Overview of Financial Crimes

A set of flashcards covering key concepts related to financial crimes, including cyber-enabled crime, human trafficking, environmental crimes, drug trafficking, terrorism financing, and the implications for institutions and compliance professionals.

What is the general characteristic of cyber-enabled crime?

Cyber-enabled crime is facilitated by the internet and can occur rapidly.

Give examples of cyber-enabled crimes.

Hacking, attempted hacking, account takeovers, compromised accounts, payment card fraud, fraudulent wire transfers.

What is the relationship between cyber-enabled crime and money laundering?

There is a direct relationship; both often utilize similar techniques to conceal funds and transfers.

Differentiate between human trafficking and human smuggling.

Human trafficking involves exploitation and may include domestic citizens or foreign nationals; human smuggling involves the transportation of foreign nationals across borders.

What tactics do human trafficking and smuggling organizations use to exploit victims?

They exploit individuals' desperation to profit, often utilizing transnational criminal organizations.

What are environmental crimes?

Illegal activities that harm human health and nature, often involving long-term impacts.

What is a major challenge in enforcing laws against environmental crimes?

They often involve transnational criminal organizations and are difficult to detect.

What is drug trafficking?

The illegal production, distribution, and sale of controlled substances.

How do drug traffickers launder money?

By using shell companies, offshore accounts, and various fraudulent methods to obscure the origins of their funds.

What distinguishes terrorism financing from money laundering?

Terrorism financing aims to support terrorist activities, while money laundering aims to conceal the origins of illegally obtained funds.

What are common sources of funding for terrorism?

Funds can come from legitimate sources like business fronts or illegitimate sources like criminal activities.

What are the three stages of money laundering?

Placement, layering, and integration.

What is a significant social consequence of financial crime?

It erodes public trust in government and institutions, leading to a lack of civic engagement.

How does financial crime impact nations economically?

It can lower living standards, diminish tax revenues, and discourage foreign investment.

What can happen to organizations that engage in financial crime?

They may face operational restrictions, heavy fines, and reputational damage.

What role do financial institutions have in preventing financial crime?

They must implement AML programs, conduct customer due diligence, and monitor suspicious activities.

What legislation impacts institutions regarding financial crime compliance?

The AML Act in the US, the Economic Crime and Corporate Transparency Act 2023 in the UK, and the EU AML Package.

Describe the consequences for compliance professionals in financial crime violations.

They can face legal and regulatory repercussions, including fines and possible criminal charges.