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There are some common demographics of a fraudster.ACFE conducts every year a global survey of its members who have dealt with many cases and have come to the conclusion that:
The common demographics of a fraudster are:
1.Male (65% of frauds are committed by males)
2.Aged between 36-45 years
3.Well educated much above a graduate in many cases.
4.Generally a first time offender
5.Trusted in community and the organisation.
The following are the other Motives of such a person to commit a fraud:(Ref:West Virginia University-Coursera course)-besides The Fraud Triangle discussed elsewhere in this website.
M stands for desire for Money.
I stands for Ideology or his beliefs (I will repay back;Bosses are taking the money out; I will not pay taxes..etc)
C stands for Coercion-by a supervisor to his employee to change figures;Managers to subordinates to alter accounts or lose job etc
E stands for Ego -the most dangerous quality in a person to act or do as he wishes without regard to laid out procedures or policies that he can getaway .
Behavioural Red Flags:
The following are the key reasons to commit frauds
1.Living Beyond means
2. Problems due to money pressures-financial difficulties.
3. Collusion with vendors and suppliers.
4.Addiction and family problems
5.Not taking a vacation for years-(They fear in their absence their fraud might be discovered)
6.Previous employment issues
7.Defensive attitude in obeying bosses.
8.Past legal issues
9.Pressure of work and not able to get along with bosses-peers and subordinates .
10. General Instability in Life
11.Alway complaints about work pressures or pay hike etc.
12. General lack of authority.
What is Money Laundering?
Money laundering has been defined as-
" The concealment of illegally obtained money typically by means of transfers into various banks (domestic & abroad) and legitimate businesses through shell companies."
John Forbes ,a retired customs agent refers to money laundering as an adventure.
The IMF estimates that about 2-5% of world GDP ,amounting to 1-2.5 Trillion dollars (2006 figures)is siphoned off towards money laundering.
The fight against Money laundering was started way back in 1970s.
Money in terms of Money laundering may refer to 1.Real estate 2.Jewels 3.Precious metals 4.Online accounts 5.Banks in tax havens 6.Shell companies in tax haven countries etc.
Bitcoin and cryptocurrency are also the ;latest modes of money laundering.
Mobile payments also conceal money laundering.
The sole objective of money laundering is disguising the existence nature,source,ownership,location and disposition of property and money derived from illegal or criminal activities and on which taxes are not paid too.
The essence of money laundering is:
1.Where they came from?
2.How he acquired them?
3.Who owns them?
4.Where they are located?
It is thus nothing but hiding and disguising illegal funds and trying to convert back into legal funds from legal activities by way of shell companies in dubious countries with no regulations like Panama,Bahamas,some Gulf countries etc .
Money laundering basically involves three main stages:
If money laundering is not detected at the stage of placement then it becomes very difficult to trace the illegal money or assets.
Layering is the next stage of design where the money is hidden with various layers and complex patterns to prevent detection.The more the number of layers the more complex is the detection.
The final stage is the Integration of the money back into the economy in such a way to make it appear as if coming from legitimate transactions.
It is estimated that about $ 0ne trillion is drained out of developing countries each year.
At times the laundered money looks like coming from a legitimate source like gift,inheritance,loans or even gambling winnings.
The fraud examiners should focus attention on the sources of money as money laundering involves ill gotten money converted into legitimate sources.
Money laundering schemes include:
1.Siphoning of money to jurisdictions where the laws are lax and no taxes and lack of good controls.
2.Hiding money in new identities
3.Shell companies is the most frequently used method of hiding and converting illegal monies.Shell companies are floated offshore with no controls and no questions asked with no activity too except to use them as fronts to show the illegal money as legal money .They are thus ideal vehicles for laundering money.Such shell companies do not employ any one nor have any economic value except for a name and address.
Digital currencies like Bitcoin are another mode of laundering money without the attention of government and tax authorities.There is no transparency or controls over cryptocurrencies .The parties concerned maintain only by informal ledger accounts.
The illegal monies through Money laundering are used in criminal activities ,arms and drug and human trafficking and also terrorism activities.
Tax heaven countries where Shell companies thrive are:
Guatemala,Nicaragua,El Salvador, Panamá , Bermuda, Bahamas, Grand cayon, Antigua etc.
Thus Money laundering is a mense to deal with by Fraud Examiners, Federal agencies,tax authorities and Governments.
The following are various Movies and TV serials were Money laundering activities and methods used in Money Laundering are
4.The Dark Knight
10.House of Cards
11.Wolf Of Wall Street
14.Rush Hour 2
15.Micky Blue Eyes
16.Bad Boys II
Refer to the following website too: