How to Avoid Money Laundering Scams

How to Avoid Money Laundering Scams

CPA CPE Courses Can Help You Avoid Fraud

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Q: What is money laundering?

A: Money laundering is the process of concealing where illegally obtained money originated from, which usually includes the use of foreign banks or legitimate businesses. Below are some examples:

1)    Offshore Trusts

a.    These personal investment companies belong to the citizens of the United States or companies that are incorporated in the U.S. and are held in overseas bank accounts. There is no federal law in place prohibiting these accounts per se; however, they can be a red flag warning for a scam. This method is mainly used for tax benefits. We recommend documenting and verifying all beneficiaries and principals related to the account.

2)    Financial Intermediator

a.    These individuals are accountants or bookkeepers who handle funds for private individuals. They typically have power of attorney for investing and other financial transactions. Do your research: although there are legitimate reasons for financial intermediators, they can be a disguise as well for money launderers. It would be in your best interest to determine whom they actually represent before doing business with a financial intermediary.

3)    Fake Companies or Shell Companies

a.    If you are concerned with the source of the funds for a company, you may want to take a look further into their internal billing, invoices, and also their vendors to see if they are legitimate or if there are any inconsistencies.

Please note: These could be warnings and are not definite proof of a scam. We recommend doing thorough research before entering any business negotiation, and always verify and document.

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