Money Laundering: What It Is and How to Spot Suspicious Transactions
Money laundering is one of the most serious financial crimes. As a professional obliged under L.4557/2018, you must know how it works, what the 'red flags' are, and what to do when you spot suspicious activity.
What Is Money Laundering?
Money laundering is the process by which money of illegal origin — from drug trafficking, tax fraud, corruption, extortion — is "cleaned" through apparently legitimate transactions so that it appears lawful. The process typically follows 3 phases: 1. Placement: The illegal money enters the financial system — e.g. deposited in a bank, invested in real estate, or used to purchase a business. 2. Layering: Multiple transactions are made to obscure the "trail" — transfers between accounts, currency conversions, use of offshore companies. 3. Integration: The money re-enters the economy as "clean" — through salaries, rental income, business sales. Under L.4557/2018, you as an accountant, lawyer or consultant are positioned exactly at the point where criminals try to enter the legitimate system.
Red Flags in Professional Practice
Certain patterns should put you on alert: Relating to the client: • Avoiding explanations about the origin of funds • Pressure to complete quickly without the usual process • Use of proxies or intermediaries without clear business reason • Address or telephone number that cannot be verified • Discrepancy between declared income and actual expenditure Relating to transactions: • Large cash payments without commercial justification • Multiple small transactions that together total a large amount (structuring) • Use of third parties for payments without apparent reason • Unusual amounts for the nature of the business Relating to corporate structures: • Offshore companies in jurisdictions with zero transparency • Multiple holding layers without commercial rationale • Nominee directors/shareholders with no real control
What to Do When You Spot Suspicious Activity
If you identify red flags, follow this process: Step 1 — DO NOT complete the transaction: Suspend the process until the situation is clarified. Step 2 — DO NOT inform the client (Tipping Off): Informing a suspected client that you are about to file a report is itself an offence under L.4557/2018. Step 3 — File a Suspicious Transaction Report (STR): Accountants → Ministry of Finance/AMLCU. Lawyers → via their Bar Association. Consultants → directly to AMLCU via goAML. Step 4 — Document everything: Record what you observed, when, and what actions you took. This documentation protects you legally.
Legal Protection for the Reporting Professional
L.4557/2018 provides important protections: Confidentiality of the report: The STR is confidential. The suspect is not informed and does not learn who made the report. Exemption from civil liability: If you file a report in good faith and it later turns out there was no problem, you bear no civil liability for any damage caused to the client. Criminal protection: You cannot be prosecuted for breach of professional confidentiality if the disclosure was made lawfully (STR).