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Anti-Money Laundering Certificate Exam Study Guide Money Laundering - ANSWER-The process of making dirty money look clean. Criminals disguise the source of funds, changing the form or moving the money to a place where it is less likely to attract attention. The process of money laundering can b...

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  • November 10, 2024
  • 36
  • 2024/2025
  • Exam (elaborations)
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Anti-Money Laundering Certificate Exam

Study Guide


Money Laundering - ANSWER✔✔-The process of making dirty money look clean. Criminals disguise the

source of funds, changing the form or moving the money to a place where it is less likely to attract

attention. The process of money laundering can be broken down into three stages: Placement, Layering

and Integration.


UN 2000 Convention Against Transnational Organized Crime - "Palermo Convention" def. of Money

Laundering - ANSWER✔✔-1. The conversion of property for the concealment of its origin


2. The concealment of the true nature of the property


3. The acquisition/use of property


All three need: KNOWING it was derived from a criminal offense


Importance of "KNOWING" in money laundering - ANSWER✔✔-You have to prove knowing in money

laundering. The intent and knowledge required to prove the offense of money laundering includes the

concept that such a mental state may inferred from "objective factual circumstances."


Willful Blindness - ANSWER✔✔-This is the deliberate avoidance of knowledge of the facts or purposeful

indifference and have held that willful blindness is the equivalent of actual knowledge of the illegal

source of funds or the intentions of a customer in a money laundering transaction.


Difference of ML and Terrorist Financing - ANSWER✔✔-The funds destined for money laundering are

derived from criminal activities while the funds of terrorist financing may include funds from perfectly

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legitimate sources. Concealment of funds used for terrorism is primarily designed to hide the purpose

for which these funds are used, rather than their source.


Placement - ANSWER✔✔-Stage one of money laundering. This is the physical disposal of cash or other

assets derived from criminal activity. During this phase the money launderer introduces the illicit

proceeds into the financial system. Often, this is accomplished by placing the funds into circulation

through formal financial institutions, casinos, and other legitimate businesses, both domestic and

international.


Placement techniques - ANSWER✔✔-1. Blending of funds


2. Foreign Exchange


3. Breaking up amounts


4. Currency smuggling


5. Loans


Blending of funds - ANSWER✔✔-Co-mingling of illegitimate funds with legitimate funds such as placing

the cash from illegal narcotics sales into cash-intensive locally owned restaurant.


Breaking up amounts - ANSWER✔✔-Placing cash in small amounts and depositing them into numerous

bank accounts in an attempt to evade reporting requirements.


Currency smuggling - ANSWER✔✔-cross-border physical movement of cash or monetary instrucments


Loans used for Placement - ANSWER✔✔-Repayment of legitimate loans using laundered cash




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Layering - ANSWER✔✔-The separation of illicit proceeds from their source by layers of financial

transactions intended to conceal the origin of the proceeds. This stage involves converting the proceeds

of crime into another form and making it difficult to find the origin and beneficial owners.


Examples of Layering - ANSWER✔✔-1. Electronically moving funds from one country to another and

dividing them into advanced financial options or markets


2. Moving funds from one financial institution to another or within accounts at the same institution


3. Converting the cash placed into monetary instruments


4. Reselling high value goods and prepaid access/stored value products.


5. Investing in real estate and other legitimate businesses


6. Using shell companies to obscure the ultimate beneficial owner and assets.


Integration - ANSWER✔✔-Third stage of money laundering. This stage is the part where the money tries

to become legitimate to illicit wealth through the re-entry of the funds into the economy in what

appears to be normal business or personal transactions. This stage provides a launderer the opportunity

to increase his wealth with the proceeds of crime.


Examples of Integration - ANSWER✔✔-1. Purchasing luxury assets like property, artwork, jewelry, or high

end automobiles.


2. Getting into financial arrangements or other ventures where investments can be made in business

enterprises


Economic/Social Risks of Money Laundering - ANSWER✔✔-1. Increased exposure to Organized Crime

and Corruption



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2. Undermining the Legitimate private sector


3. Weakening financial institutions


4. Dampening Effect on Foreign Investments


5. Loss of control of, or mistakes, in decisions regarding economic policy


6. Economic distortion and instability


7. Loss of tax revenue


8. Risks to privatization efforts


9. Reputation Risk for the Country


10. Risk of International Sanctions


11. Social Costs


12. Reputation Risk


13. Operational Risk


14. Legal Risk


15. Concentration Risk


Banks - Electronic Transfers of Funds - ANSWER✔✔-This is a transfer of funds that is initiated by

electronic means such as an ACH, ATM, electronic terminals, mobile telephones, or telephones or

magnetic tapes.




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