Common Money Laundering Schemes Your Firm Should Know About

By Julie Mendel, SILA-A, CDEI
Apr 14, 2022
Common Money Laundering Schemes That Your Firm Should Know

Anti-money laundering (AML) training is one of the most important priorities for financial service agencies and firms, which is made very clear by organizations like FINRA and the SEC. Are you confident that your firm's employees are familiar with money laundering rules and regulations? Are they aware of common money laundering schemes?

Common Money Laundering Schemes

While money laundering operations continually evolve and become more sophisticated, there are certain money laundering schemes and/or businesses that are favorites of the criminals. Below are a list of the most common money laundering schemes.

  • Smurfing involves breaking up large sums of cash into small deposits into many different accounts to avoid detection.
  • Smuggling currency is one of the oldest forms of placement. Cash is often smuggled to an overseas account where it is easier to conceal the money's origin.
  • Casinos (or gambling) schemes involve the launderer entering a casino (or another gambling establishment) with illegally obtained money and purchasing chips to use to gamble. The criminal will then gamble for a while, eventually cashing out the chips and claiming the new cash as gambling winnings.
  • Life Insurance is often targeted as part of a scheme because it is less regulated than other insurance products. A typical scenario involves the purchase of a single-premium life insurance policy naming the launderer as the primary beneficiary. After what they deem is a long enough waiting period, they will cash out the policy and obtain clean money from the insurer.
  • Financial Instrument (bonds and securities) are a frequent target for the launderer. One common laundering scheme involves the use of bearer bonds. Bearer bonds are ripe targets because they have a certain level of anonymity leaving them vulnerable for money laundering at the point of transfer. Specifically, a bearer bond is purchased and issued; the money launderer will often deposit them into a brokerage account in and use them to purchase other assets. They sometimes turn around and liquidate them and then withdraw or wire transfer their proceeds creating another layer of the scheme before integrating the proceeds. These instruments are also often used to hide the identity of beneficial owners of a shell company.
  • Cryptocurrency such as Bitcoin, is a new tool in the launderer’s arsenal. Detection is more difficult because of the use of proxy servers and other anonymous software. These currencies can often be deposited and withdrawn with little or no detection.

This is far from an exhaustive list. You can learn more about money laundering schemes, red flags, rules, regulations, warning signs and proactive measures with WebCE's variety of anti-money laundering training courses.

Protecting Your Firm from Money Laundering

To learn more about common money laundering schemes, order AML training courses, or create an AML training program AML training program for your firm or agency, please visit the WebCE Firm Element and Securities page.

WebCE's AML training courses can be taken by a variety of professionals in the financial services and insurance industries. Our online anti-money laundering training course catalog includes interactive and traditional self-study courses with the most up-to-date industry information available. WebCE’s online anti-money laundering courses can be taken for in-house compliance training, and many of our AML courses can be used for insurance CE, CFP® Certification CE, and Firm Element credit. WebCE also provides specific AML compliance courses for casino and card club employees in accordance with Title 31. To learn more about WebCE's Securities, Firm Element, AML, and Casino Compliance solutions, just use the buttons below!

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