internet search yields no information regarding a company and other signs of money laundering are apparent, the “business” might be a shell company used for exactly this purpose.

Report Money Laundering to the SEC

If you’ve encountered one of the signs of money laundering, the SEC might be interested in hearing what you have to report. Meissner Associates can confidentially review your tip for free and inform you of how likely your information is to result in a whistleblower bounty.

For more information or to get the process started, just complete the form found at the bottom of this page. You can also get in touch with us directly by calling 1-866-764-3100.