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Module 1 (Part 2) Flashcards

1
Q

What is area in non bank financial institutions that can be used to launder money

A

credit card industry

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2
Q

what do credit card associations do

A

license member banks to issue bankcards, authorize merchants to accept those cards, or both

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3
Q

what are issuing banks

A

they solicit potential customers and issue the credit cards

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4
Q

what are acquiring banks

A

they process transactions for merchants who accept credit cards

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5
Q

what are TPPP

A

they contract with issuing or acquiring banks to provide payment processing services to merchants and other business entities,

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6
Q

what do they typically do

A

initiate transactions on behalf of merchant clients that do not have a direct relationship with the TPPPs financial institution

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7
Q

Are credit card accounts likely to be used in the initial placement stage of money laundering

A

no

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8
Q

why

A

because the industry generally restricts cash payments

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9
Q

what are they more likely to be used in

A

the layering or integration stages

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10
Q

what are the second part listed of NBFIs

A

TPPP

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11
Q

what are TPPPs

A

bank customers that provide payment-processing services to merchants and other business entities and often use their commercial bank accounts to conduct payment processing for their merchant clients

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12
Q

what are they often times NOT subject to

A

AML/CFT requirements

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13
Q

What is the third NBFI area covered

A

MSBs

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14
Q

what is a MSB

A

transmits or converts currencies

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15
Q

what services do they usually provide

A

currency exchange

money transmission

check cashing

money order services

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16
Q

What is a foreign exchange dealer

A

these MSBs deal in foreign exchange (forex) and provide currency exchange services

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17
Q

who may offer check cashing services

A

check cashing services may be offered by retail businesses or stand-alone operation (Primary vs. Ancillary)

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18
Q

What is the issuer or of traveler’s check or money order responsible for

A

the payment of the item

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19
Q

what do they often use to sell the negotiable items

A

agents

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20
Q

what is a money transmitter

A

accept currency or funds for the purpose of transferring those funds electronically through a financial agency, institution, or electronic funds transfer network

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21
Q

what is a prepaid provider

A

arrange for access to funds or to the value of funds that have been paid in advance and can be retrieved or transferred at some point in the future through an electronic device or vehicle

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22
Q

what are examples of that electronic device or vehicle

A

card

code

electronic serial number

mobile ID number

PIN

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23
Q

What are the two types of prepaid access

A

Open Loop

Closed Loop

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24
Q

what can open loop prepaid cards be used for

A

purchases at any merchant that accepts cards issued for use on the payment network associated with the card and to access cash at any ATM that connects to the affiliated ATM network

