White collar crime is a very broad phrase that refers to a wide variety of activities. In many situations, the line between legal activity and illegal activity may be very thin and difficult to distinguish.
Financial professionals and business owners alike must be aware of what types of situations may raise concerns about white collar crime and financial fraud.
Money laundering basics
Many people may well have read or heard stories about individuals being accused of money laundering offenses but may not fully understand what this term means. As explained by Bankrate, at its core, the term “money laundering” refers to actions taken intended to make funds obtained illegally appear as though they were obtained legally. In essence, it refers to attempts to make dirty money seem clean and legitimate.
There are three phases or steps identified in a money laundering scheme. The first is placement of money into a bank account and the second is called layering, where funds may be moved into different accounts. Finally, integration sees the funds used and put back into the economy in some way.
Transaction values and red flags
A person accused of money laundering may have deposited money into a bank account connected to a legitimate business even if the money was obtained via another means. The Journal of Accountancy explains that in an effort to make the deposit appear logical for the business, the balance sheet for that business or other earnings may be adjusted to avoid raising flags.
Banks must report transactions that exceed a set amount. For this reason, some money laundering allegations may involve smaller transactions.