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Questions and Answers
What is one serious effect of money laundering on society?
What is one serious effect of money laundering on society?
Trade-based money laundering involves legitimate businesses only.
Trade-based money laundering involves legitimate businesses only.
False
Name one integration technique used in money laundering.
Name one integration technique used in money laundering.
Purchasing or investing in legitimate businesses using laundered proceeds
Money laundering can weaken financial ______ in society.
Money laundering can weaken financial ______ in society.
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Match the following money laundering indicators with their descriptions:
Match the following money laundering indicators with their descriptions:
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Which organization is mentioned as a resource for financial crime officers?
Which organization is mentioned as a resource for financial crime officers?
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Making investments in securities with laundered funds is an example of an integration technique.
Making investments in securities with laundered funds is an example of an integration technique.
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What is often a characteristic of bulk cash smuggling operations?
What is often a characteristic of bulk cash smuggling operations?
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The US-Mexico border is not a significant location for cash smuggling operations.
The US-Mexico border is not a significant location for cash smuggling operations.
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What type of currency is typically exchanged in bulk cash smuggling operations?
What type of currency is typically exchanged in bulk cash smuggling operations?
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The movement of cash within a financial institution can raise __________ flags for illegal activities.
The movement of cash within a financial institution can raise __________ flags for illegal activities.
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Match the following concepts related to money laundering with their descriptions:
Match the following concepts related to money laundering with their descriptions:
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What is the main purpose of a correspondent account?
What is the main purpose of a correspondent account?
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It is a best practice to establish correspondent accounts for foreign shell banks.
It is a best practice to establish correspondent accounts for foreign shell banks.
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What is a payable-through account?
What is a payable-through account?
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The Egmont Group was formed in _____ and focuses on improving cooperation against money laundering.
The Egmont Group was formed in _____ and focuses on improving cooperation against money laundering.
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Match the following terms related to banking with their definitions:
Match the following terms related to banking with their definitions:
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What is one of the primary ways the Egmont Group supports member FIUs?
What is one of the primary ways the Egmont Group supports member FIUs?
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The Egmont Secure Web (ESW) allows unencrypted sharing of case information among member FIUs.
The Egmont Secure Web (ESW) allows unencrypted sharing of case information among member FIUs.
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What is a critical concern regarding correspondent accounts?
What is a critical concern regarding correspondent accounts?
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The Egmont Group provides a central agency to counter money laundering and terrorism financing.
The Egmont Group provides a central agency to counter money laundering and terrorism financing.
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What does FIU stand for?
What does FIU stand for?
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What is the goal of the Egmont Group?
What is the goal of the Egmont Group?
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The process of preventing money laundering is often associated with __________ regulations.
The process of preventing money laundering is often associated with __________ regulations.
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Match the following services with their associated descriptions:
Match the following services with their associated descriptions:
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The Egmont Group gets its name from the _____ in Brussels where the meeting took place.
The Egmont Group gets its name from the _____ in Brussels where the meeting took place.
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Which of the following describes a foreign shell bank?
Which of the following describes a foreign shell bank?
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Why might a local bank have concerns about a foreign correspondent bank?
Why might a local bank have concerns about a foreign correspondent bank?
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Private banking is exclusively for individuals with a low net worth.
Private banking is exclusively for individuals with a low net worth.
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What role has private banking played in relation to money laundering?
What role has private banking played in relation to money laundering?
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The Egmont Group promotes the __________ of FIUs to ensure they operate independently.
The Egmont Group promotes the __________ of FIUs to ensure they operate independently.
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What is a potential risk associated with foreign banks managing correspondent accounts?
What is a potential risk associated with foreign banks managing correspondent accounts?
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What is a primary reason that escrow accounts are vulnerable to money laundering?
What is a primary reason that escrow accounts are vulnerable to money laundering?
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Escrow accounts are not susceptible to money laundering activities.
Escrow accounts are not susceptible to money laundering activities.
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Name one type of high-value items often involved in money laundering.
