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Quick InsightsPROFESSIONALMONEY LAUNDERINGS U M M A R Y O F FAT F R E P O R T P U B L I S H E D O N J U LY 2 6 , 2 0 1 8T O D O W N L O A D T H E C O M P L E T E R E P O R T, V I S I T F AT F W E B S I T E
Specialize in avoiding the safeguardslaid down by governments to preventthe act of money laundering andterrorism financing. PMLs include the following:ProfessionalMoneyLaunderers(PMLs) Organised crime groups (OCGs)Complicit actors, involving: Lawyers Accountants Bankers Brokers Tax advisors Dealers in precious metals Cryptocurrency exchange dealers, etc. Complicit professionals are involvedfor their expertise about the subjectand knowledge about the entireorganizational system.
Categories of PMLsIndividual PMLThey possess specialized skills and may beoffering money laundering (ML) serviceswhile being part of a legitimate profession.Professional Money LaunderingOrganisation (PMLO)A group of two or more who cometogether to provide money launderingadvice services. Each member isspecialized in his subject. Moneylaundering may be one arm of this group’sotherwise legitimate business.Professional Money LaunderingNetwork (PMLN)It is a network of individual PML/ s and /or one or more PMLOs. This network isquite extensive, diversified, highly skilledand cater to multiple OCGs or criminalaffiliates including terrorist organizations.
Features of PMLs: PML is not involved in the conduct of theoffence that has generated the illegalproceeds.They act to provide money launderingservice to their clients in exchange for afee.They use their specialized knowledge andexpertise to exploit legal loopholes andhelp criminals convert illegitimate fundsinto legitimate flows.The PML is concerned with the destinationof the money and the process by which it ismoved.PMLs usually do not possess any criminalbackground.Specialised ServicesProvided by PMLs: Fake documentationCreating andregistering shellcompaniesComingling legal andillegal proceedsMoving illicit cashPurchasing propertiesand assets on behalf ofthe clientRecruiting andmanaging moneymules, etc.
Provide full leadership and control over ML activities including deciding fees andcommissions. Bringing clients to the PMLs, establishing contact and relationship with PMLs in otherjurisdictions, accessing the network of existing PMLOs, etc. Maintaining infrastructure or tools that enable to set up shell companies, open fake bankaccounts and credit cards. Recruit money mule herder or cash hoarders and such appropriate staff. Generating and managing fraudulent documents like duplicate identification papers, fakecompany formation papers, bank statements, invoices, customs documents, resumes etc. Receiving and managing transport of good locally or internationally, getting everythingcleared at customs in liaison with customs officials. Investing and purchasing assets like high end luxury goods and / or assets like real estate. Collecting illicit funds for laundering purpose. They co-mingle laundered funds withlegitimate funds using cash intensive business. Assisting with fund movement, performing cash withdrawals and currency exchanges.Role and Function of PMLs:
Funds are first transferred to PMLs or itsrepresentative. It can be in the form of cash,virtual currency or bank accounts.BusinessModel ofPMLNetworks This is the layering stage wherein funds areactually laundered making it more difficult totrace the source of funds. Tools used are :a. Cash: Trade based money laundering,fictitious trade, accounts, settlements andunderground banking.b. Bank accounts: Shell company bankaccounts are majorly used.c. Virtual currency: Money mulenetworks are majorly used. Laundered funds are finally handed overback to the clients by transfer into their bankaccounts or his close associates or itsrepresentative legal entities. PML may alsoinvest the funds on behalf of its client invarious asset classes.
Types of ML Organisations &NetworksMoneytransport andCashControllerNetworkMoney MuleNetwork:Digital moneyand virtualcurrencynetwork:Used to transmit vast sums of money.They perform the function of control, co-ordinate, collect and transmit of funds.They use the account settlement system – illicit funds are substituted for legitimatefunds.Cash transportation network is used frequently to physically move bulk currencies.Money mule, also known as transaction managers physically transport stolen goods ormerchandise or launder the money.Mostly young unwitting youth are incentivized by free travel and easy money toundertake this task.PMLs arrange for transfer of funds or virtual currencies to e-wallets.Complex web of e-wallet transactions are used to obscure the source of funds.The funds are finally sent to the e-wallet of the client which are then transferred to theclient’s bank cards and can eventually be withdrawn in cash.
Proxy NetworksProxynetworkClient funds aretransferred toshellcompaniesunder the garbof legitimatetransactionslike consultancyservices, remitforimport/exportof goods orservices, loansetc.Proxy networks are PMLs who provide the services of banking transfers,particularly multi layered transfers, via bank accounts.Proxy network led money laundering follows these steps:Funds are thenmoved tomultipleaccountsbelonging toshells formedunder fictitiouscontracts.Funds aretransferredabroad throughany financialinstrument liketrade , etc.Funds are movedor transferredbetween shellcompanies.This is acomplex chainand also verycommon usedfor moneylaunderingpurpose.Funds aredeposited intoaccountsbelonging tothe clients or itscloseassociates. ThePML may alsobuy assets onbehalf of clientonce the fundhas been“legitimized”.
Tools /Mechanisms used byPMLs Trade based money laundering (TBML):Defined as “the process of disguising theproceeds of crime and moving value throughthe use of trade transactions in an attempt tolegitimise their illicit origin”. Account Settlement Mechanisms: Themodus operandi operates such that the PMLacts as a middleman between two OCGs thathave opposite financial needs in terms of cashrequirement and bank transfers. Underground banking and alternativebanking platforms: This is used by PMLNs tobypass the regulated financial sector andcreate a parallel system of moving funds andkeeping records of these transactions.Alternative banking platform (ABP) is a bankingsystem (using online financial software) whichoperates outside of the regulatory jurisdictionalmost equivalent to the shadow bankingsystem.
Complicit / Criminal Financial ServiceProviders & Other ProfessionalsMoney valuetransfer serviceproviders(MVTS)They provideassistance in foreignexchange and cashbased transactionsand electronic fundtransfer.Financialinstitutions FIsLegal Is are a major sourceof laundering fundsand moving it acrossjurisdiction andaccounts. Shellcompany fictitiousaccounts andcomplex layeringschemes are a majortool of doing so.For the depth ofexpertise that theypossess and theability to create moregap between thecriminal activity andthe laundered funds,legal andprofessionals arepreferred by OCGs.These paymentprocessingcompanies are usedby OCGs to masktransactions andlaunder the funds.Telemarketingcompanies have beenspecifically suspectedof providing paymentprocessing services toenable the layering offunds.Virtual currencypaymentproducts andservices (VCPPS)Virtual currencyexchangers havebeen used as MVTSproviders to exchangecriminal proceedsinto virtual currencyto fiat currency.
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This is the layering stage wherein funds are actually laundered making it more difficult to trace the source of funds. Tools used are : a. Cash: Trade based money laundering, fictitious trade, accounts, settlements and underground banking. b. Bank accounts: Shell company bank accounts are majorly used. c. Virtual currency: Money mule
