Money laundering prevention : deterring, detecting, and resolving financial fraud

226 Pages·2011·1.86 MB·English

by  Jonathan E. Turner

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Money Laundering
Prevention
Deterring, Detecting, and
Resolving Financial Fraud
JONATHAN E. TURNER
JohnWiley&Sons,Inc.
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Copyright#2011byJonathanE.Turner.Allrightsreserved.
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LibraryofCongressCataloging-in-PublicationData
Turner,JonathanE.,1969-
Moneylaunderingprevention:deterring,detecting,andresolvingfinancial
fraud/JonathanTurner.
p.cm.
Includesindex.
ISBN978-0-470-87475-2(hardback);ISBN978-1-1180-8668-1(ebk);
ISBN978-1-1180-8669-8(ebk);ISBN978-1-1180-8675-9(ebk)
1. Moneylaundering—Prevention. I. Title.
HV6768.T882011
0
658.473—dc22
2011007525
PrintedintheUnitedStatesofAmerica.
10 9 8 7 6 5 4 3 2 1
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Thisbookisdedicatedto
Kristen,Sarah,andAlex,
inappreciationoftheirlove,
support,encouragement,and
formakingeverythingpossible.
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Contents
Preface xi
Acknowledgments xix
CHAPTER1 UnderstandingtheProcessofMoney
Laundering 1
WhatIsMoneyLaundering? 1
MoneyLaunderingDefined 2
WhyDoPeopleLaunderMoney? 4
TheMoneyLaunderingCycle 6
MoneyLaunderingIsaCriminalBusiness 10
MoneyLaunderingIsGlobal 11
MoneyLaunderersAdaptTechnology 13
TheRoleofTechnology 14
TheRoleofBanks 15
TheRoleofNations 17
RegionalHotspots 18
TheBirthoftheFinancialAction
TaskForce(FATF) 20
Conclusion 22
CHAPTER2 MotivationsforGettingInvolved 23
InvolvementIsPersonal 23
PeopleWeightheOddsofSuccess 24
WhereDoLaunderedFundsComeFrom? 26
TheImpactofCorruption 27
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Contents
WhyIsCorruptionIncreasing? 28
CorruptionAlwaysBeginsSmall 30
BriberyandCorruptionofYourEmployees 31
BriberyandCorruptionbyYourEmployees 33
EvolutionofGovernmentAttitudes 34
OfficialCorruptionImpactsIndividual
Corruption 35
TaxEvasionasaGatewayto
MoneyLaundering 36
MovingfromTaxestoCriminalActivity 37
TheRiseofRegionalandMultinational
AMLOrganizations 38
TheConnectionbetweenFraudand
MoneyLaundering 40
MoneyLaunderingasaDo-It-Yourself
Activity 42
TheServiceProviders:Bankers,
Accountants,andLawyers 42
Conclusion 45
CHAPTER3 MechanismsforMovingMoney 47
MoneyLaunderingRequiresMovement
throughtheSystem 47
BrokenWindowsEncourageOtherCrimes 48
LookLocal,ThinkGlobal 49
ExpandingInternationalRequirements 51
FinancialHavensAreExpanding 52
MoneyLaunderingIsaGrowthIndustry 53
LawEnforcementGetsaBigBoost 54
ProfitDrivesCriminalActivity 56
StructuringtheSchemetoSucceed 57
WhyUseaBank,WhenYouCanOwnOne? 58
LearningfromtheBigFraudSchemes 59
ConfrontingtheInevitable 60
vi
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Contents
BalancingSecurityandCost 61
EffectiveFraudPreventionStrategies 62
TheFraudTriangle 63
WheretoStart 64
MitigatingImproperBehavior 67
Conclusion 68
CHAPTER4 GoingGlobal 71
TakingMoneyaroundtheWorld 71
MovingtheMoneyOffshore 72
AvoidingDetection 74
HistoricalBasisforMoneyLaundering 75
RoleofPrivateBanking 76
EnhancedRegulations 77
TheBlackMarketPesoExchange 79
IncreasingCooperationinRegulation 80
RegionalDistinctions 81
GlobalEfforts 83
TheLawEnforcementFocus 84
Conclusion 87
CHAPTER5 TechnologyandTomorrow 89
TheImpactofTechnology 89
TheNextPhaseofMoneyLaundering 91
EverythingOldBecomesNewAgain 92
BeingAnybodyYouWanttoBe 93
WelcometotheFuture 94
SoWhatIstheAMLResponse? 94
EvolutionofAMLControls 96
AdjustingtoRapidlyIncreasingScale 97
AHighlyFlexibleMethodologyResults
inProcessesthatAreDifficulttoStop 99
AMLIsaProcess,NotaDestination 100
vii
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Contents
AllCountries’RegulatoryPrograms
AreNotEqual 101
TechnologyandOffshoreHavensIntersect 103
TheCostvs.theBenefit 104
ConsiderthePaceofChangeandProgress 105
Conclusion 106
CHAPTER6 DiscoveryandPrevention 109
EarlyWarningIsEssentialtoAML 109
ProactiveMeansActive 110
BytheNumbers 111
ParadigmShift 112
TestingYourOwnAMLSystems 114
ExpandingtheBusinessComparison 115
TheRegulatoryFramework 116
High-RiskAreas 117
MoneyLaunderingMeetsTerror
Financing 119
HidinginPlainSight 121
CriminalizingtheConcealment
Activities 122
CreatingFinancialFronts 124
KeepingtheMoneyMoving 125
KeepingtheTaxManHappy 126
Conclusion 128
CHAPTER7 TerrorFinancing 131
TerroristsUseMoneyLaundering
Techniques 131
SimilaritiesandDistinctions 132
ApplicationoftheMethodology
toTerrorFinancing 133
GlobalImpactofFinancialCrimes 135
AlternativeLaunderingMechanisms 137
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