Money Laundering Typologies and Methods Flashcards

A personal account in Texas receives many small cash deposits at branches in several different states, and the funds are quickly withdrawn in Mexico near the border. Which typology does this pattern indicate?

Answer: Funnel account activity

FinCEN has described funnel accounts as accounts that take in deposits across many locations and then send the funds out quickly, often across the border, in amounts that stay under reporting thresholds.

In the Black Market Peso Exchange, who usually gives US dollar drug proceeds the appearance of legitimate payments?

Answer: Colombian importers who buy US goods with dollars bought from a peso broker

Peso brokers sell the cartels' US dollars to importers, who use them to pay US exporters for goods, which mixes drug money into ordinary trade.

A foreign respondent bank lets other foreign banks reach its US correspondent account without telling the US bank. What is this risk called?

Answer: Nested (downstream) correspondent banking

In nested correspondent relationships, unknown banks get indirect access to the US financial system through another bank's correspondent account.

A gambler buys $9,500 in casino chips with cash, places a few minimal bets, and then cashes out asking for a casino check. What is this activity MOST likely to be?

Answer: Using the casino to launder cash through minimal gaming activity

Buying chips with cash, betting very little, and then asking for a casino check turns illicit cash into a legitimate-looking financial instrument.

A buyer pays for a luxury property in cash through an LLC whose owner is not disclosed, then resells it below market value within months. Which feature makes real estate attractive to launderers in this scenario?

Answer: Anonymous legal entities and all-cash purchases can hide the beneficial owner while moving large values in a single transaction

All-cash purchases through opaque entities avoid bank lending checks and hide ownership, which is why FinCEN imposed Geographic Targeting Orders and later residential real estate reporting rules.

An intermediary bank receives a payment instruction in which the originator details that would identify a sanctioned party have been removed or altered. What is this practice called?

Answer: Wire stripping

Wire stripping deliberately removes or changes originator or beneficiary information to evade sanctions and AML screening, and it has led to large US enforcement penalties.

A college student is recruited online to receive funds into their personal account and forward them, minus a commission, to overseas accounts. What role does this person play in a laundering scheme?

Answer: Money mule

Money mules move illicit funds through their own accounts, whether they know it or not, and add layers between the crime and the criminal.