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CAMS > Module 1 (Part 4) > Flashcards

Module 1 (Part 4) Flashcards

1
Q

What is this topic on

A

Corporate Vehicles used to facilitate illicit finance

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2
Q

What are the two listed common corporate vehicles used to facilitate illicit finance?

A

LLCs

International Business Corporations (IBCs)

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3
Q

Why is the LLC an attractive vehicle

A

virtually anyone can own or manage an LLC,

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4
Q

including who?

A

including foreign persons and other business entities

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5
Q

What is an International Business corporation

A

entities formed outside of a person or businesses’ country of residence, typically in offshore jurisdictions

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6
Q

what are they used for

A

confidentiality or asset protection

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7
Q

what do IBCs permit the person to do

A

reduce transparency between tits owner in his/her home country and that of the offshore entity where the company is registered

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8
Q

Why are bearer bonds and bearer stock certificates or bearer shares prime money laundering vehicles

A

because on the surface they belong to the “bearer.”

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9
Q

What happens when bearer securities are transferred

A

The transfer takes place by physically handing over the bonds or share certificates

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10
Q

why does it occur this way

A

there is no registry of owners

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11
Q

so what does this basically mean

A

the person who holds the bonds or shares gets to claim ownership.

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12
Q

What are the two types of companies used to facilitate money laundering that is a well documented typology according to FATF

A

Shell company

Shelf company

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13
Q

What is a shelf company

A

a corporation that has had no activity. It has been created and put on the shelf.

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14
Q

What occurs then in the future with a shelf company

A

it is sold to someone who prefers a previously registered corporation over a new one

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15
Q

What is a Shell company/corporation

A

a company that at the time of incorporation has no significant assets or operations

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16
Q

What are trusts

A

Private fiduciary arrangements that allow a grantor (settlor) to place assets for future distribution to beneficiaries

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17
Q

What are the two categories of trusts

A

Revocable

Irrevocable

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18
Q

What does revocable mean

A

the grantor/settlor can terminate the trust

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19
Q

what about irrevocable

A

the grantor cannot terminate the trust once created

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20
Q

how are trusts seen

A

trusts are often seen as separate legal entities from the grantor

21
Q

as such, what are they often useful for

A

estate planning and asset protection purposes

22
Q

what do the instructions usually state

A

how the grantor/settlor would like the funds to be distributed and are limited only to a legal purpose

23
Q

how can trusts be misused

A

they may be formed to take advantage of strict secrecy rules in order to conceal the identity of the true owner or beneficiary of the trust property

24
Q

what are the other 3 ways they also used for

A
  1. to hide assets from legitimate creditors
  2. protect property from seizure under judicial action
  3. to mask the various links in the money flows associated with money laundering or tax evasion schemes
25
Q

What is the most basic difference between terrorist financing and ML

A

the origin of funds

26
Q

What does terrorist financing use funds for

A

an illegal political purpose

27
Q

but what though

A

the money is not necessarily derived from illicit proceeds

28
Q

What does money laundering always involve

A

the proceeds of illegal activity

29
Q

what is the purpose of ML

A

to enable the money to be used legally

30
Q

What do alternative remittance systems or informal value transfer systems commonly involve

A

the international transfer of value outside the legitimate banking system

31
Q

what are they based on

A

trust

32
Q

what is the concept that is discussed here

A

Hawala

33
Q

When and where was Hawala created

A

centuries ago in india and china before Western financial systems were established to facilitate the secure and convenient movement of funds

34
Q

What is hawala

A

one of the many alternative remittance systems or informal value transfer systems that are often associate with ethnic groups from Africa, asia, and the middle east

35
Q

what does hawala mean

A

an Arabic word meaning change or transform

36
Q

what is the hindi word for it and what does it mean

A

hundi which means collect

37
Q

what is the term for the way the system operates

A

chiti banking

38
Q

what does china refer to it as

A

chop shop banking

39
Q

what does Thailand refer to it as

A

poey kuan

40
Q

how does hawala work

A

people in various parts of the world using their accounts to move money internationally for third parties

41
Q

so what happens

A

deposits and withdrawals are made through hawala bankers rather than traditional financial institutions

42
Q

what are the three reasons why hawala is still in use today

A
  1. cheaper and faster money transmission
  2. lack of banking access in the remittance receiving country
  3. cultural preference and lack of trust in the formal banking system
43
Q

what is there usually with hawala

A

no physical movement of currency

lack of formality with regard to verification and record-keeping

44
Q

how does the money transfer take place

A

by coded information that is passed through chits, couriers, letters, faxes, emails, text messages, or online chat system

45
Q

what is it followed by

A

some form of telecommunications confirmation

46
Q

what can be used by the receiver to pick up the values in the other country

A

almost any document that carries an identifiable number

47
Q

What are the 5 characteristics of charities or non profit organizations that make them vulnerable to misuse for terrorist financing

A
  1. enjoying the public trust
  2. having access to considerable sources of funds
  3. Being cash intensive
  4. frequently having a global presence, often in or next to areas exposed to terrorist activity
  5. often being subject to little or no regulation and/or having few obstacles to their creation
48
Q

What does FATF recommend

A

that charities use formal bank accounts to store and transfer funds so that they are subject to the bank’s regulations and controls

49
Q

what does this intern mean for banks where the accounts are stored

A

banks can treat non profits like other customers, apply their KYC rules and file SARs

CAMS (19 decks)

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