Financial crime occurs all around the world every single day, and if you aren’t careful, your business could fall victim to any number of financial crimes. Because of the prevalence of financial crime in the world of business and the potential repercussions, business owners need to be aware of their risk level and take steps to protect their companies.
Below is a list of three of the most common financial crimes you need to be aware of in business: Fraud Fraud is one of the most common financial crimes because it can take on so many different forms. When someone commits fraud, they are willfully deceptive in their intent and actions. Fraudulent advertising, fraudulent representation to a client or business partner, and fraudulent revenue reporting are all examples of fraud crimes that can lead to big trouble for perpetrators. Your business should take all available steps to reduce the potential for fraud, and if fraud is found in your business, it needs to be addressed immediately. Money Laundering Money laundering is the act of transferring money from one entity to another so that it can be transferred back to the source without appearing to have come from the source. In a sense, this “cleans” the funds of original ownership and makes it difficult to track the origin of funds. Money laundering is often used to circumvent financial regulations, tax obligations, and donation restrictions. If you form any kind of business partnership, it would be wise to scrutinize the money handling of business partners to make sure your company isn’t unwittingly involved in a money laundering scheme. Political Corruption Although technically not a financial crime in and of itself, political corruption often goes hand-in-hand with financial crime. Politically-exposed persons (PEPs) are often the target of corruption efforts due to their positions of power. Screening for PEP risk is a good idea if you plan to enter into a joint effort with any type of public figure. Screening for PEP risk can reduce the chances for your business to get dragged into a financially compromising situation, and it also reduces the potential for harm to your business’ reputation. Read a similar article about compliance for crypto companies here at this page.
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There are many reasons why you may need to verify someone’s address, especially if you’re in business. Hiring a new employee, working with a new corporate client, or engaging in some other form of official business with someone new can be risky. This risk is made even larger when you aren’t able to ascertain who the person is or where they live.
If you’re looking for ways to verify proof of residency for someone with whom you want to conduct business, below are three easy methods: 1. Electronic Verification Electronic address verification is the modern way to go about verifying someone’s place of residence or place of business. In the past, address verification typically relied on someone producing identification documents, but these can be forged. Likewise, stolen documents can be passed off as valid. Electronic address verification often relies on databases of verified information from various sources, including government registries of publicly available information. 2. Official Mail Mail that is addressed to the person being verified can be another way to verify residency. You can ask someone to provide a few pieces of official mail like letters from local and state governments, tax returns that were mailed to the address being verified, or utility bills that have the person’s name and address on them. If you do this route, you will want to closely check the date of each piece of mail to make sure it is current or is dated within a few weeks of the time it was provided. 3. Vehicle Registration You could also ask someone to bring in a vehicle registration or mortgage document that includes the person’s name and address. These documents can be forged, but they can also be checked against state and county registries if you need further proof. Remember that your business is responsible for maintaining the confidentiality of any sensitive information it comes across. This means that you should have a system for securing any copies of official and identifying documents your business receives during the address verification process. Read a similar article about identity verification using selfies here at this page. There's an old saying that still reigns true today: The only two things you can't avoid in life are death and taxes!
Unfortunately, many people still try to avoid the latter. Tax evasion is a serious crime that involves using illegal means to avoid paying taxes. Both individuals and corporations can be charged with tax evasion. But because of its relatively loose definition, these charges are often subject to confusion and misinterpretations. Understanding Tax Evasion Contrary to popular belief, tax evasion charges usually don't come if the discrepancies result from honest mistakes. Math errors and forgetting to fill out forms typically don't lead to criminal charges. Evasion is about deliberately avoiding your tax duties. In most cases, those charged go to great lengths to minimize their tax burden. They may use illegal schemes, hide income, or sidestep anti money laundering integration protections to disguise money. There are many ways to evade taxes. One of the most common tactics is to misinterpret or underreport income. It's the go-to for corporations looking to line their pockets instead of paying their fair share. Individuals can do the same. Other techniques involve hiding money in offshore accounts, inflating deductions, and even money laundering. In some cases, evasion is a byproduct of other illegal enterprises. Tax evasion is an attempt to hide ill-gotten income. Reporting and paying illicit funds would be an admission of guilt, so criminals often try to launder the money and make it seem like a legitimate source of income. When that happens, criminals get hit with more charges than tax evasion. They can also experience the ramification of anti money laundering integration laws. The Effects of Tax Evasion The Internal Revenue Service reports that tax evasion schemes cost the United States Government an estimated $400 billion annually. Recent calculations from the head of the IRS say that the figure could be closer to $1 trillion. Tax evasion is a serious crime. Prosecutors hold no bars in these cases, and those found guilty are subject to back taxes, fines, and even lengthy prison sentences. Read a similar article about fraud detection here at this page. Identity theft is an ongoing problem in the United States and beyond. With how digitally connected the world is, it's easier than ever for thieves to access your personal information. Whether they impersonate you to take out a loan or participate in fraud using a synthetic identity, the results can be detrimental.