Name one type of high-value items often involved in money laundering.
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Money laundering during the ______ phase involves purchasing goods.
Money laundering during the ______ phase involves purchasing goods.
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Match the following parties with their roles in escrow accounts:
Match the following parties with their roles in escrow accounts:
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Which type of vehicles are commonly used in money laundering?
Which type of vehicles are commonly used in money laundering?
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The layer of transactions with illegal proceeds is a method used in money laundering.
The layer of transactions with illegal proceeds is a method used in money laundering.
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Identify one risk that businesses selling vehicles face regarding money laundering.
Identify one risk that businesses selling vehicles face regarding money laundering.
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Money laundering strategies are limited only by the creativity of the ______.
Money laundering strategies are limited only by the creativity of the ______.
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Which of the following is NOT mentioned as a risk for businesses involved in vehicle sales?
Which of the following is NOT mentioned as a risk for businesses involved in vehicle sales?
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Study Notes
Money Laundering Overview
- Money laundering is an indispensable element of financial crime, occurring at any stage
- It involves concealing the proceeds of criminal activity
- The movement of money from victims to criminals is a key indicator
- Unraveling the scheme and origins of funds leads to legal consequences
Money Laundering Methods
-
Placement: Initial entry of funds into the financial system, often using cash
- Smurfing, using cash couriers to make multiple small deposits
- Using front companies (e.g. bars) to obscure funds
-
Layering: Separating criminal proceeds, using complex transactions to obscure source
- Multiple transfers, currency exchange, and use of trusts
-
Integration: Laundered funds are integrated into the legitimate economy
- Investments, property purchases, and legitimate business transactions
The Financial Action Task Force (FATF)
- Formed in 1989 to combat money laundering and terrorism financing
- Established 40 Recommendations to combat money laundering at the international level
- The FATF is an intergovernmental organization that fosters cooperation and compliance
The Russian Laundromat
- A complex scheme that laundered approximately $20.8 billion
- Involved shell companies in Russia, Moldova, and Latvia with fake directors and shareholders
- Used a fake promissory note in Moldova, to transfer funds to accounts globally
Money Laundering Indicators for Financial Institutions
- Unusual account activity (e.g. large deposits, unusual customer behavior)
- Transactions inconsistent with customer profile.
- Frequent or large cash deposits
- Multiple transfers to/from different accounts within a short period of time.
- Transfers involving high-risk geographical locations
- Large transfers that may follow unusual transaction patterns
Gatekeepers
- Professionals, such as lawyers, accountants, and brokers, are vulnerable to money laundering
- They can be used to conceal the origins of funds
- It's important for gatekeepers to be vigilant about suspicious activities to prevent being used for money laundering
Other Money Laundering Vehicles
- Dealers in precious metals, jewelry, and art: High value items that can be used to hide money
- Real Estate: Purchases can be used to launder money
- Securities: Investments can be used to conceal the origins of funds
- Charities: They are frequently used as vehicles for illicit funding.
- Political-exposed persons (PEPs): Officials are prone to corruption and money laundering
- Casinos: Transactions are often in cash, making them vulnerable
- Insurance: Often used for concealing money from illegal activities
- Online or Internet Banking: Makes it more difficult to identify customers and monitor financial transactions
- Private Banking: Services are often confidential, making it difficult to identify suspicious transactions
- Money Transmitters: Used for transferring cash without leaving reliable financial trails.
- Shell Companies: Companies with no physical presence, concealed owners, and appear legitimate, often used for laundering money.
- Nominees: Individuals who hold assets on behalf of others, making it difficult to trace the true owners.
- Payable through accounts: Accounts that are used to conduct transactions on behalf of other parties, making it difficult to ascertain the true origin of funds.
- Bearer Bonds and Securities: Transferable assets that obscure the true ownership of the funds.
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Description
This quiz covers various aspects of money laundering, including its effects on society, techniques used, and indicators of suspicious activities. Test your knowledge on the implications of illegal financial practices and the roles of different organizations in combating financial crime.
