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Total Solutions Middle East is the leading compliance consultancy and training service company in the Dubai established in 2004, We provides HR Solutions, contracting, outsourcing and Payrolling services as well.
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Money laundering has social and economic consequences

Jul 29th 2015 at 6:56 AM

The direct impact of money laundering on initial victims is easy to understand, but actually there is a lasting effect on the society as a whole. There can be a number of ways money laundering can hurt a nation, especially the developing nations

The first and most obvious impact is the increase in crime and corruption. In some jurisdictions, no strict law exists to prevent money laundering practices. These are like heavens for successful laundering and there are little or no reporting, penalties or provisions, enforcing or provisions to seize laundered money. Under these conditions flourish the bribery of government, lawyers, bank officials, accountants all other personnel. Once it is established, there takes place violent crimes causing serious destruction of social life.

A major impact is on the legitimate businesses. A launderer may use a front company to hide illegal earnings, and it is possible in any jurisdiction. In this case, the operations of the front company may be subsidized enabling the front company to sell products at very low cost. This can actually cause the legitimate competition to lose their market share, while the launderer expands its market base. With the growth of the front company, the launderer has more opportunity to increase the illicit funds. In any developing country, launderers do not need enough time to expand their foothold in the market. They can cover the entire industry in a very short span of time.

Jurisdictions therefore call for a strong anti-money laundering law and keep the fraud out of the main economy. However, experts fear that some of the anti-money laundering laws can have a detrimental effect on the commerce. But it is important to control such activities for the betterment of society. Therefore, businesses have to follow anti-money laundering in UAE and ensure they have good compliance in practice.

  • Businesses are required to report suspicious activities, like:
  • Transactions that involve the proceeds of crime
  • Transactions which are suspicious with no clear justification of the origin of money
  • Transactions that use financial institutions or broker or dealer to leverage criminal activity
  • Transactions that appear to serve no apparent lawful purpose

Institutions must voluntarily report any suspicious activities in order to control the money laundering practices. Preventing money laundering practices is extremely important to combat corruption and stop criminal activities that make use of the laundered money.

Business must have practices in place for anti-money laundering in UAE to run their processes without any hassle.

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