Anti-Money Laundering: An Overview for US Venture Capital Firms

Venture capital (VC) and private equity (PE) firms are increasingly on the radar of criminals, such as drug traffickers, terrorist financiers, cybercriminals, and sanctioned individuals. Bad actors use early-stage investments to disguise and move illicit funds. They are also known to utilise seed funding, SAFE agreements, and complex fund structures to obscure their ownership. The risk is greatest when firms fail to conduct proper due diligence or don’t recognize suspicious indicators. To avoid being involved in a money laundering scheme, you must learn how to recognize suspicious activities, and know what to do once you have identified them.