Mapping the Shadow Economy

These flashcards cover key terms and definitions related to financial crime, anti-money laundering practices, and the economic impacts of the shadow economy.

Financial Crime

A major force of global destabilization, accounting for up to 5% of global GDP and 2 trillion USD.

Anti-Money Laundering (AML)

The practice of concealing or disguising the existence, source, movement, or illegal application of criminally derived funds.

Counter-Terrorist Financing (CFT)

Providing financial support to terrorist organizations and their activities, focusing on illicit purposes.

Bribery

The act of giving or receiving an asset for improper use of delegated power.

Fraud

An intentional act of criminal deception to obtain an unjust or illegal advantage.

Tax Evasion

The illegal use of practices to avoid paying a tax liability.

Placement

The initial introduction of 'dirty money' into the financial system.

Layering

Complex transactions designed to conceal the criminal origin of funds.

Integration

The process of reintroducing 'cleaned' money into the legitimate economy.

Predicat Crimes

Specified unlawful activities whose proceeds give rise to money laundering prosecutions.

Politically Exposed Persons (PEPs)

Individuals in prominent political positions, their family, and close associates highly vulnerable to bribery and corruption.

Ultimate Beneficial Ownership (UBO)

The natural person(s) who ultimately own or control a legal entity.

Hawala

An informal value transfer system that operates outside the formal banking system.

Digital Asset Laundering

Using cryptocurrencies and digital platforms for pseudonymous cross-border transfers.

Market-Based Money Laundering (MBML)

Using stocks, bonds, derivatives, and private equity to create complex transaction chains.

Shell Companies

Legally incorporated entities with no real business, used to disguise funds.

Custodial Services

Banks that safeguard assets for other financial institutions and often obscure ownership.

Complex Ownership Structures

Arrangements that make it difficult to identify ultimate beneficial owners.

Regulatory Compliance

Ensuring adherence to laws and regulations, especially regarding financial transactions.