Protect your money by gaining greater insights on how banking can work for you. For tips on your banking success, just ask Alex, our expert banker. Learn more about what it means to money launder. Explore how “savings bonds” work and how they might benefit you. Understand more about the Nationwide Mortgage Licensing System (NMLS) and why NMLS appears on bankers’ business cards.
Question: How do people launder money? – Jason from Rochester, New York.
Answer: Money laundering is the process of making money earned through illegal activities, like drug dealing, prostitution, black market trade and human trafficking, appear legitimate. Criminals do this because having large amounts of illegal cash is quite inefficient and poses a major risk. There are several ways, ranging from simple to complex, for criminals to place illegal money into the financial system. The most common is to use “legitimate businesses” owned by criminal organizations that are cash intensive (i.e. laundromats, strip clubs, casinos and restaurants). The daily cash deposits made to financial institutions by these businesses come from a combination of legitimate and illegitimate bills. Another way to launder money is through structuring. That is when a criminal makes multiple small cash deposits through several different accounts to avoid detection. This is done because financial institutions are required by law to report cash transactions of more than $10,000 a day to an individual account. Once funds from illegal activities are placed into the financial system, they are taken out in the form of wire transfers, cashier’s checks, money orders and gift cards.
Question: What are savings bonds? – McKenzie from Huntington, West Virginia.
Answer: A United States savings bond is defined as “a debt security issued by the U.S. Department of Treasury to help pay for the U.S. government’s borrowing needs.” In other words, the buyer of a savings bond lends the government money. When the buyer redeems the bond, the government pays back the money borrowed with interest. There are two types of savings bonds. First, there is the Series I savings bond. It is issued for a period of 30 years and sold at face value. That means the buyer pays $100 for a $100 value bond. The interest rate is tied to the inflation rate which is determined by the Consumer Price Index (CPI). Second, there is the Series EE savings bond. The paper bonds, discontinued as of January 1, 2012, were issued at a 50% discount. Now purchased electronically, they are also sold at face value. The Series EE has a fixed rate of return in which the government guarantees the bond will at least double its face value in 20 years. For more information regarding savings bonds please go to treasurydirect.gov.
Question: My banker gave me her business card and it has an NMLS number. What does that mean? – Rochelle from Gulfport, Mississippi.
Answer: The Nationwide Mortgage Licensing System (NMLS) was formed in 2008 when the Secured and Fair Enforcement for Mortgage Licensing (SAFE) Act was passed. It requires all mortgage loan originators to be federally registered. The public can view the profiles of all licensed NMLS individuals through the NMLS Consumer Access website. The record includes the individual’s NMLS number, name, business phone number, employment history and any disciplinary actions. Without a NMLS number, a banker or mortgage officer can’t process any home loan applications. This includes mortgages, home equity loans or home equity lines of credit.
Written by: Alex Sanchez, Branch Manager
Important: For your specific questions about banking, contact your banking expert, Alex, at: email@example.com
Alex is starting his 17th year in the banking industry. He has worked for such notable banks as Bank of America, US Bank, and Chase. Alex has his bachelor’s degree in Business Economic from the University of California Riverside.