Preface xi
Acknowledgments xix
CHAPTER 1 Understanding the Process of Money Laundering 1
What Is Money Laundering? 1
Money Laundering Defined 2
Why Do People Launder Money? 4
The Money Laundering Cycle 6
Money Laundering Is a Criminal Business 10
Money Laundering Is Global 11
Money Launderers Adapt Technology 13
The Role of Technology 14
The Role of Banks 15
The Role of Nations 17
Regional Hotspots 18
The Birth of the Financial Action
Task Force (FATF) 20
Conclusion 22
CHAPTER 2 Motivations for Getting Involved 23
Involvement Is Personal 23
People Weigh the Odds of Success 24
Where Do Laundered Funds Come From? 26
The Impact of Corruption 27
Why Is Corruption Increasing? 28
Corruption Always Begins Small 30
Bribery and Corruption of Your Employees 31
Bribery and Corruption by Your Employees 33
Evolution of Government Attitudes 34
Official Corruption Impacts Individual Corruption 35
Tax Evasion as a Gateway to Money Laundering 36
Moving from Taxes to Criminal Activity 37
The Rise of Regional and Multinational AML Organizations 38
The Connection between Fraud and Money Laundering 40
Money Laundering as a Do-It-Yourself Activity 42
The Service Providers: Bankers, Accountants, and Lawyers 42
Conclusion 45
CHAPTER 3 Mechanisms for Moving Money 47
Money Laundering Requires Movement through the System 47
Broken Windows Encourage Other Crimes 48
Look Local, Think Global 49
Expanding International Requirements 51
Financial Havens Are Expanding 52
Money Laundering Is a Growth Industry 53
Law Enforcement Gets a Big Boost 54
Profit Drives Criminal Activity 56
Structuring the Scheme to Succeed 57
Why Use a Bank, When You Can Own One? 58
Learning from the Big Fraud Schemes 59
Confronting the Inevitable 60
Balancing Security and Cost 61
Effective Fraud Prevention Strategies 62
The Fraud Triangle 63
Where to Start 64
Mitigating Improper Behavior 67
Conclusion 68
CHAPTER 4 Going Global 71
Taking Money around the World 71
Moving the Money Offshore 72
Avoiding Detection 74
Historical Basis for Money Laundering 75
Role of Private Banking 76
Enhanced Regulations 77
The Black Market Peso Exchange 79
Increasing Cooperation in Regulation 80
Regional Distinctions 81
Global Efforts 83
The Law Enforcement Focus 84
Conclusion 87
CHAPTER 5 Technology and Tomorrow 89
The Impact of Technology 89
The Next Phase of Money Laundering 91
Everything Old Becomes New Again 92
Being Anybody You Want to Be 93
Welcome to the Future 94
So What Is the AML Response? 94
Evolution of AML Controls 96
Adjusting to Rapidly Increasing Scale 97
A Highly Flexible Methodology Results in Processes that Are Difficult to Stop 99
AML Is a Process, Not a Destination 100
All Countriesâ Regulatory Programs Are Not Equal 101
Technology and Offshore Havens Intersect 103
The Cost vs. the Benefit 104
Consider the Pace of Change and Progress 105
Conclusion 106
CHAPTER 6 Discovery and Prevention 109
Early Warning Is Essential to AML 109
Proactive Means Active 110
By the Numbers 111
Paradigm Shift 112
Testing Your Own AML Systems 114
Expanding the Business Comparison 115
The Regulatory Framework 116
High-Risk Areas 117
Money Laundering Meets Terror Financing 119
Hiding in Plain Sight 121
Criminalizing the Concealment Activities 122
Creating Financial Fronts 124
Keeping the Money Moving 125
Keeping the Tax Man Happy 126
Conclusion 128
CHAPTER 7 Terror Financing 131
Terrorists Use Money Laundering Techniques 131
Similarities and Distinctions 132
Application of the Methodology to Terror Financing 133
Global Impact of Financial Crimes 135
Alternative Laundering Mechanisms 137
Regulatory Responses 139
Conclusion 141
CHAPTER 8 Identifying Risk Exposures 143
AML Exposures: Assessing Financial Institution Risk 143
Language, Culture, and Ethnicity 144
The Legal Landscape 145
Geography: Distance Matters 147
The Goal of the Launderer Is to Hide 147
The United States Takes a Different Approach 149
Laundering Groups Seek to Evade Detection 151
A Fractured Enforcement and Regulatory Picture 152
The Regulatory Position on Cyber Risks 152
Simple Fraud, Still Successful 154
Conclusion 158
CHAPTER 9 Investigating Money Movement 159
Money Laundering Is Now Transnational Organized Crime 159
Succeeding in the Investigative Process 160
Government Access to Information 161
Mining Data for Money Laundering 163
Some Products Help the Perpetrators 164
Investigating Virtual Payment Technologies 165
Looking to the Future Investigative Issues 167
Putting an Investigative Plan in Motion 169
People Are Essential to Proof 170
Finding Money Laundering Abroad 172
Money Laundering Exposure during the Financial Industry Consolidation 173
Conclusion 177
CHAPTER 10 Reporting and Recovery 179
Reporting to Law Enforcement 179
Honest People Act Differently 180
Anticipating Challenges with Cyber Recoveries 181
Building Appropriate Controls into Online Payment Systems 183
Global Coordination on Future Issues 185
Weighing Access vs. Privacy 185
Compliance Issues 187
Putting Recovery Plans into Action 188
Conclusion 191
CHAPTER 11 Conclusion 193
About the Author 197
Index 199
