What defines a money laundering typology?

A money laundering typology is defined as a method used to disguise illegally obtained money. This definition emphasizes the techniques or strategies employed by criminals to make illicit funds appear legitimate. Understanding typologies is crucial for anti-money laundering (AML) professionals because it enables them to recognize patterns and behaviors that may indicate the presence of money laundering activities.

By identifying these methods, financial institutions and regulatory bodies can implement appropriate measures to detect, prevent, and report suspicious activities. Moreover, knowing the various typologies allows compliance professionals to develop targeted training and inform their risk assessments, ensuring they remain vigilant against evolving money laundering risks.

In contrast, the other options do not encapsulate the essence of money laundering typologies. A specific financial product pertains to the tools available in the market, a legal business model focuses on legitimate operations, and a regulatory compliance framework involves the guidelines and obligations that institutions must follow, none of which directly address the techniques used to launder money.