Chapter 7

Question 1

definition of money laundering

Answer 1

Taking money from one source, hiding the source, and making funds available in another setting so that funds can be used without incurring legal restrictions or penalties

Question 2

what is bitcoin

Answer 2

encryted currency. closely monitored the number of coins so that the value stay constant

• Often used on the dark web - because ether $ is untraceable

Question 3

What is the difference between e-currency and bitcoin

Answer 3

e-currency is backed by gold or national currencies

Question 4

What is blockchain

Answer 4

• this lols for anonymous transactions. Public, open digital ledger with blocks holding ledger information

Question 5

How do grant recipients use money laundering

Answer 5

I university get a grant with restrictions for how to use it. The university creates charges against the fund for “services” that are allowable under the grant. The moneyies are then freed for discretionary spending/

Same thing happens with endowments

Question 6

How can you stop money laundering

Answer 6

Establish a chain of custody is established - both with paper and electronically

Question 7

Is it possible for a legitimate business to adopt money laundering to avoid paying taxes -

Answer 7

yes - example - manufacturing company creates transfer pricing policies to create profit in only one country - the one with the lowest tax rate

Question 8

What are correspondent banks

Answer 8

These are banks that conduct business internationally by providing services to one another.

Question 9

What does the patriot act make banks do

Answer 9

They must establish due diligence on customers in order for it to not be a conduit of criminal activity.

Question 10

What tools do banks use to monitor money laundering

Answer 10

• softeware to monitor and identify suspicious activity

Question 11

What is a CTR

Answer 11

Currency Transaction report - ABOVE $10,000. when an $ amount is above this

Question 12

What is a SARS

Answer 12

Suspicious activity Report - for transactions as noticed by bank personnel

Over $2,000
millions reported each year.

Question 13

what is KYC

Answer 13

Know your customer

Question 14

What is form 8300

Answer 14

This is for business sales above $10,000

Question 15

What law made money maundering a crime

Answer 15

1986 - Money Laundering Control Act

Question 16

Shell Banks

Answer 16

High risk banks without a physical presence in any legal jurisdiction/

Prohibited in the US

Question 17

The difference between an offshore bank and and shell bank

Answer 17

off shore - international, , set up to avoid US taxes, access to many different currencies. ONLY international
Shell banks - not mutually exclusive of offshore

Question 18

Business where money laundering can easily happen

Answer 18

Cash Businesses - vending machine, casino, nightclubs, bars, online auctions, restaurants

Question 19

How are purchasing departments used to ML

Answer 19

can set up a computer company overseas. get equipment bought in the US through surfing and sell below costs to show no profit on sale of equipment

Question 20

What is smurfing

Answer 20

deposits in less than $10,000 amounts so not to trigger a CTR

Question 21

Gift cards

Answer 21

buy these in bulk and resell them - or use direct deposit

Question 22

What is churning of money

Answer 22

the more times that you illegal money is churned the money difficult it is to track. internet has made churning instantaneous

Question 23

What are ways of detecting money laundering schemes

Answer 23

• weblogs and keyloggers ( placed on a pC to record keystrokes) - you can trace IP addresses from weblogs
• wire transfers - transfers from PC or CHPS or SWIFT - if over 10K the a CTR but if under then undetected

Question 24

How do you use log data

Answer 24

used by forensic accountants to reconstruct financial transactions or locate the physical address of a fraudster.

Question 25

How do you guard against money laundering

Answer 25

• use individual due diligence ) business associations, employment, social media
• use company due diligence 0 verify the legal existence of company
• trust due diligence - trust deeds

Question 26

What are the three steps of money laundering

P L I

Answer 26

1 - placement
2 - Transfers - layering
3 - Integrations