But how do you know if you're a victim? Here are a few signs that could indicate that your personal information is compromised. Inaccuracies in Your Credit Report Here's why regularly checking your credit report is vital. Many fraudsters will use your information to open lines of credit. They might use it to get a small credit card or apply for a massive loan they never intend to pay off. Because it's under your name, you're the one that suffers. Looking at your credit score is the best way to spot potential issues. Something is up if you notice new accounts, higher-than-normal debt figures, or recent inquiries you never requested. You're Denied Credit If you believe you have a relatively good credit score, you might forgo the constant checking and apply for credit whenever you need it. But despite your good record, you get rejected. When that happens, it could mean that your credit score dropped due to fraudulent activity. Calls from Debt Collectors Debt collection calls are a common sign of identity theft. A criminal could use your personal information to open up credit cards or get loans, leaving you to pay the bill. Because it's in your name, debt collectors go after you to reclaim the assets. Getting Unknown Bills Some victims of identity theft will get medical bills, credit card statements, and other questionable financial documents. They might not even have your name, but the address provided is yours. In some cases, criminals will commit fraud using a synthetic identity. The technique involves combining fake and factual stolen information. This form of identity theft is becoming increasingly common, presenting issues to innocent people around the country. Identity theft is no joke. If you notice these red flags, take action as soon as possible to address them and preserve your financial well-being. Read a similar article about Cognito here at this page. Passed shortly after the September 11th terrorist attacks, the Patriot Act is a law that aims to make it easier for law enforcement to deter and punish potential terrorists. It's an anti-terrorism measure that broadens the power of law enforcement agencies to investigate and indict terrorists. The law also increases penalties for committing acts of terrorism or supporting related crimes.
A Point of Contention The Patriot Act drew much controversy upon its passing. Even to this day, many believe that it infringes on constitutional privacy rights. The issue stems from the powers the Patriot Act grants. Law enforcement can use the law to share information and evidence about possible terrorist crimes. It also gives investigators more tools to get the information they need. That includes the power to obtain business records, surveil possible suspects, and more. The ultimate goal of the Patriot Act is to protect Americans, but the broad powers it provides are a concern for many privacy advocates. The Patriot Act and Finance The Patriot Act also has a significant impact on the financial world. The Title II provision titled the International Money Laundering Abatement and Financial Anti-Terrorism Act of 2001, created more bookkeeping requirements for financial institutes. It builds on the Bank Secrecy Act of 1970. With the Title III provision, banks must have detailed records for transactions with countries with a history of money laundering problems for the United States. Bank Secrecy Act enhanced due diligence aims to boost financial transparency and prevent terrorists from using companies to disguise their illegal activity. The Title III provision expanded the definition of money laundering, broadening its scope to include computer crimes, bribery, and other fraudulent activity that uses public funds. Bank Secrecy Act enhanced due diligence quickly became a success. It positively impacted money laundering, forcing criminals to move cash physically. For this reason, the Patriot Act's Title III provision also made concealing more than $10,000 a punishable offense. The Patriot Act had a significant impact on the financial world. While it forced banks and financial institutes to change how they do business, it has seen success in deterring money laundering. Read a similar article about global IDV here at this page. If you’re doing business with other businesses, it’s vital to know that they are legitimate. Performing Business Verification, or Know Your Business (KYB) checks, helps protect your business from fraud, ensures regulatory compliance and mitigates potential risks read more
Unfortunately, we live in a world where security breaches, fraud, and cybercriminal activity run rampant. Despite all the convenience and efficiency the digital age brings, it also opens up a can of worms for unethical activity.
