Why are luxury items like watches, designer handbags, jewelry, and fine art popular among money launderers? Because they're portable and generally hold their high value.
Therefore, they can be purchased using "dirty money" and then resold for "clean money". It's a technique that enables criminals to transfer money across borders, evade taxes, and avoid detection by law enforcement agencies.
To prevent financial crime, luxury businesses must establish a chain of custody and perform due diligence on all clients and business partners (know your customer).
What else can you do to reduce the threat?
✅ Inquire into and record the source of funds used to make the purchase - reduce or even eliminate the use of cash
✅ Determine whether the purchase is made on behalf of a third party and, if so, inquire into and record the identity of that third party
✅ Screen your clients against Politically Exposed Persons (PEPs) and sanctions lists, global watchlists, and negative mentions in the media
✅ Enforce robust compliance controls and AML transaction monitoring
✅ Keep up-to-date with regulatory changes and industry best practices and be prepared to adapt your compliance programs accordingly
✅ Last but not least, invest in compliance training and education for your staff, particularly those involved in sales.
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