AML quiz chapter 1
What is money laundering? - Answer - Claiming illegal funds as a legitimate business transaction
Who oversees money laundering? - Answer - federal regulations like the USA PATRIOT
Act,
What is AML mean? - Answer - AML refers collectively to laws, policies, and company programs intended to deter and detect money laundering.
The first stage in the money laundering process is called? - Answer - placement
What does placement mean? - Answer - brings the illicit cash into the legal financial system
What is structuring? - Answer - the practice of breaking up large cash transactions into multiple smaller transactions (for the purpose of evading reporting or recordkeeping requirements
What is the 2nd step of money laundering? - Answer - Layering
What is layering? - Answer - cash equivalents obtained in the placement stage are used
to purchase a variety of financial instruments
What are some examples of sophisticated financial products - Answer - can include cash value life insurance and deferred annuity contracts.
What is the 3rd and final step in money laundering? - Answer - Integration
What is integration? - Answer - cleansed money is circulated back into the hands of the criminal and ultimately into the financial system
Cash value life insurance and deferred annuity contracts provide owners access to funds through? - Answer - policy loans, partial withdrawals, or outright surrenders
What laundering technique looks appealing to those who launder because it avoids surrender charges? - Answer - Free-look surrenders
Tom and Raul case study - Answer - Tom wrote a $500,000 universal life insurance policy. wrote large cash value policies not only on Raul but also on Raul's business associates and personal friends. A common denominator with every case was the buyer's interest in the policy's living benefits. There were frequent withdrawals and partial surrenders, and several policies had been canceled during the free-look period. Raul and his associates, agents for an international drug cartel, were responsible for laundering the millions of dollars generated annually from cocaine and heroin buyers in the U.S. and Europe
Tom and Dru - Answer - Raul made substantial donations to the cultural center, mostly through wire transfers from off-shore bank accounts owned by obscurely named business entities.There the funds were available to clients with international connections.
The money laundering operation set up by Raul and his associates followed the standard three-stage process characteristic of most money laundering schemes. - Answer - Placement occurred when the cash was deposited into off-shore bank accounts, where it was subsequently wired to Tom's insurance company to pay premiums.
Layering was achieved through buying multiple life insurance and deferred annuity contracts using cash payments and wire transfers from uncertain sources. Ownership changes helped cover any audit trail.
Integration occurred through partial surrenders and withdrawals in the form of insurance
company checks, which moved the money back into the legal monetary system.
Operation Capstone involved the efforts of whom - Answer - the action involved the coordinated efforts of the U.S. Customs Service, the U.S. Attorney for the Southern District of Florida, and several police departments in South Florida, as well as British and South American authorities.
Operation Capstone - Answer - revealed that owners were heavily funding their policies just shy of MEC levels to avoid IRS scrutiny and making early withdrawals to access the
cleansed money within. . Changes in policy ownership were common.
What are some ways to money launder? - Answer - A money launderer could purchase a life insurance policy and then cancel the policy during the free-look period to receive a
refund of the premium. The returned premium is used to purchase other assets or investments, thus adding layers to the process and further integrating the money into the financial system.
A money launderer could purchase a life insurance policy and then use the policy values as collateral for a loan to buy a piece of real estate. The loan is repaid by surrendering the policy, and the launderer now owns property that can be retained or sold at a later date.
A money launderer could use illicit funds to purchase life insurance policies from terminally ill insureds under viatical settlement agreements, naming an off-shore company or group of foreign investors as beneficiaries of the policies. When the insureds die, the proceeds are paid to the company or the investors as legitimate death benefits.
What is money laundering? - Answer - Claiming illegal funds as a legitimate business transaction
Who oversees money laundering? - Answer - federal regulations like the USA PATRIOT
Act,
What is AML mean? - Answer - AML refers collectively to laws, policies, and company programs intended to deter and detect money laundering.
The first stage in the money laundering process is called? - Answer - placement
What does placement mean? - Answer - brings the illicit cash into the legal financial system
What is structuring? - Answer - the practice of breaking up large cash transactions into multiple smaller transactions (for the purpose of evading reporting or recordkeeping requirements
What is the 2nd step of money laundering? - Answer - Layering
What is layering? - Answer - cash equivalents obtained in the placement stage are used
to purchase a variety of financial instruments
What are some examples of sophisticated financial products - Answer - can include cash value life insurance and deferred annuity contracts.
What is the 3rd and final step in money laundering? - Answer - Integration
What is integration? - Answer - cleansed money is circulated back into the hands of the criminal and ultimately into the financial system
Cash value life insurance and deferred annuity contracts provide owners access to funds through? - Answer - policy loans, partial withdrawals, or outright surrenders
What laundering technique looks appealing to those who launder because it avoids surrender charges? - Answer - Free-look surrenders
Tom and Raul case study - Answer - Tom wrote a $500,000 universal life insurance policy. wrote large cash value policies not only on Raul but also on Raul's business associates and personal friends. A common denominator with every case was the buyer's interest in the policy's living benefits. There were frequent withdrawals and partial surrenders, and several policies had been canceled during the free-look period. Raul and his associates, agents for an international drug cartel, were responsible for laundering the millions of dollars generated annually from cocaine and heroin buyers in the U.S. and Europe
Tom and Dru - Answer - Raul made substantial donations to the cultural center, mostly through wire transfers from off-shore bank accounts owned by obscurely named business entities.There the funds were available to clients with international connections.
The money laundering operation set up by Raul and his associates followed the standard three-stage process characteristic of most money laundering schemes. - Answer - Placement occurred when the cash was deposited into off-shore bank accounts, where it was subsequently wired to Tom's insurance company to pay premiums.
Layering was achieved through buying multiple life insurance and deferred annuity contracts using cash payments and wire transfers from uncertain sources. Ownership changes helped cover any audit trail.
Integration occurred through partial surrenders and withdrawals in the form of insurance
company checks, which moved the money back into the legal monetary system.
Operation Capstone involved the efforts of whom - Answer - the action involved the coordinated efforts of the U.S. Customs Service, the U.S. Attorney for the Southern District of Florida, and several police departments in South Florida, as well as British and South American authorities.
Operation Capstone - Answer - revealed that owners were heavily funding their policies just shy of MEC levels to avoid IRS scrutiny and making early withdrawals to access the
cleansed money within. . Changes in policy ownership were common.
What are some ways to money launder? - Answer - A money launderer could purchase a life insurance policy and then cancel the policy during the free-look period to receive a
refund of the premium. The returned premium is used to purchase other assets or investments, thus adding layers to the process and further integrating the money into the financial system.
A money launderer could purchase a life insurance policy and then use the policy values as collateral for a loan to buy a piece of real estate. The loan is repaid by surrendering the policy, and the launderer now owns property that can be retained or sold at a later date.
A money launderer could use illicit funds to purchase life insurance policies from terminally ill insureds under viatical settlement agreements, naming an off-shore company or group of foreign investors as beneficiaries of the policies. When the insureds die, the proceeds are paid to the company or the investors as legitimate death benefits.
