Exporting can be an enjoyable and rewarding experience. But it also needs to be a learning experience, as Aziz Rahman, of leading law firm Rahman Ravelli points out...
Export deals can involve the movement of money from one country to one or more destinations, sometimes via a number of transactions. Unfortunately, such activity can carry the risk of money laundering.
Money laundering – to “clean’’ money to disguise the fact that it is the proceeds of crime – requires the use of a company or individual that can put it through their accounts. It happens in national and international businesses. It may involve individuals who are knowingly laundering the money. But it may also involve people who genuinely have no idea that their or their company’s accounts are being used for money laundering.
A person can launder their own criminal proceeds or have it done for them by another person. Both of these are offences under the Proceeds of Crime Act 2002 (POCA). In the UK, the maximum sentence for money laundering is 14 years. So it is certainly worth taking precautions.
When it comes to exporting, it is often the case that an exporter is dealing with companies or individuals for the first time. Every effort must be made, therefore, to ensure that no aspect of the deal is being used as a vehicle for money laundering.
If you are suspected of allowing money laundering to take place you have to be able to show that you did everything possible to prevent it happening. Countries around the world are cooperating more than ever before to tackle money laundering. Those in business need to at least match this commitment. A failure to do so could lead to that seemingly perfect export deal being exposed by the authorities as a carefully-constructed money laundering exercise.
Checking a potential client or trading partner’s background is essential in any deal. But it is especially crucial when it comes to exports, where you may be dealing with one or more parties that you have never encountered before and getting to grips with the complexities of completing a cross-border deal. The most basic checks such as proof of identity and establishing who exactly is involved in the export deal have to be addressed properly. Any failure to carry out such checks can offer opportunities to the money launderer.
Companies need to have a clear set of procedures in place so that everyone knows how any suspicions about third parties should be reported. A whistle blowing procedure should be introduced for staff to report any concerns they have about any aspects of a deal or the people involved. Policies that limit the cash amounts involved in deals, make certain staff responsible for checking third party funding sources and restrict use of company accounts can all be obstacles to money laundering.
But these procedures have to be properly enforced. Otherwise they will be of little use. Such an approach is worthwhile in any company, regardless of whether they export goods or intend to in the future. But when it comes to exports, there are often more aspects to a deal and more parties involved. This can mean greater potential for wrongdoing; making it even more important that a company has checking and reporting procedures that are fit for purpose.
Nobody would want to discourage a flourishing company from seeking and following up export opportunities. But anyone seeking such business should not be blind to the risks of money laundering.
There is no comprehensive list of signs to look out for when it comes to money laundering. But certain responses should arouse suspicion in the mind of anyone intent on keeping money laundering away from their export deals.
If, at any stage of the export deal, any party that has a stake in it is vague or non-committal about the finances or the people involved, alarm bells should start ringing. Similarly, if you have been approached out of the blue, for no apparent reason, by someone proposing an import-export deal, you need to find out why you have been contacted and exactly who is involved in the deal.
If anything does not seem logical, you must be suspicious. It is far better to be suspicious and take the time to check all aspects of a deal than to be over enthusiastic and unwittingly commit to what may be an elaborate cover for money laundering. However innocent you may have been when completing the deal, you will face a tough time from the authorities here or abroad if money laundering has been committed by someone using you or your company.