Financial institutions are continually looking for methods to prevent money laundering. Money launderers are criminals who place illegal profits into the financial system without revealing their illegal origin. Launderers have many different strategies to avoid detection, including breaking up large amounts of cash into small deposit amounts or purchasing different monetary instruments, such as money orders. Money orders and cash increments may be deposited into many different accounts to avoid detection as well.

After money launderers have successfully introduced illegal funds into the financial system, they will move funds into the legitimate economy for collection. At this point, launderers can use the money for any purpose, including real estate, luxuries, and business investments. Financial institutions must take active steps and invest in technology solutions to help prevent money laundering.

Ways to Prevent Money Laundering

The best way to prevent money laundering is to know your customer. Financial institutions should actively screen all new customers prior to approving any new accounts. Institutions can also monitor the behavior of existing customers to see how they use the products and services of the financial system. Monitoring can help financial institutions to find potential money launderers within the system.

Various software programs are available to help financial institutions to screen and detect potential money launderers. These programs will give access to government watch lists and financial records so fraudulent customers will be revealed. Some programs will also provide background checks so institutions can make sure that applicants are providing truthful information on their financial applications.