AML quiz chapter 1
What is money laundering? {ANSW}- Claiming illegal funds as a legitimate business transaction
Who oversees money laundering? {ANSW}- federal regulations like the USA PATRIOT Act,
What is AML mean? {ANSW}- AML refers collectively to laws, policies, and company programs intended
to deter and detect money laundering.
The first stage in the money laundering process is called? {ANSW}- placement
What does placement mean? {ANSW}- brings the illicit cash into the legal financial system
What is structuring? {ANSW}- the practice of breaking up large cash transactions into multiple smaller
transactions (for the purpose of evading reporting or recordkeeping requirements
What is the 2nd step of money laundering? {ANSW}- Layering
What is layering? {ANSW}- cash equivalents obtained in the placement stage are used to purchase a
variety of financial instruments
What are some examples of sophisticated financial products {ANSW}- can include cash value life
insurance and deferred annuity contracts.
What is the 3rd and final step in money laundering? {ANSW}- Integration
What is integration? {ANSW}- cleansed money is circulated back into the hands of the criminal and
ultimately into the financial system
, Cash value life insurance and deferred annuity contracts provide owners access to funds through?
{ANSW}- policy loans, partial withdrawals, or outright surrenders
What laundering technique looks appealing to those who launder because it avoids surrender charges?
{ANSW}- Free-look surrenders
Tom and Raul case study {ANSW}- Tom wrote a $500,000 universal life insurance policy. wrote large cash
value policies not only on Raul but also on Raul's business associates and personal friends. A common
denominator with every case was the buyer's interest in the policy's living benefits. There were frequent
withdrawals and partial surrenders, and several policies had been canceled during the free-look period.
Raul and his associates, agents for an international drug cartel, were responsible for laundering the
millions of dollars generated annually from cocaine and heroin buyers in the U.S. and Europe
Tom and Dru {ANSW}- Raul made substantial donations to the cultural center, mostly through wire
transfers from off-shore bank accounts owned by obscurely named business entities.There the funds
were available to clients with international connections.
The money laundering operation set up by Raul and his associates followed the standard three-stage
process characteristic of most money laundering schemes. {ANSW}- Placement occurred when the cash
was deposited into off-shore bank accounts, where it was subsequently wired to Tom's insurance
company to pay premiums.
Layering was achieved through buying multiple life insurance and deferred annuity contracts using cash
payments and wire transfers from uncertain sources. Ownership changes helped cover any audit trail.
Integration occurred through partial surrenders and withdrawals in the form of insurance company
checks, which moved the money back into the legal monetary system.
Operation Capstone involved the efforts of whom {ANSW}- the action involved the coordinated efforts
of the U.S. Customs Service, the U.S. Attorney for the Southern District of Florida, and several police
departments in South Florida, as well as British and South American authorities.
Operation Capstone {ANSW}- revealed that owners were heavily funding their policies just shy of MEC
levels to avoid IRS scrutiny and making early withdrawals to access the cleansed money within. . Changes
in policy ownership were common.
What is money laundering? {ANSW}- Claiming illegal funds as a legitimate business transaction
Who oversees money laundering? {ANSW}- federal regulations like the USA PATRIOT Act,
What is AML mean? {ANSW}- AML refers collectively to laws, policies, and company programs intended
to deter and detect money laundering.
The first stage in the money laundering process is called? {ANSW}- placement
What does placement mean? {ANSW}- brings the illicit cash into the legal financial system
What is structuring? {ANSW}- the practice of breaking up large cash transactions into multiple smaller
transactions (for the purpose of evading reporting or recordkeeping requirements
What is the 2nd step of money laundering? {ANSW}- Layering
What is layering? {ANSW}- cash equivalents obtained in the placement stage are used to purchase a
variety of financial instruments
What are some examples of sophisticated financial products {ANSW}- can include cash value life
insurance and deferred annuity contracts.
What is the 3rd and final step in money laundering? {ANSW}- Integration
What is integration? {ANSW}- cleansed money is circulated back into the hands of the criminal and
ultimately into the financial system
, Cash value life insurance and deferred annuity contracts provide owners access to funds through?
{ANSW}- policy loans, partial withdrawals, or outright surrenders
What laundering technique looks appealing to those who launder because it avoids surrender charges?
{ANSW}- Free-look surrenders
Tom and Raul case study {ANSW}- Tom wrote a $500,000 universal life insurance policy. wrote large cash
value policies not only on Raul but also on Raul's business associates and personal friends. A common
denominator with every case was the buyer's interest in the policy's living benefits. There were frequent
withdrawals and partial surrenders, and several policies had been canceled during the free-look period.
Raul and his associates, agents for an international drug cartel, were responsible for laundering the
millions of dollars generated annually from cocaine and heroin buyers in the U.S. and Europe
Tom and Dru {ANSW}- Raul made substantial donations to the cultural center, mostly through wire
transfers from off-shore bank accounts owned by obscurely named business entities.There the funds
were available to clients with international connections.
The money laundering operation set up by Raul and his associates followed the standard three-stage
process characteristic of most money laundering schemes. {ANSW}- Placement occurred when the cash
was deposited into off-shore bank accounts, where it was subsequently wired to Tom's insurance
company to pay premiums.
Layering was achieved through buying multiple life insurance and deferred annuity contracts using cash
payments and wire transfers from uncertain sources. Ownership changes helped cover any audit trail.
Integration occurred through partial surrenders and withdrawals in the form of insurance company
checks, which moved the money back into the legal monetary system.
Operation Capstone involved the efforts of whom {ANSW}- the action involved the coordinated efforts
of the U.S. Customs Service, the U.S. Attorney for the Southern District of Florida, and several police
departments in South Florida, as well as British and South American authorities.
Operation Capstone {ANSW}- revealed that owners were heavily funding their policies just shy of MEC
levels to avoid IRS scrutiny and making early withdrawals to access the cleansed money within. . Changes
in policy ownership were common.
