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| • | Currency exchanges / cash conversion: used to assist with smuggling to another jurisdiction or to exploit low reporting requirements on currency exchange houses to minimize risk of detection – e.g., purchasing of travellers cheques to transport value to another jurisdiction. |
| • | Cash couriers / currency smuggling: concealed movement of currency to avoid transaction / cash reporting measures. |
| • | Structuring (smurfing): A method involving numerous transactions (deposits, withdrawals, transfers), often various people, high volumes of small transactions and sometimes numerous accounts to avoid detection threshold reporting obligations. |
| • | Use of credit cards, cheques, promissory notes, etc.: Used as instruments to access funds held in a financial institution, often in another jurisdiction. |
| • | Purchase of portable valuable commodities (gems, precious metals, etc.): A technique to purchase instruments to conceal ownership or move value without detection and avoid AML/CFT measures – e.g., movement of diamonds or gold to another jurisdiction. |
| • | Purchase of valuable assets (real estate, race horses, vehicles, etc.): Criminal proceeds are invested in high-value negotiable goods to take advantage of reduced reporting requirements to obscure the source of proceeds of crime. |
| • | Commodity exchanges (barter): Avoiding the use of money or financial instruments in value transactions to avoid AML/CFT measures - e.g., a direct exchange of heroin for gold bullion. |
| • | Use of wire transfers: to electronically transfer funds between financial institutions and often to another jurisdiction to avoid detection and confiscation. |
| • | Underground banking / unlicensed remittance services: Illegal mechanisms based on networks of trust used to remit monies, without the proper license or registration. Often work in parallel with the traditional banking sector and exploited by money launderers and terrorist financiers to move value without detection and to obscure the identity of those controlling funds. |
| • | Trade-based money laundering and terrorist financing: usually involves invoice manipulation and uses trade finance routes and commodities to avoid financial transparency laws and regulations. |
| • | Abuse of non-profit organizations (NPOs): May be used to raise terrorist funds, obscure the source and nature of funds and to distribute funds for terrorist activities. |
| • | Investment in capital markets: to obscure the source of proceeds of crime to purchase negotiable instruments, often exploiting relatively low reporting requirements. |
| • | Mingling (business investment): A key step in money laundering involves combining proceeds of crime with legitimate business monies to obscure the illegal source of the funds. |
| • | Use of shell companies/corporations: a technique to obscure the identity of persons controlling funds and exploit relatively low reporting requirements. |
| • | Use of offshore banks/businesses, including trust company service providers: to obscure the identity of persons controlling funds and to move monies away from interdiction by domestic authorities. |
| • | Use of nominees, trusts, family members or third parties, etc: to obscure the identity of persons controlling illicit funds. |
| • | Use of foreign bank accounts: to move funds away from interdiction by domestic authorities and obscure the identity of persons controlling illicit funds. |
| • | Identity fraud / false identification: used to obscure the identity of those involved in many methods of money laundering and terrorist financing. |
| • | Use “gatekeepers” professional services (lawyers, accountants, brokers, etc.): to obscure the identity of beneficiaries and the illicit source of funds. May also include corrupt professionals who offer ‘specialist’ money laundering services to criminals. |
| • | New Payment technologies: use of emerging payment technologies for money laundering and terrorist financing. Examples include cell phone-based remittance and payment systems. |
| • | Virtual assets: (VA) and related services have the potential to spur financial innovation and efficiency, but their distinct features also create new opportunities for money launderers, terrorist financiers, and other criminals to launder their proceeds or finance their illicit activities. FIs may refer to the FATF Recommendations that place AML/CFT requirements on Virtual Assets (VA) and Virtual Asset Service Providers (VASPs). The FATF has also issued a document on Guidance on Risk Based Approach to VAs and VASPs. FIs should be familiar with the AML/CFT risks of dealing with VAs and VASPs in accordance with the FATF guidance. |
| • | Life insurance products can be for instance be used for money laundering when they have saving or investment features which may include the options for full or partial withdrawals or early surrenders. |
| • | General insurance product: there are several cases where the early cancellation of policies with return of premium has been used to launder money.| | ○ | A number of policies entered into by the same insurer/intermediary for small amounts and then cancelled at the same time; | | | ○ | Return premium being credited to an account different from the original account; | | | ○ | Requests for return premiums in currencies different from the original premium; | | | ○ | Regular purchase and cancellation of policies. |
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| • | Overpayment of premiums: arranging for excessive numbers or excessively high values of insurance reimbursements by cheque or wire transfer to be made, in this method, the launderer may arrange for insurance of the legitimate assets and ‘accidentally’ but on a recurring basis, significantly overpay his premiums and request a refund for the excess.
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