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Money laundering is a global problem and it extends to entrepreneurship. According to the United Nations Office on Drugs and Crime, around $800 billion to $2 trillion are estimated to be laundered around the world, every year. While small businesses are at higher risk, even large, established firms can be a victim of money laundering. It’s the process in which assets or funds generated from illegal activities are linked to legal operations to make it circulate in the economic system without being penalised.

And while the reported rate of Money Laundering related crimes or fraud in Singapore has been consistently below the global average, when it comes to financial losses the situation is different. Based on our survey, 32% of Singapore-based organisations reporting fraud indicated that they may have suffered financial losses of more than USD 1 million from the most disruptive economic crime that occurred during the last 24 months, significantly higher than global average (18%).

If you work with partners across borders, and wish to avoid serious liability, you should know your customer (KYC) well and understand how to protect your business from money laundering. To help you out, we’ve compiled some effective ways to achieve that:

Learn About Money Laundering Techniques

Fraudsters keep learning new tactics. Taking the time to understand them helps detect money laundering more efficiently. You should know about the different ways of laundering money, such as putting illegal cash in your business account, making income generated from illegal activity look legitimate by overbilling or falsifying invoices, and layering proceeds through wire transfer and converting cash to financial instruments. Developing an understanding of these tricks should help you steer clear of money laundering schemes.

To provide a brief understanding of the money laundering process is that it most commonly occurs in three key stages: placement, layering and integration. Each individual money laundering stage can be extremely complex due to the criminal activity involved.

Implement a KYC Policy

If you think about it, a lack of knowledge about your customers is the major reason for money laundering issues. To counter this, develop a KYC policy with the following measures:

  • Whether you’re setting up business relationships or monitoring your ongoing transactions, doing the due diligence is important. This requires establishing a proper user identification system.
  • Through user identification, if you find that a business is involved in legal transactions, reject the account.
  • While watching the transactions should be an ongoing process, you should more closely monitor the transactional behavior of a partner during their first six months. Use the information you gain to categorise them into low, moderate, and high-risk. Thereafter, look out for anomalies in payout processes.
  • Seek effective risk management to address the risks posed by money laundering.

Conduct More Due Diligence

Stay cautious when someone approaches you with an offer. For instance, don’t consider it a jackpot when a total stranger says they’ll transfer an enormous amount of money to you. It’s most probably a money laundering scheme. Conduct a scrutiny of the client or partner by checking whether they’re registered with their local government office or the trading standards authority. This is particularly important if they’re from abroad.


Whether you operate in the B2C or B2B marketplace, it’s critical to do the due diligence and implement KYC policies to avoid getting affiliated with money laundering activities, which are more common in investments, mergers & acquisitions and business takeover transactions. Start-ups, SMEs, and MNCs looking towards expansion should thus be more vigilant with the partners they deal with. As long as you follow the aforementioned tips, you should be able to play safe in the business and financial world.