Financial Institution

• Provides the accounts and payment channels through which illicit VAT refunds circulate, often unwittingly used by criminals.
• May serve as a single hub for multiple related entities, making it difficult to identify cyclical or phantom trading activity.
• Faces challenges in detecting large-scale carousel schemes due to complex corporate layering and cross-border networks.

Financial institutions, including correspondent banks and trade finance providers, are exploited when criminals:

• Submit falsified settlement documents to access cross-border payment networks or secure trade finance.
• Exploit inconsistent data standards and multi-jurisdictional loopholes to evade detection.

Their reliance on documentary checks and routine processing can mask suspicious transactions, complicating efforts to trace illicit flows.

Financial institutions are unwittingly used once illicit cash is relocated. Criminals:

• Deposit or exchange currency in smaller increments below domestic reporting thresholds.
• Distribute these transactions across multiple accounts or branches to avoid red flags.

This reliance on sub-threshold structuring obscures the total volume of illicit proceeds entering the system.

Financial institutions receive TITO redemption proceeds as purported gambling winnings. These deposits hinder detection efforts because the original source of funds—large volumes of illicit cash—remains obscured by the casino-based conversion process.

Financial institutions are unwittingly exploited when:

• Providing financing (e.g., supply chain or invoice financing) based on forged invoices or fake payables.
• Processing payments to sham creditors that appear to be standard supplier or vendor disbursements.

This involvement undermines effective risk management and transaction monitoring, as the usual indicators of legitimate business activity are falsified.

Fraudulent payroll funds are deposited into bank accounts, merging illicit proceeds into the financial system. Since wages appear to originate from legitimate paycheck sources, standard monitoring and due diligence measures may not immediately flag these transactions.

These entities, including banks and insurance companies, are exploited when criminals:

• Overfund accounts or policies with amounts that exceed common premium or deposit thresholds.
• Receive partial surrenders, early withdrawals, or refunds that appear routine.

This practice obscures the illicit origin of the funds and complicates transaction monitoring, as financial institutions issue seemingly legitimate disbursements without clear indicators of wrongdoing.

Financial institutions, including banks and money services businesses, are exploited through:

• Opening or maintaining personal and business accounts across various branches or locations, allowing structured cash deposits.
• Rapid inter-branch or cross-border transfers and withdrawals, limiting a unified transactional view.

Although typically unwitting, their account infrastructure is leveraged to hide the illicit origin and flow of funds.

They are unwittingly exploited by:

• Accepting multiple small cash deposits, often below reporting thresholds, across various branches or counters.
• Providing channels (e.g., ATM services, teller windows) through which dispersed deposits obscure any single suspicious total.

This fragmented use of numerous locations hampers the timely recognition of illicit patterns.

Financial institutions are exploited once gold is liquidated by:

• Receiving purportedly legitimate proceeds from gold sales, masking the illicit origin of funds.
• Providing banking channels through which criminals reintegrate laundered profits into the formal economy.

Financial institutions are unwittingly exploited to:

• Receive deposits and process payments disguised as ordinary commercial transactions.
• Facilitate cross-border transfers that layer proceeds from forced labor or sexual exploitation, hindering detection due to the routine nature of account activity.

Legitimate banks and non-bank financial entities are targeted and exploited through infiltration. Criminals:

• Weaken or override internal governance and compliance mechanisms, bypassing due diligence.
• Funnel illicit proceeds through standard account services and cross-border relationships.

Once compromised, the institution becomes a conduit for significant laundering operations, facing severe reputational, legal, and regulatory risks.

Criminals unwittingly exploit financial institutions by distributing transactions across different accounts or branches:

• Each institution or department sees only its own limited portion of deposits, transfers, or withdrawals.
• Without a unified view, compliance controls struggle to link seemingly unrelated transactions, allowing launderers to maintain anonymity.
• This siloed approach diminishes the likelihood of detection, as no single institution can assemble the full picture of suspicious movement of funds.

Financial institutions are unwittingly exploited as gateways for loan proceeds and repayments.

• Loan officers may rely on incomplete or falsified documentation when approving or servicing loans, creating openings for laundering.
• The normal lending and repayment processes help criminals integrate illicit funds, reducing transparency for subsequent due diligence.

Financial institutions are exploited through micro-structuring by:

• Processing multiple small cash or electronic deposits that individually appear below suspicious transaction limits.
• Handling high volumes of minor transactions across different branches or channels without immediately recognizing a larger coordinated scheme.

