Module 4: Money Laundering & Fraud Typologies

Question 1

Definition of ML

Answer 1

Money laundering is the process of changing large amounts of money obtained from crimes, such as drug trafficking, to give the appearance that it has come from a legitimate source

Question 2

Effects of ML

Answer 2

• Undermines legitimate business
• Increases crime and corruption
• Danger to financial institutions
• Loss of tax revenue
• State security and terrorist Financing
• Social costs

Question 3

PLI

Answer 3

Placement: Introducing cash into financ system
Layering: Transactions to obfuscate obscure ownersh
Integration: Cleaned money returned to criminal

Question 4

What are the fatal weaknesses of ML?

Answer 4

Shallow subterfuge, reliance on intermediates, weakness at placement stage, obvious wealth at integration stage —> funds of unknown source

Question 5

Explain ML with MSB?

Answer 5

Money Service Businesses (MSBs). C2C money transfer, e.g. Wester Union

Money Transfer Agents: authorised to provide money transfer services on behalf of the MSB (2 and 5)

MTCN = Money transfer control number

–> Large transfers, evading reporting limits (smurfing), multiple transactions between same people (suspicious commonalities; addresses, transfer agents), no apparent business purpose

Question 6

Explain Invoice Fraud (manipulation: under and over-invoicing

Answer 6

[scheme]

Question 7

what is teeming and lading

Answer 7

Teeming: Receiving payments from one source and use it to cover a previously misappropriated amount. Delay detection of initial theft
Lading: Creating a false sense of balance or “loading” accounts. Mask the deficit to look solvent or correct