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Money Laundering Prevention: Deterring, Detecting, and Resolving Financial Fraud by Jonathan E. Turner

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Chapter 5

Technology and Tomorrow

The Impact of Technology

In order to launder money, perpetrators must move the money through the standard financial institution system, creating a plausible paper trail to justify its existence. Indeed, most perpetrators use simple, easily understood financial processes to move the money around (over the many exotic mechanisms that could be designed). Technology in a rapidly changing the financial landscape facilitates this movement, both in capabilities and in the control of execution, factors that matter most to money launderers.

Before examining the changes that technology brings, it is important to understand what aspects of the current banking and financial services model are important to money launderers. Traditionally, money laundering was accomplished through five primary mechanisms:

  • Deposits to financial institutions, using the deposit, transfer, and movement functionality to create a paper trail.
  • Wire transfers, using the instant accessibility to quickly move money around the globe.
  • Front businesses, where control of the records allows the creation of any supporting details.
  • Fictitious identities, “straws” (as in “strawmen”), fronts, family members, or invented souls.
  • Taking it offshore (as discussed in Chapter 4).

By comingling the illicit cash deposits with a front company that uses cash directly, such as a money services business, ATM company, or liquor store, the money launderer can easily find alternative uses for the cash besides ...

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