A financial service involving contracts whose value is derived from underlying assets such as stocks, bonds, commodities, currencies, interest rates, or market indexes, including offerings like contracts for difference (CFDs). These services are typically offered by banks, investment firms, and other financial institutions.
Main/
Derivatives and Structured Products
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Code
PS0102
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Name
Derivatives and Structured Products
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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
- Criminals can engage in high-volume paper or digital gold trades without ever taking physical delivery, creating multiple transaction layers that obscure the origin of funds.
- These intangible positions allow for rapid purchase and sale cycles, complicating traceability when proceeds are eventually returned to the financial system.
- Hedging instruments and other derivatives are used to justify atypical currency movements, creating a facade of legitimate risk management.
- Complex transactions and rolling contracts mask the true origin and purpose of illicit funds, enabling layering in multiple currencies.
- Provide vehicles such as futures or options where spoofing, wash trading, or layered trades obfuscate the ultimate ownership and transaction flows.
- Enable complex hedging or offsetting positions designed to hide illicit proceeds among legitimate market activities.
- Allows setting up offsetting derivative positions in multiple jurisdictions under the same or related parties, obscuring actual ownership changes.
- Complex structured products can mask true economic intent, supporting rapid layering of illicit funds through seemingly legitimate hedging or arbitrage strategies.
- Allow criminals to enter matched positions or mirrored derivative contracts, producing artificially high trading volumes without true market exposure.
- These offsetting trades can disguise illicit proceeds as legitimate gains/losses, complicating funds traceability.