Financial Crime Techniques

Question 1

Crimes we help detect?

Answer 1

1) Embezzlement
2) Structuring
3) Money Laundering
4) Terrorist Financing
5) Smuggling
6)Bribery

Question 2

True or False: Structuring is the act of evading currency reporting requirements

Answer 2

True

Question 3

What is the difference between Unknown Purpose of Funds & Unknown Source of Funds?

Answer 3

Unknown Source: Cash deposit activity not consistent with customer
Unknown Purpose: Cash withdrawal activity not consistent with customer

Question 4

What is Smurfing?

Answer 4

Use of multiple individuals to conduct transactions, used to avoid detection, could be used in a structuring scheme

Question 5

What is Rapid Movement of Funds?

Answer 5

Deposits are quickly followed by withdrawals
(wire to wire, wire to cash, ACH to ACH)
KEY- ONLY classify if activity is concerning

Question 6

What is a Shell Company?

Answer 6

A business that only exists on paper
no office or employees
used to hold and move assets
- legal, but requires scrutiny

Question 7

What is an Offshore account?

Answer 7

Jurisdictions with secrecy and tax laws advantageous to shell companies
- legal, but requires scrutiny

Question 8

What is Out of Pattern Activity?

Answer 8

Transactions that do not conform to Customer type, account history and established patterns,
account volume, unknown relationship or unknown counterparty

Question 9

What is Human Trafficking?

Answer 9

The act of recruiting, harboring, transporting, providing, or obtaining a person for
forced labor or commercial sex acts through the use of force, fraud, or coercion

Question 10

Sex Trafficking Victim Account Red Flags?

Answer 10

Funnel account activity
Joint owner or regular beneficiary with no known connection
Excessive cash deposits, prepaid card purchases, or cryptocurrency
purchases
Transactions in multiple states over short period

Question 11

What will you NOT see on Victim Account?

Answer 11

Payroll, Living expenses

Question 12

Red flags Sex trafficking business account?

Answer 12

Lack of normal business expenses
Transactions outside of normal business hours
Charges to commercial sex sites or international online classified sites

Question 13

Labor Trafficking Red Flags?

Answer 13

Non-existent or extremely low payroll for the size of the business
Business with seasonal workers
Lack of payroll tax
or workers compensation insurance

Question 14

What is a Funnel Account?

Answer 14

Account opened in one area that receives deposits from different areas
- often in amounts below CTR threshold
Funds are quickly withdrawn in same area where account is domiciled
- often in cash
-

Question 15

What do we see Funnel Accounts most prevalent in?

Answer 15

Human Trafficking/Smuggling, Drug Trafficking

Question 16

Benefits of Funnel Accounts for the Criminal?

Answer 16

Rapid movement of funds for little or no cost
no wire fees
withdrawn cash is physically clean
more secure than smuggling bills across the country
deposit small bills, withdraw large bills

Question 17

Funnel Account Red Flags?

Answer 17

Deposits from different geographic locations
Rapid movement of funds following deposits
Cash deposits by multiple individuals
Unable to answer basic questions about the account
Accounts with high deposit activity but low account balances
Issued checks have different handwriting

Question 18

What is a Front Company?

Answer 18

Businesses established to help make illicit funds and activities appear legitimate
-KEY: Illicit funds are often commingled with legitimate business revenue

Question 19

Front Company Red Flags?

Answer 19

Expenses not commensurate with business type
No clear business type
Lack of business expenses
Cash Deposit volume not commensurate with
 - Other forms of revenue
 - Services provided
 - Business location
 - Business expenses