Virtual Private Network

VPN usage employs encryption and proxy routing to hide criminals’ true location and identity, making it harder for financial institutions to detect, investigate, or link suspicious transactions to them. The primary strategic objective of using VPNs is to continually evade AML scrutiny and preserve operational security.

This technique exploits weaknesses in the delivery channel by using VPNs to mask the user’s true location and identity. Criminals leverage encrypted network pathways to obscure their traffic, making it harder for financial institutions to detect suspicious geographic or transactional patterns in real time.

• Captures online banking events, including IP usage, device fingerprints, and account access details.
• Identifies consistent VPN usage in account opening or management activities.
• Supports AML investigations by correlating suspicious login methods with KYC records to detect potentially hidden user locations.

• Records the details of financial transactions, including timestamps, amounts, sending and receiving account data, and source IP information.
• Helps investigators identify high-value or structured transactions initiated from VPN endpoints.
• Supports unraveling layered funds by correlating masked IP addresses with suspicious transaction patterns.

• Provides user login records, including IP addresses, timestamps, device information, and geolocation data.
• Enables identification of known VPN or proxy endpoints and detection of sudden, improbable location changes.
• Facilitates investigation by correlating unusual login patterns with potential layering or obfuscation attempts.

Implement specialized alerts to detect transactional activity initiated from known VPN endpoints or exhibiting rapid geolocation changes. For instance, maintain updated lists of common VPN IP addresses and systematically flag high-value transfers originating from those addresses for immediate compliance review. This targeted monitoring addresses how VPN use conceals the origin and destination of funds, helping to disrupt layering attempts masked by anonymized connections.

Incorporate IP intelligence checks into login authentication and continuously monitor session behavior. If a customer frequently logs in from VPN-driven IP addresses or exhibits geolocation anomalies (e.g., improbable rapid movement across regions), require additional identity verification or block sensitive functions. By identifying and challenging suspicious VPN logins, institutions can reduce adversaries' ability to maintain anonymity.

Include VPN usage or consistent IP obfuscation among key indicators when developing a customer’s risk profile. Specifically, categorize repeated or unexplained use of anonymizing services as higher risk, triggering heightened transaction scrutiny and more frequent identity checks. This combats the core VPN vulnerability by focusing investigative resources on customers whose geolocation or identity is persistently concealed.

Share intelligence on suspicious VPN providers or frequently misused IP ranges with peers and law enforcement. For example, collaborate to maintain and update lists of high-risk VPN endpoints, enabling cross-institutional alerts and consistent identification of customers routing illicit funds via masked connections. This measure directly limits criminals' ability to exploit multiple financial institutions using the same obfuscation routes.

Temporarily suspend or limit certain high-risk services (e.g., large outgoing wires) if activity is identified from known VPN endpoints without legitimate justification. Require the customer to confirm their true location or business purpose before reactivating full privileges. By restricting potentially high-impact transactions initiated through concealed IP addresses, the institution disrupts adversaries' layering and anonymization strategies.

• Criminals use VPNs to mask their real IP addresses when creating or logging into online gambling platforms, making it appear as though they are operating from a different region or country.
• This allows them to deposit and withdraw funds in a manner that appears unconnected across various jurisdictions, complicating real-time AML monitoring and hindering attempts by casinos or regulators to confirm user identities and enforce location-based restrictions.

• Criminals use VPNs to obscure their true IP addresses and bypass geolocation checks when opening or accessing bank accounts remotely.
• By posing as legitimate users from acceptable jurisdictions, they circumvent location-based AML controls, enabling them to deposit and layer illicit funds with reduced scrutiny.
• This tactic makes it harder for financial institutions to identify suspicious cross-border activities or detect account usage inconsistencies tied to high-risk regions.

• Criminals use VPN connections to conceal their true IP addresses when buying or selling NFTs on online marketplaces, making it more difficult to verify the origin of transactions.
• By routing bids, purchases, and sales through different VPN endpoints, illicit actors can layer funds across multiple NFT transfers without revealing consistent geographic or account ownership patterns.

