6_Money Laundering Flashcards
What is money laundering?
Making money earned from crimes look like it came from legal activities.
Name the three stages of money laundering
Placement, Layering, Integration
What does the ‘Placement’ stage do in money laundering?
Puts illegal money into the financial system
What does the ‘Placement’ stage do in money laundering?
Puts illegal money into the financial system
What does the ‘Layering’ stage do in money laundering?
Hides where the money originally came from using complicated transactions.
What happens in the ‘Integration’ stage of money laundering?
Makes the money look like it was earned legally
What group works to make money laundering laws the same around the world?
Financial Action Task Force (FATF)
What did the EU directive of 2001 do for money laundering?
Made rules to hide and disguise the criminal origin of money the same across EU countries.
How does money laundering hurt businesses and the economy?
Damages fair business competition and causes loss of tax money.
What is a Suspicious Activity Report (SAR)?
A report that banks make when they see possibly illegal financial activities.
Why are money laundering regulations strict for banks?
Banks need to follow strong rules to spot and stop money laundering.
Why is it important to know who really owns the laundered money?
Helps find out who benefits from the crime and breaks down the laundering scheme.
What might criminals say to hide the illegal source of their money?
They might claim the money came from a legal business or a sudden gain.
How do banks prevent money laundering?
Use a system to check and manage risks from illegal money activities.
How is money put into the financial system during ‘placement’?
Through fake business deals or wrong invoicing.
