‘Dirty money’: Banks, businesses be alert

If the money laundering law, meant to curb dealing in ‘dirty money’ is still with Parliamentarians, then there is need for everybody to be on high alert.

If the money laundering law, meant to curb dealing in ‘dirty money’ is still with Parliamentarians, then there is need for everybody to be on high alert.

Money laundering is when criminals conceal unlawful funds by converting them into seemingly legitimate income. That is “making dirty money clean”.

While the term refers to the monetary proceeds of all criminal activity it is most often associated with the financial activities and drug traffickers who seek to launder large amounts of cash generated from the sale of narcotics.

So, those charged with combating crime, especially police, their mandate is to identify, assess, restrain and forfeit illicit and/or unreported wealth accumulated through criminal activities. But the question remains how does such agency (police) get relevant information?

 To combat crime, their is need to bring together the skills, knowledge, and abilities of a diverse group of experts, including police investigators, bankers, and lawyers from the department of justice, forensic accountants, and representatives from other relevant agencies in the country and customs officers.

It is important for businesses to be informed about how they can be used to launder money, and how they can help to make it more difficult for criminals to prosper, especially financial institutions which are more susceptible to money laundering.
Some regulators require banks to collect information from customers, monitor their accounts, and report “suspicious” activities. And if you don’t give the bank the information it wants, you could forfeit your account.

 Some critics see this system of know your customer (KYC), as treating people as suspects instead of as good citizens.

New rules in respect to combating money laundering are needed to ensure the “safety” and “reputation” of the banking system. Banks have managed to respect their customers’ privacy for decades without endangering the “safety” of the banking system.

Government’s role
To combat money laundering, government must inform the public about the vice and enact laws to curb it. However to most businesses, money laundering is something that happens somewhere else, involving only criminals. But the truth is; it can happen anywhere, anytime, and you may not even be aware that you have been involved.

Know your customer (KYC)
In the recent years, prevention of money laundering has assumed greater importance. In this direction, adoption of know your customer (KYC) principle is a step further towards combating money laundering and financing of terrorism.

Take into account any abnormal circumstances in a transaction that indicate that the export may be destined for an inappropriate end-use, end-user, or destination and unusual transactions on your customers’ accounts. Such circumstances are referred to as “red flags.

Businesses should have started by now to formulate a KYC policy. Banks should ensure that KYC procedures are applied to all existing accounts of individuals, companies/firms, religious/charitable organisations and other institutions.

Do not turn a blind eye
Employees need to know how to handle “red flags.” This makes it important for firms to establish clear policies and effective compliance procedures to ensure that such knowledge about transactions can be evaluated by responsible senior officials. Failure to do so could be regarded as a form of self-blinding.

Rwandans need not overlook such dangerous acts. Some may think that such high level crime like money laundering can not take place in Rwanda. Stay on the alert, such incident could challenge our economy.


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