Luckily, there are ways to combat fraud. Reducing fraud with phone number verification can help your bottom line in more ways than you realize. Here's how. Painless Identity Verification A big part of reducing fraud is verifying the identity of your customer. The old-school way of doing things was to ask for a pile of official documents and multiple stages of authentication. However, mobile verification simplifies that entire process. While it revolves around a single data point, phone verification can make a world of difference. For one, you can easily link phone numbers to names, addresses, and even social security numbers. Furthermore, phone verifying instantly connects an account to a device, making it easier to authenticate users in the future. A Streamlined User Experience Identity verification is a necessity. It keeps accounts safe and avoids fraud all around. However, it can be a nightmare from your customer's perspective. No one wants to dig through old documents and provide a ton of sensitive information. In many cases, lengthy verification processes will turn people away, negatively impacting your bottom line. Mobile phone verification addresses that issue. It's quick and only takes a few seconds. That single data point can give you the power to perform multi-layered cross-checking. But on the customer-facing side of things, it's nothing more than a minor inconvenience at best. Customer Safety Reducing fraud with phone number verification is about safety. Not only does it keep your company safe from fraudsters and scammers, but it also ensures that your customers are staying safe. Phone number verification is often used during registration, when changing account credentials, and when making sales. Having that extra wall of protection makes it that much harder for a scammer to slip through the cracks. A Technique Worth Using There are many identification techniques out there, but phone verification is one of the best. It's a great alternative to older methods, providing more convenience and safety than ever before. Read a similar article about best IDV service here at this page. The Foreign Corrupt Practices Act (FCPA) is legislation that was enacted in 1977. It prevents the payment of bribes to foreign officials, which some companies may attempt to do to obtain or maintain business. Businesses must be aware of the key FCPA risks to avoid fines and legal issues. Organizations can do so by implementing a compliance program and choosing to screen for politically exposed persons online.
What are key FCPA risks? According to the United States Department of Justice, common red flags associated with third parties include:
How to reduce FCPA risks Every American company conducting or seeking business overseas is subject to the FCPA. Businesses can reduce their FCPA risks by creating and implementing a compliance program to help combat corruption. Such programs should include a well-documented due diligence procedure that is tailored to their operations and the associated risks. What to include in an FCPA compliance program A well-designed and implemented compliance program should include the following items:
Companies should also screen for politically exposed persons online regularly, as PEPs are more susceptible to being involved in bribery or corruption. Organizations that screen for politically exposed persons online should also screen any close business associate or family member of someone who has been designated as a PEP. By applying the above tips, companies can limit their risk of being involved in corruption, bribery, or other illegal business activities when conducting business abroad. Read a similar blog about screening solution here at this page. PEP stands for Politically Exposed Person. It's a classification that identifies people susceptible to criminal behavior like corruption, bribery, money laundering, and more. Of course, not every PEP is involved in nefarious activity, but it would be dangerous not to consider the risks.
In this blog, we'll cover the basics of PEPs and identify the potential risks they carry. What Makes Someone a PEP? First things first, how do you identify a PEP? In a broad sense, the categorization applies to any high-profile person in a position of power. The Financial Action Task Force has set criteria to define a PEP. The list includes government officials and senior executives in government-owned or commercial businesses. Relatives and close associates of those individuals apply as well. Before you do business with anyone, it's a good idea to perform PEP screening. That way, you understand who you're doing business with and can start to identify the risk factors of PEPs. What are the Risk Factors of PEPs? Because someone is a PEP doesn't necessarily mean you shouldn't do business with them. However, assessing various risk factors is crucial. The most important details to think about are:
Your organization should also understand the purpose of the account they have with you, its anticipated activity, and the complexity of its needs. Managing Your Risks As mentioned earlier, your best course of action is to implement PEP screening measures. You should already have a "Know Your Customer" program in place to gather information about the clients you're working serving. Use that information to perform due diligence. Put their data through AML and PEP screening services and focus on ongoing account monitoring. Reassess the risks later on and comply with all regulations to protect your organization. PEPs aren't necessarily planning on any crimes. But, you can never be too careful. Understanding your risks will keep you vigilant and ensure that you're looking for suspicious activity. Read a similar article about enhanced due diligence here at this page. https://culturebooklet.com/AuthorsHome/Details?postId=90048 |
AuthorEmily Clarke writes about identity verification and business verification service. Archives
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