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Identity Theft and Money Laundering

By: Sarah Knowles BA, MA - Updated: 1 Dec 2010 | comments*Discuss
Identity Theft Money Laundering Criminal

When criminals get their hands on money through illegal means, they need to have a way to get their money “laundered”, which means to have dirty money made clean again. In simple language, that means making criminals’ ill-gotten gains appear legitimate.

One way of laundering profits is for criminals to attain the identities of other people, in order to open bank accounts, get credit cards and write cheques in their names.

This form of identity theft is simple: a way for criminals to make it difficult or impossible to trace their profit trail back to them.

“Where a criminal succeeds in making stolen money look clean this is known as money laundering,” says the Financial Services Authority. “Criminals can then move the money around to conceal where it came from even further.”

How They Do It

All a criminal needs to steal your identity is a few simple facts, such as your bank account details, date of birth and address. From there, it’s easy to set up a bank account or get a chequebook in your name.

That’s not all. The people who steal your identity could even take over your existing accounts, and gain access to your money. In fact, they can even change the address on your account, so that you no longer have access to your paper statements or other correspondence from your bank.

It is estimated the in the UK alone, identity theft costs the economy about £1.2 billion per year. But that’s not the only price we pay.

If you are the victim of identity theft when it comes to money laundering, you could be held responsible – until you prove that you are actually the victim. Sadly, that can be a very difficult and time-consuming process.

Identity Checks

Many identity checks are in place to help prevent money laundering identity theft fraud. Under existing Money Laundering Regulations, banks must ensure that they do, indeed, know the identity of the customer before agreeing to open an account in his name - or they can be held responsible as well. These types of checks include:

  • Checking that the individual is really who they claim to be, as well as profession etc.
  • Checking their name and address
  • Checking documents to prove this, such as driving licence, passport, utility bill, Council tax statement, birth certificate and other forms of identification
No system is perfect, however, and fraudsters are now employing more and more sophisticated techniques to steal others’ identities. Some of these techniques include:
  • Stealing pre-approved credit card applications from someone’s bin, applying for them and getting a credit card in someone else’s name
  • Stealing discarded utility and council tax bills
  • Gaining access to credit cards and pin numbers through illegal means

Don’t Become a Money Mule

Money mules are people who, inadvertently or on purpose, transfer money that has been illegally “earned” in one country to another country. Often, money mules are paid a sum to complete the transaction, but sometimes they are unaware of what they are doing.

Don’t let someone steal your identity and turn you into a money mule - or a money launderer. Make sure you shred and dispose of important letters, documents and bills, and never give out personal information unless you are sure why, and to whom.

According to Crimestoppers, you should always ask yourself these three questions before giving out any personal information whatsoever:

  • WHO is asking for my details?
  • WHAT type of details do they want from me?
  • WHY do they need to know these specific details?
Don’t become a victim of money laundering, when so often it is easily preventable. Avoiding becoming an identity theft target is the first step, and can save you months – and even years – of misery.

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