Bank : Kiting And Money Laundering

The First Security Bank (FSB) of Malta, Montana fall victim to a crime of credit card fraud, money laundering, and embezzlement. The crime stared a small city in Montano with a couple thousand, who was startled from the crime. The vice president of operation of the bank was a pillar of the community and the suspect of the bank’s crime. The scheme was committed over a long period of time. This crime weakens the foundation of the bank and possible may run it out of business. The committee was in a frenzy with the bank and the suspect about spending the community’s money. The shareholders gave the president “30 days to clean up the bank or pawn the bank off to another financial institution.” (Volz p.1) However, the bank pulls through the crisis and gains more customer as the business begins the recover period.

This would halt if not shut down the entire bank for the day depending on how severe the attack was. In most cases the banks have a backup system in place in the event of these types of security breeches as well as natural disasters. During a security breech within the banking system everyone who does business with that bank and other banks who do business with that bank could all be effected if the breech went far enough before being discovered. The security teams within the banking system must always be constantly checking for attempts or attacks on their systems. Below is a list and description of the most common types of attacks on the banking or financial industry.

Three women from Cleveland were discovered conducting a scheme where they were found to be orchestrating a check kiting scheme. The three women attempted to run the money through a casino called The Horseshoe Casino and then withdrawal the money. The women were individually charged with multiple attempts to commit bank fraud. Two of the women forged checks and withdrew the money as cash. The ladies also passed bad checks and stole from banks. The group also used outside individuals to open bank accounts and pass over debit cards to women in the group. Their fraudulent actions accounted to total to 165,000 dollars. The fraud committed by the group of ladies is known as check kiting. The ladies fraudulent activity was discovered by special agents

Banks could become victim to kiting. Kiting can occur within a bank because criminals will open multiple accounts within multiple organizations in order to commit kiting, and bank employees are not aware the criminal has already opened multiple accounts. Banks also fall victim, as they do not detect kiting taking place until it is too late and the high dollar checks come back as insufficient funds.

Although these services seem irrelevant, they are key to the function of regular banks as well as the federal government. One of these services is check clearing, “a service provided by the Fed to report receipts and expenditures of bank clients”(Meek 2011). Each federal district processes millions

Criminalisation is a central tenet of any credible anti-money laundering (AML) regime. The principal offences related to money laundering in Australia are contained in division 400 of the Criminal Code Act 1995(Cth) (the Criminal Code), which applies to both ‘proceeds’ and ‘instruments’ of crime. Recognising the wide array of channels used to launder funds, the provision is framed in broad terms and has been relied on to prosecute individuals in a variety of circumstances. This versatility has been acknowledged by the courts with the NSWCA in Milne v R asserting that ‘the money laundering offences in section 400 constitute a 21st century response to antisocial and criminal conduct commonly with international elements’. Through the remainder of this presentation I will outline the evolution and background of these offences, their elements, application, and

The Financial Stability Board (FSB) to improve recommendations to support the oversight and instruction of the shadow banking system by mid-2011 in collaboration with other international standard setting bodies. The FSB formed a task force to develop initial recommendations for discussion that would set out potential approaches for monitoring the shadow banking system; and explore possible regulatory measures to address the systemic risk and regulatory arbitrage concerns posed by the shadow banking system.

Briefly explain the rise and fall of LTCM. What was the moral hazard issue the fed was worried about? How did they try and get around the moral hazard issue? What specifically was the Fed's role in the bailout? What roles specifically did Bear play and not play in the LTCM's life and death?

Third-party bill paying services are often misused to commit check fraud. The checks produced by these service providers do not include the payor signature. Instead, the signature line reflects something such as "signature on file." Unauthorized checks produced by third-party payment services are usually not detected until the customer reviews the monthly bank statement. By the time the customer identifies the unauthorized check, it is often too late to recover the funds since the "24-hour window" (actually until midnight of the next banking day) for the timely return of checks has long since passed. These checks usually sail right through the check clearing system, since they include good account information and sometimes even include good

The Prevention of Money-Laundering Act, 2002 (PMLA) was enacted to safeguard against those acts of persons which are aimed at making tainted money appear as untainted. To take a simple example, if a person earns money through, say, dealing in narcotic drugs and thereafter takes some steps whereby it appears to have been earned through some legitimate business, such as running a laundry shop (the classic example), it is money-laundering . Thus, the ingredients of the Act are clear: there has to be an offence, monies have to be earned through such offence and then an act should be made delinking such earnings from the offence and linking it with another act that is not an offence .

Money laundering to transnational organized crime operations because if their cash was not able to merge with legal business then the offenders would easily be discovered and their income would not be legitimate (Albanese, 2011). This process allows criminal proceeds to be disguises from their original origin(Albanese,2011). Transnational organized crime at times can go unnoticed and even unsolved because money laundering is not just a trade but an irreplaceable mechanism of every other illicit trade and when these activities experience a surge, it pushes more into the laundering cycle(Naim,2005).

A common term used throughout organized crime is loan sharking. Loan sharking is known as

Congress crafted a broad statute designed to criminalize the actions of anyone who knowingly participated in an illicit transaction, regardless of its magnitude or dollar value. Although the current money laundering statute is broad and general, there is widespread agreement that it does not criminalize the mere act of spending money generated by the illegal criminal activity. This helps hold the accountability for individuals engaged in criminal activity. Spending money by making a purchase or entering into a transaction is not necessarily a crime, even if the party spending the illegally gained money knows that the money came from illegal activities. Rather, in order to run afoul of the law, there must be direct or circumstantial evidence

Money laundering has been defined as the process by which criminals attempt to conceal the illicit origin and ownership of the proceeds from their illegal activities. Criminals obtain the money from their illicit activities such as drug trafficking, fraud, etc. From that point forward, three stages are to happen in order for the crime of money laundering to be committed. The first stage is placement. Placement means the cash is deposited into banks. The second stage is layering meaning the funds are moved into other financial institutions to throw off any suspicions of its origins. The final stage is integration which simply means the money is used for legitimate assets such as purchasing a house or investing in stocks and other things of that nature.

Offshore banking is the action of having a bank account outside of the country of residence. Typically it offers many advantages like greater privacy, low or no taxation, easy access to deposits and protection against local, political, or financial instability, but has also been popular for its use of illegal practices like money laundering and tax evasion. Those against offshore banking view its illegal reputation and predict that it will only cause further damage like providing fund for terrorism or holding underground economies. However other experts believe that offshore banking is a safe haven for depositors and has had a substantial impact on the international economy in today’s world.