You’ve probably heard the term “money laundering” (or anti-money laundering) thrown around in crime movies or prominent court cases. Given these circumstances, you can probably infer that it’s a crime, one punishable by prison terms, fines, and other criminal penalties.
The crime of money laundering is simple to define. It is the act of concealing illegally-obtained funds by falsely claiming said funds as part of a commercial transaction. It can also be a series of illegal banking transactions to make the illegitimate funds in question seem legitimate. So, if one were to illegally obtain money and try to pass it off as, say, a bank transfer or revenue for a business, that would be considered money laundering.
Anti-Money Laundering (or AML) are legal processes and safeguards to prevent such things from taking place. Most investors and investment firms, including Percent, go through some sort of anti-money laundering process for regulatory and compliance reasons. They putting in safeguards and regular checks to make sure the investor doesn’t get mistakenly figured for a money launderer, while also mitigating risk for the platform.
The question remains: why does this matter to investors?
Anti-money laundering verifies users’ funds as authentic and prevents dust-ups with the law.
Anti-money laundering is required by law. As per regulations passed in the last two decades, financial institutions (Percent included) are required to report any financial crimes found and do everything possible to stop them.
At Percent, our Know Your Customer (or KYC) process is one of the key components to our company AML program. This process requires us to verify users’ identities through appropriate documents, assess user risk upon signup, and verify other aspects of users to insure they are not, in fact, trying to launder money illegally through Percent.
There are other safeguards Percent has part of our anti-money laundering endeavors, and other investment platforms also have their own proprietary means of sniffing out such crimes. In the end, however, these preventative measures are not to assume the investor is guilty until proven innocent; they are simply default regulatory measures to assess investor risk while saving investors a painful legal headache should they not meet the qualifications.
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