Learning Objectives
382 words
2 min read
Visual companion
Python
Type and operator map
Python Week 1: the first filter for runtime behavior
View
Revision summary
What this note is really saying
Short form
# Learning Objectives - Understand money laundering stages and methods - Know AML regulatory frameworks - Apply transaction monitoring techniques - Understanding of financial systems - Week 4: Forensic analysis ## 1. Money Laundering Stages **Placement:** Introducing illegal funds into financial system.
Learning Objectives
- Understand money laundering stages and methods
- Know AML regulatory frameworks
- Apply transaction monitoring techniques
- Understanding of financial systems
- Week 4: Forensic analysis
1. Money Laundering Stages
Placement: Introducing illegal funds into financial system. Methods: smurfing (small deposits), currency smuggling, cash-intensive businesses, gambling.
Layering: Obscuring the origin through complex transactions. Methods: wire transfers through multiple jurisdictions, shell companies, investments, trade-based laundering.
Integration: Making laundered funds appear legitimate. Methods: real estate purchases, luxury assets, business investments, loans from shell companies.
2. AML Regulatory Framework
- FATF (Financial Action Task Force): Sets international standards
- PMLA (Prevention of Money Laundering Act): India's legislation
- KYC (Know Your Customer): Customer identification and verification
- SAR (Suspicious Activity Report): Filing obligations for financial institutions
- CDD (Customer Due Diligence): Risk-based customer assessment
3. Transaction Monitoring
- Rule-Based: Predefined scenarios (large cash deposits, rapid movement, high-risk countries)
- Behavioral: ML models learn normal patterns, flag anomalies
- False Positive Optimization: Reducing false alerts (often >95% of alerts are false)
Q1: What are the 3 stages of money laundering?Placement (introduce funds), Layering (obscure origin), Integration (make appear legitimate). Memorable as "Place-Layer-Integrate." Q2: What is smurfing?Breaking large amounts of cash into smaller deposits to avoid reporting thresholds (typically $10,000 in US). Multiple individuals ("smurfs") make deposits at different banks/branches. Q3: What is KYC and why is it important?Know Your Customer: verifying customer identity, understanding their business, assessing risk. Critical for preventing money laundering, terrorist financing, and fraud. Q4: What is a Suspicious Activity Report (SAR)?Report filed by financial institutions to government authorities when suspicious activity is detected. Contains transaction details but NOT a notification to the subject (confidential). Q5: What is trade-based money laundering?Manipulating trade transactions (over/under-invoicing, multiple invoicing, misdescription of goods) to move money across borders. Difficult to detect due to high volume of legitimate trade. Q6: What is the difference between SAR and CTR?CTR (Currency Transaction Report): filed for ALL cash transactions above threshold (e.g., $10,000). SAR: filed for transactions that APPEAR suspicious regardless of amount. CTR is rules-based, SAR is judgment-based. Join Discord PreviousForensic Accounting & Financial AnalysisNextDigital Forensics for Financial Crime