Financial services provided by brokerage firms that enable individuals and entities to buy, sell, and hold various securities—such as stocks, bonds, mutual funds, and other investment products. Clients typically open brokerage accounts for self-directed or managed trading, with brokers facilitating trade execution, clearing, and related administrative functions.
Main/
Securities Brokerage
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Code
PS0027
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Name
Securities Brokerage
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Version
1.0
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Category
Wealth & Investment
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Created
2025-03-14
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Modified
2025-04-02
Related Techniques
- Fraudulently established brokerage accounts (directly by criminals or via money mules) allow illicit proceeds to be channeled into seemingly legitimate securities trades.
- High volumes of small transactions blend criminal funds into normal trading records, diluting red flags.
- Complex layering across multiple customer accounts and instruments obscures beneficial ownership and complicates detection.
- Criminals can present physical bearer bonds or negotiable certificates for trading or redemption, relying on minimal verification of the true beneficial owner.
- Brokers may struggle to confirm provenance of the instrument, enabling illicit proceeds to enter the financial system under the cloak of anonymity.
- Criminals purchase government or corporate bonds using illicit funds, disguising the true source of capital as legitimate investment proceeds.
- They may place ownership under relatives or third parties, concealing the ultimate beneficial owner and complicating due diligence.
- Interest and redemption payouts are then presented as ordinary investment returns, obscuring their criminal origin.
- Criminals can rotate authorized traders on brokerage accounts to obscure who actually controls the assets.
- Utilize corporate or trust structures to establish accounts, then repeatedly change listed ownership, complicating beneficial ownership tracing.
- Conduct rapid trades or transfers within these accounts to layer funds and mask the true financial trail.
- Criminals open or maintain brokerage accounts under multiple nominee names, frequently rotating authorized traders or owners to obscure who controls the securities holdings.
- Rapid or repeated changes to signatories inhibit transparent oversight and delay identification of the true beneficiaries.
- Criminals can set up multiple brokerage accounts to place matching buy/sell orders (wash trading), boosting perceived liquidity and interest in a security.
- Pump-and-dump ploys involve spreading false information to inflate share prices, enabling rapid sell-offs at manipulated highs.
- Facilitate direct purchase and sale of equities, allowing criminals to orchestrate manipulative trades across multiple accounts.
- Provide an interface to trade low-liquidity or penny stocks, enabling pump-and-dump and wash trading schemes where abnormal volumes or prices can obscure illicit fund origins.
- Criminals open or control multiple brokerage accounts and execute frequent buy/sell orders of the same stock between accounts they secretly own, creating illusory volume.
- This activity can distort market prices and mask illegal funds as legitimate capital gains or losses once the trades settle.
- Criminals exploit routine brokerage operations by placing offsetting buy and sell orders across multiple accounts or jurisdictions to disguise illicit funds as ordinary market activity.
- The same or linked beneficial owners control both sides of the trades, negating any real market risk while transferring value under the appearance of legitimate trading.
- Criminals can place near-simultaneous buy and sell orders for the same security using multiple accounts under their control, resulting in minimal net position changes while artificially inflating trading volume.
- This creates a wash trade environment that obscures the true source of funds, complicating AML oversight and investigations.
- Criminals leverage brokerage accounts to execute high-volume securities trades on non-public information, quickly generating illicit profits.
- Proceeds from these insider trades are then funneled across multiple accounts or intermediaries, obscuring the origin and ownership of funds.
- Rapid liquidation and subsequent distribution of profits to external accounts frustrates regulatory oversight and masking suspicious trading patterns.
- Provide the primary channel for trading, lending, and short selling of shares around dividend record dates.
- Brokers can coordinate rapid ownership transfers so multiple entities appear entitled to the same dividend credits.
- Collusion with complicit brokers enables timing trades to blur beneficial ownership, directly supporting duplicate tax refund claims.