Money laundering is continually evolving. The term was initially coined when the mafia set up legal businesses such as laundromats and diners to get their illegally earned money into the legitimate financial system. These days laundering cash does not require physical property.
A leaked document from the U.S. Federal Bureau of Investigation (FBI) found that criminals are using hedge funds and private equity firms to launder hundreds of millions of dollars. Investment firms and financial institutions are expected to have anti-money laundering policies and comply with specific procedures to make it harder. Failure to do so could result in charges.
The Financial Crimes Enforcement Network (FinCEN) tried to introduce legislation in 2015 to force registered investment advisers to report suspicious activity of their clients. While the bill was not approved, it is clear that FinCEN believes advisers often know when they are dealing with illegally earned money.
If you have any suspicions about the legitimacy of money that a client wants to invest, saying no may save you trouble later. It will be stressful for you and your family if federal authorities investigate you for money laundering. It could tarnish your reputation and that of your company, even if you are found not guilty.
To defend federal charges of money laundering, you will need experienced legal counsel. You will be up against federal prosecutors who believe you knew what you were doing and will be looking to make an example. The charges are serious, and the consequences of being found guilty are severe.