Financial Crime World

National Money Laundering Risk Assessment

Introduction

The National Money Laundering Risk Assessment is a comprehensive document that highlights various aspects of fraud and money laundering, emphasizing their significant impact on U.S. markets, national security, public confidence in the financial sector and government benefits, and emergency relief programs.

Categorization of Fraud

Fraud can be categorized based on entities exploited (e.g., financial institution, government programs), victims (e.g., elders, investors, taxpayers), and methods of perpetration (e.g., identity theft/fraud, BEC, account takeover).

  • Financial Institution Exploitation
    • Financial institutions are targeted by fraudsters to compromise their systems or obtain sensitive information.
  • Government Programs
    • Government programs such as Medicare and Medicaid are exploited for financial gain through various means.
  • Victims of Fraud
    • Elderly individuals, investors, and taxpayers are commonly targeted by fraudsters.
  • Methods of Perpetration
    • Identity theft/fraud
    • Business Email Compromise (BEC)
    • Account takeover

Impact of Fraud

Fraud has a significant impact on U.S. markets, national security, public confidence in the financial sector and government benefits, and emergency relief programs.

  • Economic Impact: Fraud can lead to substantial losses for businesses and individuals.
  • National Security: Fraud can compromise sensitive information and put national security at risk.
  • Public Confidence: Fraud can erode public confidence in the financial sector and government benefits.
  • Emergency Relief Programs: Fraud can divert resources from those who need them most.

Methods of Money Laundering

Money laundering is a complex process that involves concealing the source of illicit funds. Data exploitation (mainly personal identifiable information) is a common method used by criminals to set up bank accounts and conceal fraudulent activity.

  • Data Exploitation: Personal identifiable information is exploited to set up bank accounts and conceal fraudulent activity.
  • Money Mule Networks: Large organized fraud groups use money mule networks as third-party money laundering mechanisms.

Money Mules

A money mule is an individual who transfers or moves illegally acquired money on behalf of someone else, either wittingly or unwittingly.

  • Definition: A money mule is an individual who transfers or moves illegally acquired money.
  • Types of Money Mules
    • Witting money mules: Knowingly transfer illicit funds.
    • Unwitting money mules: Unknowingly transfer illicit funds.

Credit and Gift Cards

Organized fraud rings are increasingly using credit cards and stored value gift cards to launder money.

  • Credit Cards: Used to make large transactions and conceal fraudulent activity.
  • Stored Value Gift Cards: Used to purchase goods and services with laundered money.

Online Scams

Romance scams are a type of online scam where criminals adopt fake online identities to gain victims’ affection and trust, then manipulate or steal from them.

  • Definition: Romance scams involve adopting fake online identities to gain victims’ affection and trust.
  • Types of Online Scams
    • Romance scams
    • Phishing scams
    • Identity theft