Meaning of money laundering when it comes to credit?
NoirLA
Posts: 6 Forumite
When lenders say they make anti money laundering checks in an application what does that actually mean? Money laundering means passing ill-gotten-gains through legit sources to make it clean money. But money on credit comes from them... barring repayment which isn't made at the time of application.
so can someone with a bit of background on this explain what they mean by money laundering checks when applying for credit and what risks this exposes to the lender and why they conduct them when its their money being used not our own?? any examples of why a money laundering check would fail with a lender and how they can even detect it simply by a credit check?
so can someone with a bit of background on this explain what they mean by money laundering checks when applying for credit and what risks this exposes to the lender and why they conduct them when its their money being used not our own?? any examples of why a money laundering check would fail with a lender and how they can even detect it simply by a credit check?
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Comments
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It's a check against the person, not the product. If I bank has a suspicion that you have been involved in money laundering, it's flagged up to prevent you using financial services of any kind.
For example, someone paying in regular cash into an account but declared no job or other income could be seen as suspicious. In reality, launderers are much cleverer than that and use other means.
Broadly speaking, methods to identify money laundering are confidential for obvious reasons. Banks have an obligation to report suspicious activity to the National Crime Agency and it's a criminal offence if they don't.0 -
For instance, someone transferring a large amount into your account which you then withdraw and that someone reports fraud on their account.0
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camelot1971 wrote: »It's a check against the person, not the product. If I bank has a suspicion that you have been involved in money laundering, it's flagged up to prevent you using financial services of any kind.
For example, someone paying in regular cash into an account but declared no job or other income could be seen as suspicious. In reality, launderers are much cleverer than that and use other means.
Broadly speaking, methods to identify money laundering are confidential for obvious reasons. Banks have an obligation to report suspicious activity to the National Crime Agency and it's a criminal offence if they don't.
Oh I see... so when they say money laundering checks they essentially mean matching your name against databases to make sure you are not flagged? and that information origins back to banks who are the hub of money and are the ones responsible for reporting laundering when they suspect it?
suspicion is not actually guilty though so if someone doesn't have a job but has money paid in all the time often from the same account the bank would see that as dodgy and report it to the crime agency and databases that lenders use to do their money laundering checks which links back to my original question?0 -
Very simply there are a number of requirements placed on firms to ensure that they have systems and processes to ensure they minimise the chances of them being used for money laundering.
There overall principal of money laundering is taking 'dirty' money and making it 'clean'.
It is therefore important before a firm does business with a customer, they 'know' their customer and are satisfied that they are not supporting money laundering.
There are basic things like identity checks which take place but then there are many other things that can be done also. Where a suspicion exists most firms will have a dept/team of specialists who will look into the suspicion and could refer to the a number of government bodies.
It's therefore probably better to understand them as anti-money laundering and anti-fraud checks.
As an example, you could be reported to HMRC if they feel you are not fully declaring an income - this could happen where for example you declare child benefit or working tax credits where your income would suggest that you shouldn't be claiming these.
If you have a reasonable explanation then there is nothing to worry about but yes you could be flagged and this could be referred - equally it may not go further.0 -
Oh I see... so when they say money laundering checks they essentially mean matching your name against databases to make sure you are not flagged? and that information origins back to banks who are the hub of money and are the ones responsible for reporting laundering when they suspect it?
suspicion is not actually guilty though so if someone doesn't have a job but has money paid in all the time often from the same account the bank would see that as dodgy and report it to the crime agency and databases that lenders use to do their money laundering checks which links back to my original question?
If you have a legitimate income you have nothing to worry about. If you have random money paid into an account then you might trigger further checks. A classic one is criminals get money paid into someone elses account and then ask them to take it out and wire it somewhere. Remarkably (not), people are stupid enough to do this.0
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