A customer puts high-denomination cash notes into a poker machine at a casino. Without placing any bets, the customer collected winnings in the form of a check from the casino. Which money laundering threats could result from the customer's activities?
Correct Answer: A
1. A. Micro-structuring cash: The customer's behavior of putting high-denomination cash notes into a poker machine without placing bets and then collecting winnings in the form of a check resembles "structuring" or "smurfing." Structuring involves breaking down large sums of money into smaller transactions to avoid detection. In this case, the customer may be attempting to legitimize illicit funds by converting them into casino winnings1. 2. B. Legitimizing illicit funds: By using the poker machine to convert cash into a check, the customer is potentially legitimizing illicit funds. The casino winnings obtained through this process may appear legitimate, even though the initial source of the cash remains suspicious1. A: Micro-structuring cash: The customer's actions of repeatedly inserting high-denomination cash notes into the poker machine without placing bets and then collecting winnings in the form of a check resemble structuring. Structuring involves deliberately breaking down large amounts of cash into smaller transactions to avoid detection. Money launderers engage in structuring to obscure the origin of funds and make them appear legitimate. In this case, the customer's behavior raises red flags and warrants further investigation. B: Legitimizing Illicit Funds: By converting cash into casino winnings (in the form of a check), the customer may be attempting to legitimize illicit funds. The casino winnings obtained through this process could be used to create a veneer of legitimacy, even though the initial source of the cash remains suspicious. Casinos are attractive for money launderers due to the anonymity and fluidity of transactions, making it challenging to trace the origin of funds1. References: 1: Anti-Money Laundering Specialist (6th edition), ACAMS, Chapter 3: "Money Laundering and Terrorist Financing Methods," Section 3.1.2: "Structuring."
Question 687
Under which two circumstances may law enforcement be given access to a financial institution customer's financial records? (Choose two.)
Correct Answer: B,D
Explanation/Reference:
Question 688
A bank located in Arizona is considering a loan application for a new client. The collateral for the loan is a property in Florida. The loan will be in the name of a limited company (LLC) whose ownership is not disclosed to the bank. The LLC was established by a New York-based attorney. The loan will be repaid by the LLC in monthly wire transfers of $9,000 which is more than the required monthly payment. Which aspect indicates potential for money laundering?
Correct Answer: A,C
According to the ACAMS study guide, one of the red flags for money laundering in loan transactions is "the use of shell companies or other legal entities whose ownership is not transparent or whose beneficial owners are unknown" (p. 223). Money launderers may use such entities to hide their identity and the source of their funds, or to create complex layers of transactions to obscure the trail of money. The other options are not necessarily indicative of money laundering risk, as they could be explained by legitimate factors such as the location of the property, the repayment schedule, or the choice of attorney. References: * ACAMS. (2020). Study Guide for the Certification Examination for Anti-Money Laundering Specialists (6th ed.). Miami, FL: ACAMS. * MLO Mentor: Anti-Money Laundering 1 * Compliance Obligations of Certain Loan or Finance Company Affiliates of Federally Regulated Banks and Other Financial Institutions 2
Question 689
A bank sells reloadable open-loop prepaid cards to both customers and non-customers. What is a red flag associated with these cards that may indicate money laundering?
Correct Answer: A
Question 690
How can dealers in high-value items be at risk for money laundering?
