27 Sep The MOST used methods by criminals to launder money
The ways to launder money are revolutionizing as the criminals have come up with creative ways to launder their illicit funds. But unfortunately, their creativity comes at a cost to your business if you are unable to detect and prevent this money from entering your system. These costs include fines, imprisonment, and reputation damage.
While you might be aware of some of the more common money laundering techniques, here is a detailed description of the methods of money laundering:
Smurfing
A commonly used money laundering method, smurfing involves the use of multiple individuals and/or multiple transactions for making cash deposits, buying monetary instruments, or bank drafts in amounts under the reporting threshold (normally around $10,000). The illegal act of splitting cash deposits or withdrawals into smaller amounts, or purchasing monetary instruments, to stay under a currency reporting threshold. Money launderers use structuring to avoid triggering a filing by a financial institution. The technique is common in jurisdictions that have compulsory currency reporting requirements.
Online Marketplaces
The more there are opportunities of earning additional income off of the resources the more there is a rise in micro-merchants, individuals who offer their products or services through an online marketplace. It all adds up to a huge economy with massive transaction volume and thus a tempting target for money launderers. In one example, money launderers make fake bookings and share the revenue with the host, and the value can add up quickly. Proper risk management techniques and effective due diligence procedures will help protect your business.
Electronic Money
There are many ways in which a criminal can illegally acquire money electronically. Whether it’s through malicious malware, phishing, account takeovers, or other vectors, a commonality across all these attack methods is that fraudsters will need to move the illicit funds fast to avoid being caught and have the sum confiscated. Stored-value cards allow electronic money to be put onto the card directly and then used to purchase goods and services.
Offshore Accounts
Individuals can transfer stolen funds into an offshore account in a locale where bank secrecy laws are not very strict. These countries and territories are often referred to as tax havens. Financial institutions, trusts, shell corporations, and other financial groups in these regions may welcome money from almost anywhere and often do not require disclosure of information regarding where the money originated from. In turn, these institutions do not file any reporting back to the country in which the funds were generated.
Anonymous Shell Accounts
A shell company, bank, account, or corporation is an entity that conducts no real business. It is essentially a cover used to hide and move funds. The purpose of these accounts is to deceive others into thinking the business is legitimate while laundering money and evading taxes.
Money Mules
A money mule is a person who receives and transfers funds acquired illegally for others. Most mules receive a commission for their efforts. When bank accounts are compromised by cybercriminals and international organized crime groups, money mules are an essential part of moving victims’ money through the financial system and assisting criminals in cashing out the compromised accounts.
In the past money mules were known to cross borders with money strapped to their bodies, travelling with brief cases full of notes or simply stuffing money in the tank of the car criminals are never short of creative ideas.
Casinos
In recent years, the Financial Crime Enforcement Network placed regulatory requirements on casinos due to the large sums of money and the high frequency of transactions at these establishments. Not every country and territory follows these guidelines, however, allowing savvy criminals another pathway to move their illicit funds. A recent example of this is a Bangladesh bank heist where cybercriminals targeted the SWIFT system to move the money before extracting it through a casino in the Philippines.
Another way used to launder money is criminals would buy thousands of dollars’ worth of casino chips in an established casino with low AML rules and then request the chips to be moved around the different casino branches around the world and ultimately withdrawing the money as “winnings”
Cryptocurrencies
Virtual currencies, cryptocurrency, a digital currency designed to work as a medium of exchange, offers another avenue for money launderers to clean their money. The increasing use of OTC bitcoin brokers can transfer millions of dollars in bitcoin across international borders until you have a way to stop this process, criminals will keep on harming the societies and economies.
The minimum controls and KYC process implemented by some of these crypto brokers and exchanges make it an ideal place for money launders to use.
Shell Bank
The bank that exists on paper only and that has no physical presence in the country where it is incorporated or licensed, and which is unaffiliated with a regulated financial services group that is subject to effective consolidated supervision. Although there has been a crackdown on doing business with Shell Banks they still exist in certain jurisdictions.
Instant Messaging
There are many other instant messaging payment apps used by people around the world. For example, Facebook’s Messenger Chat service has integrations with PayPal, MasterCard, American Express, TransferWise and Western Union. All these accounts and transactions make for another sweet target for money launderers. While the volume and number of accounts are enormous, all the transactions are digital, making tracking and monitoring for illegal activity that much easier. Thus, larger organizations can enable sophisticated pattern recognition systems that highlight questionable activities and accounts.
Gift Cards
Gift cards are big business. Fraudsters copy the serial numbers of the cards, scratch off the security code, and then cover them up. Then, when the card is activated, they can access the funds on the card. While they can’t redeem the funds for cash directly, they can use them to buy products that they sell for cash. Moreover, by using stolen debit or credit cards, they quickly purchase prepaid cards in bulk. They can then sell for cards for cold, hard cash. If they aren’t caught in the act of using the stolen cards, it’s very difficult to trace these culprits.
Online Games
Typically, online games involve setting up numerous accounts in multiple jurisdictions, purchasing in-game credits and transferring those credits around to wash the money. They can extend the crime by exploiting hacks of the game to create more virtual loot, create spoofing accounts to steal other player credits, or even using forced labor to generate credits. As these virtual worlds continue to grow and their virtual economies deal with larger sums of money, money launderers will no doubt come up with other models to hide their funds.
Well there you have it, some of the most common methods used to launder money, although some are creative and take careful planning to be carried out, if caught by the authorities we are sure the creativity wont help to get them out of a hefty prison sentence.
If you wish to watch the video version please see below:
No Comments