7_Fraud Typologies Flashcards
What are Money Service Businesses (MSBs)?
Businesses like Western Union that provide consumer-to-consumer money transfer services, often regulated but can be misused for money laundering.
What is smurfing in MSB transactions?
Smurfing is breaking down large transactions into smaller amounts to avoid triggering regulatory reporting requirements.
How do MSBs work in a money transfer?
An MSB involves a sender, a receiver, sending and receiving agents, and uses a Money Transfer Control Number (MTCN) for security and tracking.
What indicators suggest suspicious activities in MSB transactions?
Large, frequent transactions just below reporting limits, multiple transactions between the same parties, and repeated use of the same agents.
How can invoice fraud be used in money laundering?
By manipulating invoice amounts, like over-invoicing or under-invoicing, to transfer illegal funds under the guise of legitimate business transactions.
Describe ‘Teeming and Lading’ with examples.
‘Teeming’ involves using new incoming funds to cover previous thefts, while ‘Lading’ refers to loading accounts with new funds to mask deficits. For example, a club treasurer might use new donations to cover earlier embezzled amounts.
What is invoice manipulation and its significance in money laundering?
Invoice manipulation involves altering invoice amounts to move money illegally. It’s significant because it can easily integrate illicit funds into the legitimate economy if both buyer and seller collude.
How does under-invoicing facilitate money laundering?
By invoicing goods at below their actual value, the difference paid secretly facilitates transferring value without official records, typically used to move funds illicitly or evade taxes.
How does over-invoicing facilitate money laundering?
Over-invoicing involves billing goods at above their actual value, allowing the transfer of excess money to the seller, which can then be laundered back as legitimate income.
What tools are effective for investigating financial frauds like money laundering?
Tools like Excel for data analysis, i2 Analyst’s Notebook for visual relationship mapping, and Visio for graphical presentations are effective in dissecting complex financial schemes.
Explain how financial investigators use data analysis tools in fraud investigation.
Investigators use data analysis tools to organize large datasets, spot anomalies, and visualize transaction flows and relationships between entities involved in suspicious activities.
Why is understanding the role of nominative directors important in international business fraud?
Nominative directors can obscure the true controllers of companies involved in fraud, facilitating transactions without revealing the actual beneficiaries.
What is the Money Transfer Control Number (MTCN), and why is it important?
MTCN is a unique number used in MSB transactions to secure and track the money transfer process, ensuring the money reaches the intended recipient.
What are typical signs of money laundering through MSBs that investigators look for?
Signs include structured transactions just under reportable thresholds, use of the same MSB agents repeatedly, and transactions linked by common addresses or phone numbers.
