Financial Crime and Compliance

These flashcards cover key concepts related to financial crime, money laundering, compliance measures, and the technology used in investigations.

What is money laundering?

Money laundering is the process of concealing or disguising the existence, source, movement, destination, or illegal application of criminally derived funds to make them appear legitimate.

What are the three stages of money laundering?

The three stages are placement (introducing illegal funds into the financial system), layering (concealing the origin of the funds), and integration (using the laundered money in the legitimate economy).

What does the term 'predicate crime' refer to?

Predicate crimes are specified unlawful activities whose proceeds can give rise to prosecution for money laundering.

What are common examples of predicate crimes?

Common examples include drug trafficking, fraud, human trafficking, and corruption.

What is the role of technology in ongoing monitoring and investigations?

Technology aids in transaction monitoring, risk assessment, data preparation, and maintaining compliance with AML regulations.

What are some methods of sanctions evasion?

Methods include payments through proxies, establishment of shell companies, and transshipment of goods to obscure their origin.

What does FATF stand for and what is its purpose?

FATF stands for Financial Action Task Force, and it aims to combat money laundering and terrorist financing through international cooperation.

What are some red flags indicating potential fraud?

Red flags include demands for upfront payments, promises of high returns, secrecy, and urgency to act.

What is the difference between tax avoidance and tax evasion?

Tax avoidance is legally reducing tax liabilities, while tax evasion is illegal and involves not declaring taxable income or hiding assets.

What role do compliance officers play in preventing financial crime?

Compliance officers oversee adherence to laws and regulations, conduct audits, and enhance controls to deter financial crime.