The securities sector is one of the core industries through which persons and entities can access the financial system. This report shows that the securities sector provides opportunities that criminals may also exploit. This sector is characterised by the speed of executing transactions; its global reach and its adaptability. Indeed, new products and services are developed constantly, in reaction to investor demand, market conditions, and advances in technology. Product offerings are vast and often complex. Some are intended for sale to the general public and others tailored to the needs of a single purchaser.
Additionally, a considerable number of transactions are conducted electronically and across international borders. All these characteristics make the securities sector attractive to those who would abuse it for illicit purposes.
This FATF study describes (i) how criminals might be able to use securities firms to launder money and finance terrorism and (ii) how illicit funds can be generated through fraudulent activities.
The report contains case studies that illustrate the risks associated with the various types of intermediaries, products, payment methods and clients involved in the securities industry. It also identifies that some areas of vulnerability are not necessarily unique to the securities industry: indeed, some money laundering schemes involve types of products and transaction that exist in the banking and insurance sectors as well.
Suspicious transaction reporting in the sector remains relatively low, which appears to be explained by a number of factors, including a lack of awareness and insufficient securities-specific indicators and case studies.
Additionally, a considerable number of transactions are conducted electronically and across international borders. All these characteristics make the securities sector attractive to those who would abuse it for illicit purposes.
This FATF study describes (i) how criminals might be able to use securities firms to launder money and finance terrorism and (ii) how illicit funds can be generated through fraudulent activities.
The report contains case studies that illustrate the risks associated with the various types of intermediaries, products, payment methods and clients involved in the securities industry. It also identifies that some areas of vulnerability are not necessarily unique to the securities industry: indeed, some money laundering schemes involve types of products and transaction that exist in the banking and insurance sectors as well.
Suspicious transaction reporting in the sector remains relatively low, which appears to be explained by a number of factors, including a lack of awareness and insufficient securities-specific indicators and case studies.
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