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25
What are closed loop prepaid cars typically limited to
buying goods or services from the merchant issuing the card
26
What is the next NBFI
Casinos
27
Why are casinos good for money laundering
they are among the most proficient cash-generating businesses
28
when does money laundering through casinos generally occur
Placement and layering stage
29
what is an example
converting the illicit funds from cash to checks and utilizing casino credit to add a layer of transactions before the funds are ultimately transferred out
30
What is also present regarding casinos/that industry that aids in money laundering
online gambling
31
what are the 3 reasons that online gambling provides an excellent method of money laundering for cyber criminals
1. Transactions are conducted principally through credit or debit cards 2. Site operators are typically unregulated offshore firms 3. Tracing the source of ownership illegal money that moves through these accounts can be difficult for enforcement and regulatory agencies
32
in july of 2015 what report did FATF release
Money Laundering/Terrorist financing risks and vulnerabilities associated with gold
33
What are the first 3 of 6 vulnerabilities associated with gold
1. High intrinsic value in a relatively compact and easy to transport form 2. Can be bought and sold easily and often with anonymity for currency in most areas of the world. 3. More readily accepted than precious stones, especially since it can be melted down into many different forms
34
What are the second 3 of 6 vulnerabilities associated with gold
4. holds its value regardless of the form it takes - whether as bullion or as a finished piece of jewelry 5. often sought after as a way of facilitating transfer of wealth 6. For some societies, carries an important cultural or religious significance that adds to its demand
35
in a 2013 typology report, what did FATF state
the functions provided by lawyers, notaries, accountants and other professionals are the most useful to a potential money launder
36
what are the 5 concepts listed for the functions that these professionals can cover
1. Managing complex legal arrangements 2. Buying or selling property 3. Performing Financial transactions 4. Providing financial and tax advice 5. Other gate keeper functions
37
What is the deal with managing complex legal arrangements
such arrangements may serve to obscure the links between the proceeds of a crime and the perpetrator
38
what about buying and selling property
property transfers serve as either the cover for transfers of illegal funds (layering stage) or the final investment of proceeds after they pass through the initial laundering process stage (integration stage)
39
what about performing financial transactions
sometimes these professionals may carry out various financial operations on behalf of the client
40
what are 3 other gatekeeper functions
providing introductions to financial institutions undertaking certain litigation setting up and managing a charity
41
What is a relatively uncomplicated method of money laundering
real estate
42
how does it work in the placement and layering phases
large sums of criminal proceeds may be integrated into the legitimate economy through real estate investments
43
what about the integration phase
properties may be sold for a profit or retained for residential, investment or vacation purposes
44
what do many real estate transactions involve that facilitates ML
deposit of a large check from the mortgagee, as well as checks and cash required from the buyer at closing
45
what are the 4 listed methods listed for Money laundering in real estate transactions
Escrow accounts reverse flip loan back all cash
46
what are escrow accounts
designed to hold funds entrusted to someone for protection and proper disbursement
47
why are they attractive to Money launderers
because of the large number of diverse transactions that can pass through them in any deal
48
what can escrow accounts facilitate
the movement of funds by cashier's checks, wire transfers or company checks to seemingly legitimate individuals or companies
49
what is reverse flip
a money laundering might find a cooperative property seller who agrees to a reported purchase price well below the actual value of the property and then accepts the difference under the table
50
what is loan back
the criminal provides an associate with a specific amount of illegitimate money. the associate then provides a "Loan or mortgage" back to the criminal for the same amount with all the necessary "loan and/or mortgage" documentation
51
what does this create
an illusion that the trafficker's funds are legitimate
52
how is the scheme reinforced
through legitimately scheduled payments made on the loan by the traffickers
53
What is all cash
refers to transactions that do not involve traditional financing and doe snot necessarily reference the use of physical cash
54
what is trade based money laundering
the process of disguising the proceeds of crime and moving value through the use of trade transactions in an attempt to legitimize their illicit origins.
55
how can this be achieved in practice
through the misrepresentation of the price, quantity, or quality of imports or exports
56
What are the 6 ways to execute trade-based money laundering
1. Over invoicing or under invoicing 2. Over shipping or short shipping 3. Ghost Shipping 4. Shell companies 5. Multiple invoicing 6. Black market trades
57
What is over invoicing
by invoicing the goods or service at a price above the fair market price, the seller is able to receive value from the buyer
58
what is under invoicing
by invoicing the goods or service at a price below the fair market price, the seller is able to transfer value to the buyer
59
What is overshipping or short shipping
the difference in the invoiced quantity of goods and the quantity of goods that are shipped whereby the buyer or seller gains excess value based on the payment made
60
what is ghost shipping
fictitious trades where a buyer and seller collude to prepare all the documentation indicating goods were sold, shipped and payments were made, but no goods were actually shipped
61
how are shell companies used
to reduce the transparency of ownership in the transaction
62
what is multiple invoicing
numerous invoices are issued for the same shipment of goods, thus allowing the money launderer the opportunity to make numerous payments and justify them with the invoices
63
what are black market trades commonly referred to
commonly referred to as the black market peso exchange
64
what occurs during this
the domestic transfer of funds is used to pay for goods by a foreign importer

CAMS (19 decks)

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