Money Laundering Investigation Flashcards

A CFE discovers that a client's company has been making round-trip transactions where funds leave the company and return disguised as foreign investment. This is known as:

Answer: Round-tripping

Round-tripping involves sending money offshore and reintroducing it as foreign investment, making domestic funds appear to come from a foreign source.

Under FinCEN's Customer Due Diligence (CDD) Rule, what ownership threshold triggers beneficial ownership identification for legal entities?

Answer: 25% or more ownership

FinCEN's CDD Rule requires financial institutions to identify individuals who own 25% or more of a legal entity customer.

Which professional is most at risk of being used as a 'gatekeeper' in a money laundering scheme?

Answer: An attorney forming shell companies on behalf of anonymous clients

Attorneys, accountants, and other professionals who form companies or manage funds for clients can be exploited as gatekeepers to obscure beneficial ownership.

What is the primary difference between 'concealment' money laundering and 'promotion' money laundering under 18 U.S.C. § 1956?

Answer: Concealment hides proceeds of past crimes; promotion uses funds to facilitate future crimes

Concealment money laundering involves disguising the nature or source of criminal proceeds, while promotion money laundering uses those proceeds to further criminal activity.

A money launderer uses a legitimate restaurant business to commingle illegal cash with daily sales receipts, inflating reported revenues. This primarily exploits which characteristic?

Answer: The cash-intensive nature of restaurant operations

Cash-intensive businesses like restaurants are attractive for commingling because large cash revenues are normal and harder to distinguish from illicit funds.

When investigating a suspected money laundering case, which type of analysis maps the flow of funds through multiple accounts and entities?

Answer: Link analysis

Link analysis visually maps relationships and fund flows between accounts, individuals, and entities, helping investigators trace the movement of laundered money.

A financial institution that fails to implement an adequate AML program can be prosecuted under which theory even if it did not knowingly process illegal funds?

Answer: Deliberate ignorance / willful blindness

The willful blindness doctrine holds that deliberately avoiding knowledge of suspicious activity is equivalent to actual knowledge for criminal liability purposes.