Emerging Trends Flashcards

Central Bank Digital Currencies (CBDCs) introduce which key AML design consideration for governments?

Answer: Whether to allow anonymous small-value transactions versus requiring full identification for all transfers

CBDC designers must balance financial inclusion (allowing some anonymity for small payments) against AML requirements (full traceability of all transactions).

What is 'ransomware' in the AML context, and why does it matter for compliance officers?

Answer: Malware that encrypts victim data, with ransom payments often made in cryptocurrency requiring laundering

Ransomware payments—typically demanded in cryptocurrency—generate illicit proceeds that subsequently flow through exchanges and mixers, creating transaction monitoring obligations.

Which emerging AML risk involves criminals establishing shell companies to acquire real estate in cash or through mortgage fraud to launder funds?

Answer: Beneficial owner obfuscation through real estate

Shell companies are used to purchase real estate while concealing the true beneficial owner, integrating illicit funds as seemingly legitimate property investments.

How does 'pig butchering' (sha zhu pan) fraud connect to AML obligations for financial institutions?

Answer: Victims are persuaded to invest in fraudulent crypto platforms, and their deposits constitute fraud proceeds requiring reporting

Pig butchering scams convince victims to deposit funds into fake investment platforms controlled by criminals, generating fraud proceeds that flow through global banking systems.

The emergence of 'super-correspondent' banks in global payment networks raises AML concerns because:

Answer: Concentration of global payments through a few institutions creates systemic risk if one is compromised

Concentration of global correspondent banking in a small number of institutions means a single compliance failure or exploitation could affect a vast network of downstream banks.

Which behavioral indicator is most associated with money mule activity in retail banking accounts?

Answer: Receiving large deposits immediately followed by outbound transfers leaving near-zero balances

Money mule accounts typically receive funds and rapidly forward them onward, functioning as pass-through accounts with no apparent personal economic purpose.

What does the term 'financial inclusion' have to do with AML risk in emerging markets?

Answer: Bringing unbanked populations into formal financial systems can reduce reliance on unmonitored informal value transfer systems

When unbanked populations gain access to formal financial services, transactions shift from unmonitored hawala or cash networks into regulated, traceable channels.