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Bank fraud and money laundering allegations

On Behalf of | Nov 12, 2021 | Firm News

Business owners applying for loans may face bank fraud allegations. Prosecutors may claim falsified documents helped enable a loan approval. According to the Department of Justice, providing false statements that influence a lending decision may classify as unlawful conduct.

Applicants with documents purportedly showing assets valued higher than their worth may raise suspicions of fraud. A bank may approve a loan, but prosecutors may file charges alleging an individual obtained it through deception.

Loan applications require due diligence

Bank officers owe a duty of care to conduct due diligence when reviewing business loan applications. As noted by the National Credit Union Administration, lending institutions must maintain policies related to discovering information about their customers.

Inquiries into business activities and sources of wealth may determine whether to approve a loan. Verifying documents may help prevent lenders from issuing funds obtained through false statements. As noted by, however, some lenders may not perform ample due diligence.

Bank fraud may lead to further charges

Prosecutors with evidence of bank fraud may file additional charges for money laundering. As illustrated on the United Nations website, depositing proceeds of loans obtained through unlawful conduct may result in allegations of carrying out stage one of the money laundering cycle.

Money laundering charges need proof that a defendant carried out three specific steps. The first step involves placing or depositing illicit proceeds into a bank account. The second step layers those funds. This involves transferring the funds to several other accounts. The final step, integration, reflects using the funds for investments or other purchases.

To convict on bank fraud charges, prosecutors must prove a defendant supplied false information to obtain funds. If a defendant also faces related money laundering charges, the court must see proof the individual used the funds to complete the three stages of placement, layering and integration.