NCJ Number
207291
Journal
Journal of Financial Crime Volume: 12 Issue: 1 Dated: August 2004 Pages: 66-68
Date Published
August 2004
Length
3 pages
Annotation
This paper argues that although financial institutions may profit from receiving large amounts of criminal proceeds in money laundering schemes, over the long term these financial institutions not only risk criminal prosecution but also the loss of public trust that is necessary for their ultimate survival.
Abstract
For financial markets to work properly for the benefit of participants, the investors must believe that financial institutions will protect their funds and pay a reasonable rate of return on their investment. When legitimate financial institutions are used by criminal groups to launder their ill-gotten money, the financial institutions may profit from the use of this money, but only over the short term. They not only become vulnerable to criminal prosecutions, but they lose the confidence of their legitimate customers. Financial systems thus benefit from the imposition of statutory regulations designed to thwart economic crime. Under these regulations, financial institutions are expected to have policies on risk management and internal control that facilitate the implementation of those policies. Staff must also be continually trained in security measures and the warning signs that security may have been breached. They must also be familiar with their customers, including their financial service needs and the nature of their financial transactions.