Economics Issues of the Underground Economy Assignment

Over the past two Tuesdays, we have had guest speakers from Discover's Anti-Money Laundering operations here in the Columbus area. They covered a number of topics related to their statutory obligations, investigative activities, and risk evaluation. The following questions should be relatively straightforward if you attended the lectures and paid attention. If you don't recall the specifics, rest assured that all of this information is obtainable over the web from various sources. As an alternative, you may choose to contact group members who may be able to help refresh your memory.

1. A successful money laundering operation involves three steps: placement, layering, and integration. Please describe each of these steps in a couple of sentences. As a part of your answer, make sure to define 'Smurfing' and explain how it fits into the process.

2. Both sets of presenters discussed the concept of 'willful blindness'. Explain what this term means in a sentence or two. Give at least two examples of behaviors that might be described as willful blindness. Finally, discuss in 2-3 sentences what can happen to a bank that engages in this practice.

3. Four types of risk were discussed at length in the second presentation: customer risk, product risk, geography risk, and typology risk. Describe two of these types of risk in a couple of paragraphs, making sure to include several (3-5) examples of each risk type.

4. The anti-money laundering process involves five steps: Alert review, Case investigation, SAR, Escalation, and Continuing activity review. Briefly describe each of these steps. Make sure to carefully explain SARs, as they are the linchpin of the entire process, and the one that our presenters are most concerned with.