AML quiz chapter 1
What is money laundering? - -Claiming illegal funds as a legitimate business
transaction
- Who oversees money laundering? - -federal regulations like the USA
PATRIOT Act,
- What is AML mean? - -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? - -placement
- What does placement mean? - -brings the illicit cash into the legal financial
system
- What is structuring? - -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? - -Layering
- What is layering? - -cash equivalents obtained in the placement stage are
used to purchase a variety of financial instruments
- What are some examples of sophisticated financial products - -can include
cash value life insurance and deferred annuity contracts.
- What is the 3rd and final step in money laundering? - -Integration
- What is integration? - -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? - -policy loans, partial withdrawals, or outright
surrenders
- What laundering technique looks appealing to those who launder because
it avoids surrender charges? - -Free-look surrenders
- Tom and Raul case study - -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 - -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. - -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 - -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 - -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? - -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.
What is money laundering? - -Claiming illegal funds as a legitimate business
transaction
- Who oversees money laundering? - -federal regulations like the USA
PATRIOT Act,
- What is AML mean? - -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? - -placement
- What does placement mean? - -brings the illicit cash into the legal financial
system
- What is structuring? - -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? - -Layering
- What is layering? - -cash equivalents obtained in the placement stage are
used to purchase a variety of financial instruments
- What are some examples of sophisticated financial products - -can include
cash value life insurance and deferred annuity contracts.
- What is the 3rd and final step in money laundering? - -Integration
- What is integration? - -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? - -policy loans, partial withdrawals, or outright
surrenders
- What laundering technique looks appealing to those who launder because
it avoids surrender charges? - -Free-look surrenders
- Tom and Raul case study - -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 - -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. - -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 - -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 - -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? - -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.
