The automobile industry is another vulnerable sector to money laundering due to the high value of transactions and the anonymity associated with some cash payments. Criminals often use expensive assets like luxury vehicles, either purchased or rented, to wash large amounts of money and convert it into clean cash. Past international reports indicate that this industry has been used for money laundering for quite some time.
All the businesses involved in vehicle sales, from dealerships to leasing companies and banks, should accordingly have the appropriate AML measures in place to effectively mitigate the risks and report suspicious cases to the relevant authority. The extent of AML requirements will vary from entity to entity, but it is important that all parties implement the right measures, so that everyone is fighting towards the common goal of combating money laundering.
This implies putting in place measures like proper customer onboarding, due diligence, ongoing monitoring on specific profiles, reporting suspicious cases and transactions, while training their respective employees towards recognizing potential signs of money laundering.
A significant factor contributing to the rise of money laundering proceedings in the automobile industry may lie with dealerships themselves. Dealerships are subject to less financial oversight than financial institutions, and dealers are often not as well trained in, or completely ignorant of, AML requirements compared to other financial organizations operating in this industry.
In conclusion, businesses accepting cash payments and providing financing for the purchase of high-value assets such as cars, trucks and other vehicles are more vulnerable to money laundering as they can be used as a layer in the money laundering process, where illegal funds can be transferred through a single, or multiple accounts, to conceal the origin of the funds. They should accordingly ensure that they have the right screening, risk scoring and monitoring framework in place to protect their business, their reputation and jurisdiction.
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