 |
Corporate Fraud. Falsification of financial information. Self-dealing. Detection and deterrence. Money Laundering. Money-Laundering Steps
|
|
|
|
Corporate Fraud
Some definitions of white-collar crime consider only offenses undertaken by an individual to benefit themselves. But the FBI, for one, defines these crimes as including large-scale fraud perpetrated by many throughout a corporate or government institution.
In fact, the agency names corporate crime as among its highest enforcement priorities. That's because it not only brings " significant financial losses to investors, " but " has the potential to cause immeasurable damage to the U. S. economy and investor confidence. "
Falsification of financial information
The majority of corporate fraud cases involve accounting schemes that are conceived to deceive investors, auditors, and analysts about the true financial condition of a corporation or business entity. Such cases typically involve manipulating financial data, the share price, or other valuation measurements to make the financial performance of the business appear better than it actually is.
For instance, Credit Suisse pleaded guilty in 2014 to helping U. S. citizens avoid paying taxes by hiding income from the Internal Revenue Service. The bank agreed to pay penalties of $2. 6 billion. Also in 2014, Bank of America acknowledged it sold billions in mortgage-backed securities (MBS) tied to properties with inflated values. These loans, which did not have proper collateral, were among the types of financial misdeeds that led to the financial crash of 2008. Bank of America agreed to pay $16. 65 billion in damages and admit to its wrongdoing.
Self-dealing
Corporate fraud also encompasses cases in which one or more employees of a company act to enrich themselves at the expense of investors or other parties. Most notorious are insider trading cases, in which individuals act upon, or divulge to others, information that isn't yet public and is likely to affect share price and other company valuations once it is known.
Other trading-related offenses included fraud in connection with mutual hedge funds, including late-day trading and other market-timing schemes.
Detection and deterrence
With the range of crimes and corporate entities involved so wide, corporate fraud draws in perhaps the widest group or partners for investigations. The FBI says it typically coordinates with the U. S. Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), Financial Industry Regulatory Authority, Internal Revenue Service, Department of Labor, Federal Energy Regulatory Commission, and the U. S. Postal Inspection Service, and other regulatory and/or law enforcement agencies.
Money Laundering
Money laundering is the process of taking cash earned from illicit activities, such as drug trafficking, and making the cash appear to be earnings from a legal business activity. The money from the illicit activity is considered " dirty" and the process “launders” the money to make it look " clean. "
|
|
|
With such cases, of course, the investigation often encompasses not only the laundering itself but the criminal activity from which the laundered money was derived. Criminals who engage in money laundering derive their proceeds in many ways including healthcare fraud, human and narcotics trafficking, public corruption, and terrorism.
Criminals use a dizzying number and variety of methods to launder money. Among the most common, though, use real estate, precious metals, international trade, and virtual currency such as Bitcoin.
Money-Laundering Steps
There are three steps in the money laundering process, according to the FBI: placement, layering, and integration. Placement represents the initial entry of the criminal’s proceeds into the financial system. Layering is the most complex step, as it often entails the international movement of funds. Layering separates the criminal’s proceeds from their original source and creates a deliberately complex audit trail through a series of financial transactions. Integration occurs when the criminal’s proceeds are returned to the criminal from what appear to be legitimate sources.
Not all such schemes are necessarily sophisticated. One of the most common laundering schemes, for example, is through a legitimate cash-based business owned by the criminal organization. If the organization owns a restaurant, it might inflate the daily cash receipts to funnel its illegal cash through the restaurant and into the bank. Then they can distribute the funds to the owners out of the restaurant’s bank account.
Detection and Deterrence
The number of steps involved in money laundering, along with the often-global scope of its many financial transactions, makes investigations unusually complex. The FBI says it regularly coordinates on money laundering with federal, state, and local law enforcement agencies, along with a host of international partners.
|
|
|