• By routing transactions through a VPN, illicit actors obscure their real network location, preventing exchanges or blockchain analytics from detecting suspicious or sanctioned jurisdictions.
• This obfuscation eases the layering process by allowing rapid transfers across multiple cryptocurrency addresses without raising location-based alerts.
• VPN-encrypted connections further complicate compliance tools designed to monitor aberrant transaction patterns tied to recognized high-risk areas.

• Criminals enhance anonymity by combining VPN services with privacy-focused cryptocurrencies, such as those using stealth addresses or ring signatures.
• The VPN conceals the IP addresses involved, complicating efforts to connect on-chain privacy mechanisms to specific users or locations. This increased secrecy hinders investigators' attempts to link deposits, transfers, and withdrawals to the true origin of funds.

• VPN usage conceals the wallet user’s actual IP address, making it appear as if the wallet is accessed from a permissible or low-risk region.
• This deception hinders monitoring efforts that rely on geographic patterns or IP-based risk assessments, complicating the identification of suspicious wallet activity.
• Criminals can funnel or layer illicit funds through multiple wallet addresses across VPN endpoints, increasing anonymity and impeding investigators’ ability to trace the true origin of transactions.

• Criminals route transactions through public blockchain networks while connected via VPNs, masking their true IP addresses to make user locations and access patterns appear legitimate or geographically scattered.
• This obfuscation hinders financial institutions and investigators attempting to correlate blockchain transaction data with known IP addresses, complicating the identification of underlying illicit users during the layering stage.

• Criminals top up and manage prepaid cards or digital wallets from behind a VPN, making their IP location appear to come from a legitimate or low-risk country instead of their true jurisdiction.
• Repeatedly shifting VPN endpoints across multiple sessions obscures consistent usage patterns and prevents financial institutions from flagging suspicious cross-border or high-risk activity tied to a specific location.

• Criminals can hide their IP addresses when trading, appearing to operate in low-risk areas despite being physically located in high-risk or sanctioned regions.
• VPN-based anonymity complicates detection of potentially correlated or suspicious transaction patterns between buyers and sellers.
• This heightened secrecy enables layering activities by allowing trades to remain off regulators’ radars.

• Criminals can conceal their actual IP address and jurisdiction, preventing the exchange from identifying or blocking high-risk geolocations.
• This camouflage complicates cross-border compliance checks, as users may appear to be operating from a location with less stringent AML requirements.
• Law enforcement efforts to pinpoint the real origin or destination of digital asset flows are hindered by the VPN layers, easing layering attempts.

• VPN usage masks user location, thwarting region-specific transaction filtering or velocity checks.
• Fraud detection tools relying on IP-based rulesets are less effective, potentially enabling layered transactions that evade typical red flags.
• This anonymity can hamper monitoring of suspicious payment routes and undermine due diligence protocols.

• By routing connections through a VPN, illicit actors obscure their genuine geographic location, complicating KYC and verification processes.
• Investigators face additional hurdles in tracing or linking suspicious activities to a real user, as typical IP-based controls are circumvented.
• This heightened anonymity can facilitate layering and movement of illicit proceeds via digital wallet balances.

• VPN usage allows customers to open or access digital banking services undetected from sanctioned jurisdictions or flagged IP ranges.
• Banks reliant on geolocation indicators face blind spots, inhibiting real-time detection of potential cross-border laundering activity.
• This level of anonymity eases layering efforts by disguising the origination and destination of funds in digital transactions.

• VPN usage cloaks the true origin of a wire transfer, undermining location-focused AML controls used to detect potentially high-risk or sanctioned jurisdictions.
• Disguised IP addresses reduce the effectiveness of system alerts triggered by unusual geographic patterns or impossible travel times.
• This obfuscation can assist criminals in layering funds across multiple accounts in different nations.

Illicit operators use VPNs to:

• Obscure their location and identity when opening or managing accounts, initiating fund transfers, or carrying out digital wallet activities.
• Encrypt their communications, reducing the likelihood of detection by financial institutions' monitoring systems.
• Layer illicit proceeds by routing transactions across multiple jurisdictions, complicating investigative efforts to trace funds back to their true origins.