These fragmented deposits strain conventional monitoring tools, allowing illicit funds to pass undetected.

Financial institutions hold and transfer funds after each currency conversion step, providing accounts and wire services that criminals use to further layer illicit proceeds. By dispersing transactions across multiple institutions with differing AML standards, criminals increase complexity and reduce the likelihood that any single bank or regulator will detect the entire laundering chain.

Financial institutions are unwittingly exploited when:

• Criminals open accounts under different national identities, circumventing consistent KYC checks.
• Multiple passport details mask the link between separate accounts, undermining beneficial ownership tracing.
• Varying identity documents reduce the efficacy of transaction monitoring and red flag detection.

Financial institutions are exploited when:

• Criminals present separate but identical invoices to different branches or departments, each believing it is financing a distinct transaction.
• Letters of credit, loans, or other credit lines are approved based on duplicate trade documentation, unwittingly funding a single shipment multiple times.

This fragmentation among multiple financial providers obscures the money trail and amplifies the layering of illicit proceeds.

Financial institutions, including banks and money services businesses:

• Issue negotiable instruments that criminals exploit by making multiple, lower-value purchases to avoid triggering cash deposit red flags.
• Are unwittingly used to convert illicit currency into legitimate-seeming payment forms.
• Face challenges in tracing the original source of funds once these instruments are deposited or redeemed across multiple accounts or institutions.

Financial institutions hosting or administering pension accounts are exploited when:

• They receive unusually large or frequent contributions misrepresented as retirement savings.
• Their systems are used for multiple rollover transfers, complicating transaction monitoring and source-of-funds checks.
• Illicit funds are eventually dispersed as routine pension disbursements, shielded under standard retirement processes.

Financial institutions are exploited as unwitting lenders by:

• Accepting inflated or fictitious export orders and associated documents at face value.
• Providing short-term pre-shipment financing (e.g., packing credits, working capital loans) without rigorous verification of shipping or buyer details.
• Receiving repayment from illicit funds disguised as legitimate export proceeds, effectively laundering criminal funds under the guise of normal trade transactions.

Financial institutions offering remote deposit capture can be unknowingly exploited when:

• Automated workflows allow remote submission of high volumes of suspicious checks without in-person verification.
• Limited monitoring or delayed suspicious activity reporting overlooks sequential or duplicate deposits.

Once fraudulent deposits clear, subsequent rapid transfers increase challenges in tracing and preventing further illicit transactions.

Financial institutions unwittingly process cross-border payments related to remote mining by:

• Handling wire transfers labeled as legitimate hosting, equipment, or energy costs.
• Receiving or sending substantial amounts that may originate from illicit sources.

These transactions complicate detection efforts, especially if the receiving mining operator lacks AML controls.

Financial institutions are exploited when criminals:

• Abuse limited or automated remote onboarding tools by submitting altered or stolen identification documents.
• Recycle the same device or IP address for multiple fraudulent account registrations.
• Leverage inadequate ID checks or insufficient transaction monitoring to maintain illicit accounts undetected.

Financial institutions, including both lead arrangers and co-lenders, enable syndicated trade loan manipulation by:

• Relying on the lead arranger's primary KYC check while performing limited or no independent due diligence.
• Accepting inflated or falsified trade documentation, which criminals use to justify higher financing amounts.
• Disbursing loan proceeds across multiple accounts, creating fragmented oversight and making it more difficult to detect suspicious activities or beneficial ownership.

Financial institutions are unwittingly exploited in this technique because:

• Their threshold-based monitoring rules are tested with repeated low-value transactions, revealing the points at which alerts are triggered.
• Once criminals learn these limits, they structure larger illicit transfers to remain under the identified thresholds, circumventing the institution’s existing AML controls.

Financial institutions are exploited by criminals using virtual IBANs that mimic standard IBAN formats, concealing the fact that multiple references route back to the same underlying account. This deception hinders beneficial ownership identification and complicates transaction monitoring, thereby weakening AML efforts.

Financial institutions, including correspondent banks, are unwittingly exploited by:

• Processing consecutive wire transfers across multiple jurisdictions, each appearing routine in isolation.
• Handling split transactions that remain below reporting thresholds, hindering detection.
• Lacking consolidated oversight of layered transfers that traverse different institutions, complicating investigators’ ability to track proceeds.