#QuickBiteCompliance Day 35
Understanding Beneficiaries in Financial Crime – An Explainer for Everyone
In financial transactions, the beneficiary is the person or group who receives the benefits or the money. Beneficiaries can be people, companies, or even families set up in legal structures like trusts. However, in the world of financial crime, the term “beneficiary” often takes on a darker meaning.
Here are two ways we can think about beneficiaries:
1. Beneficiaries of Transactions: Think of them as the person getting the money in a wire transfer or payout. Let’s say Aunt Lisa sends money to her nephew, Jake. In this case, Jake is the beneficiary. BUT… sometimes criminals use fake names to send money to themselves, making it look like it’s going to a “beneficiary” when it’s really just hiding money they stole or earned through illegal means.
2. Beneficiaries in Trusts: A trust is like a box where you put money or assets for safekeeping, sometimes for your family or other people. Trusts often last a very long time – up to 100 years! And while every trust must have a beneficiary (someone who eventually receives the assets), criminals can use these structures to hide who really benefits. They may claim the trust has “no existing beneficiary” or leave the true beneficiary hidden, making it harder for investigators to trace who’s getting the money.
How Do Criminals Use This? 🕵️
Layering: They move money through many bank accounts or trusts, making it nearly impossible to tell who the final “beneficiary” is.
Shell Companies: Criminals might create fake companies as beneficiaries. So, when money moves, it looks legitimate but is really heading to criminals.
In financial crime prevention, identifying the true beneficiary is crucial to stopping the flow of dirty money. By staying alert and understanding these tricks, we can help keep financial systems safe.
#InclusiveRegtech #OpenSourceAML #Beneficiary
Source: https://www.acams.org/en/resources/aml-glossary-of-terms
