Money Laundering Overview

Money laundering refers to concealing the origin of illegally obtained funds by passing them through legitimate businesses or financial transactions.

Trade-based money laundering involves using false or inflated imports/exports to disguise the movement of illicit money across borders.

Financial criminals may buy or invest in legitimate businesses using laundered proceeds to conceal their illegal activities and make the money look legal.

Money laundering can involve using laundered funds to buy securities, like stocks and bonds, to clean the money and further conceal its origin.

Financial criminals may create fake business arrangements between companies they control, using tactics like zero-interest loans and false invoicing, to move money around and hide its source.

Money laundering weakens financial institutions by making it difficult to detect and combat financial crimes, which can damage the overall trust and stability of the system.

Money laundering fosters public corruption by providing illegal funds that can be used to bribe officials and undermine democratic processes.

Escrow accounts handle the transfer of funds during real estate transactions, making them vulnerable to money laundering due to the multiple parties involved, like lawyers, title agents, and banks.

Money laundering often involves converting illegal funds into legitimate assets, like buying expensive goods.

The process of concealing illegal funds through various transactions with legitimate businesses, making it difficult to track the origins.

Vehicle dealerships are often targets for money laundering because they deal with large sums of cash and can easily disguise the origin of funds.

Techniques used to hide the origins of illegal profits, often involving complex transactions through multiple accounts or businesses.

Financial criminals often use creative methods, like fake invoices and zero-interest loans, to make money look legitimate.

Money laundering can be seen as a threat to the financial system because it undermines the integrity and transparency of financial institutions.

Illegal profits used for bribery and corruption weaken governance and democratic processes.

Moving large sums of cash across borders, often involving financial institutions to convert smaller bills into larger denominations or place funds.

Organizations like Mexican drug cartels often engage in bulk cash smuggling, making it a major concern for law enforcement.

Financial institutions play a key role in laundering operations, either by exchanging small bills for large ones or transferring funds internationally.

Financial institutions should be vigilant for suspicious activity related to large cash transactions, as it may indicate money laundering attempts.

Financial institutions must apply due diligence and risk-based approaches while extending loans, analyzing the ultimate beneficiary and the proposed use of the loan proceeds.

The Egmont Group is an international organization that supports Financial Intelligence Units (FIUs) in combating money laundering and terrorist financing.

The Egmont Group helps FIUs improve their ability to share financial intelligence by promoting secure communication systems such as Egmont Secure Web (ESW).

The Egmont Group focuses on improving the efficiency and effectiveness of FIUs through training programs and staff exchanges to enhance their skills and expertise.

Correspondent accounts are used by banks to process transactions for foreign banks, potentially increasing the risk of money laundering.

Private banking services cater to wealthy individuals, providing personalized and confidential financial services. This industry can be susceptible to money laundering activities.

Private banking involves a high level of discretion and personalized services, which can be exploited by criminals to launder money through complex transactions.

Money launderers may use private banking to disguise the origin of their illegal funds by utilizing personalized services and confidential transactions.

Correspondent accounts can be used for money laundering by allowing criminals to move funds through multiple banks, making it hard to track their origin.

Banks may be unaware of the activities of foreign banks using their correspondent accounts, making them vulnerable to money laundering schemes.

The Egmont Group promotes the establishment of FIUs in countries, especially those with emerging AML/CFT programs, to strengthen their ability to fight financial crime.

A bank account established by a financial institution in another location, often called the correspondent bank, for the purpose of conducting transactions.

A special type of account that a correspondent bank allows customers of another bank to access for transactions. It's like a 'sub-account' for foreign customers.

A financial institution with no physical presence, existing only online, and often used by money launderers to disguise the origin of illegal funds. These banks are considered high-risk.

A group of international organizations dedicated to fighting money laundering and terrorism financing. They share financial intelligence and work together to implement counter-measures.

These units receive, analyze, and share confidential financial information about suspected money laundering and terrorism financing with national authorities.

Preventing the establishment of correspondent bank accounts for foreign shell banks is important for protecting against money laundering. These accounts allow financial criminals to hide their money with ease.

A critical practice to ensure that correspondent bank accounts are not abused. It aims to prevent fraudulent transactions and protect the integrity of the system.

Banks must be vigilant against the possibility of a foreign bank account (a 'nested' account) being used for illegal transactions. This is a potential abuse of correspondent banking.

When a correspondent bank allows other banks' customers to access transactions directly from their accounts, it creates risks for money laundering. This can be a path for criminals to use.