Third-Party Payments

Third-party payments explicitly introduce one or more additional steps—via external individuals or entities—between the criminal and the illicit funds, fragmenting the audit trail and making it harder to trace proceeds back to their criminal source. This added transactional complexity is a hallmark of layering.

Criminals rely on external third-party account holders or proxies (e.g., friends, family, shell associates) to disguise beneficial ownership and complicate due diligence. By routing transactions through unrelated individuals, the true owners of illicit funds remain hidden from financial institutions, undermining AML customer identification processes.

Use of third-party payment services or aggregator platforms allows criminals to mask or omit payer details. This channel vulnerability makes it harder for institutions to link incoming funds to the true source, impeding effective monitoring and beneficial ownership checks.

Aggregates risk profiles for countries and financial institutions, highlighting those with AML/CFT weaknesses or high corruption rates. Identifying multiple third-party payments originating from high-risk jurisdictions helps flag transactions that deviate from a customer’s usual geographic profile and may signal laundering attempts.

Captures all incoming and outgoing payments, including payer details, timestamps, and transaction references. This allows institutions to identify recurrent or unusual third-party payers who have no apparent relationship with the primary account holder, helping to flag potential attempts to obscure beneficial ownership.

These records provide details on the authorized borrower, repayment terms, and declared funding sources for loans and credit lines. By comparing actual repayments against documented agreements, financial institutions can detect suspicious third-party payments or structured deposits by individuals not listed in the contract, thereby uncovering potential layering or disguised ownership of funds.

Comprises invoices, bills of lading, and other shipping records that identify the official buyer, seller, and payment terms. Comparing these records against transaction data helps detect discrepancies when a third party, not named in the trade documents, makes or receives payments, indicating potential concealment of real beneficiaries.

Contains verified information on customer identities, beneficial ownership, and documented risk assessments. By cross-referencing depositors’ identities with these records, institutions can detect incomplete or inconsistent details provided by third-party depositors, revealing hidden ownership or suspicious funding sources.

Apply deeper scrutiny when accounts receive large or frequent deposits from external parties. Verify the actual relationship between the outside payer and the beneficiary, confirm the source of funds, and identify any hidden beneficial owners to prevent collusion or layering through undisclosed third-party involvement.

Require prospective customers to disclose anticipated third-party depositors during onboarding and verify the identities of these external payers. Disallow transactions from unknown or unverified third parties, ensuring a fully documented chain of ownership to prevent anonymity in the payment flow.

Implement scenario-based monitoring rules to detect repeated or structured third-party deposits with no clear link to the account holder, particularly from high-risk locations or involving contradictory payer details. Flag frequent partial payments from unconnected external accounts and promptly escalate them for investigation or enhanced checks.

Screen all third-party payers or depositors against sanctions lists and watchlists. Immediately suspend or investigate transactions involving matches to high-risk jurisdictions, ensuring external payers cannot exploit unmonitored channels to conceal illicit funds.

Train frontline and compliance teams to recognize signs of third-party payment abuse, such as incomplete payer details, unknown relationships to the beneficiary, and structured or repetitive small deposits by multiple outside parties. Prompt escalation ensures swift intervention before criminals fully mask the origins of funds.

Check publicly available records, business registries, and media sources to validate the identities of outside payers. If discrepancies or negative information surface, escalate for a deeper review to determine whether third-party depositors are complicit shell entities or linked to known criminal networks.

Restrict or suspend services when multiple unexplained third-party payments emerge, particularly if depositors evade identification. Institutions can limit account features or freeze payments until the external payer’s legitimacy is proven, blocking further exploitation of anonymous payment avenues.

Continuously revisit and update customer risk profiles to track emerging third-party payment patterns. If outside contributors repeatedly appear without valid business or personal ties, initiate targeted transaction reviews, enhanced due diligence (EDD), or other heightened measures.

Compare transaction details, invoices, and shipping documents to verify that the paying entity matches the named buyer or seller. When third-party payers appear without justified commercial roles, investigate for potential layering and disguised ownership of funds.

• Criminals instruct unrelated third parties to issue checks from personal or business accounts on the criminal’s behalf.
• Transactions appear legitimate because the checks come from external sources, distancing the launderer from the funds.
• Using multiple payers and structuring amounts across various checks reduces flags for unusual account activity, complicating anti-money laundering oversight.

• Criminals instruct third parties, such as family members or associates, to deposit illicit funds into a bank account opened in the third party’s name, ensuring there is no direct link to the actual owner of the money.
• Multiple, smaller deposits by different, unrelated payers fragment the transaction trail to evade detection.
• This arrangement conceals the real beneficial ownership by making it appear that the funds belong to the nominal account holder rather than the criminal.

• Criminals supply illicit funds to third parties to purchase money orders, avoiding direct attribution of payer details.
• When consolidated under different purchaser names, the financial trail becomes segmented and more difficult to trace back to the true origin.
• Limited due diligence at the point of purchase makes it easier for criminals to exploit these instruments for layering funds.

• Criminals hand over physical currency to cooperating or unwitting third parties, who then deposit it under their own names.
• Since receipts and deposit records reflect only the third party, investigators struggle to link the cash back to the criminal.
• Repetitive, below-threshold deposits orchestrated by multiple individuals reduce scrutiny and hide the cumulative scale of illicit funds.

• Criminals direct multiple collaborators to load small amounts of illicit funds onto prepaid cards or e-wallets, sidestepping more rigorous bank account KYC.
• This pooling of value under assorted third-party names creates a fragmented deposit record, obscuring the ultimate ownership of funds.
• The stored-value instruments can then be used to settle bills, repay loans, or move balances to the criminal’s preferred accounts without revealing the criminal’s identity.

• Offenders leverage direct person-to-person transfers to route illicit proceeds via unrelated or unwitting senders.
• Minimal identity verification requirements and rapid transaction capabilities enable fast layering and disguise the ultimate fund owner.

• These services act as a middle layer between the payer and beneficiary, potentially masking the real beneficiary or origin of funds.
• Criminals instruct third parties to settle invoices or receive funds, complicating beneficial owner checks and audit trails.

• Criminals utilize intermediary or aggregator payment solutions to commingle funds, obscuring payer identity and origin.
• External third-party billers or automated payment gateways may omit or mask complete payer details, impeding suspicious activity detection.

• Criminals obtain loans or lines of credit and repay them in structured amounts via multiple external depositors.
• This fragments the origin of illicit funds among third parties, concealing the true source and layering proceeds through an apparently legitimate repayment process.

• Criminals can direct unrelated or complicit third parties to initiate or receive remittances on their behalf, obscuring true fund ownership.
• Structured or repeated transfers from multiple outside payers complicate beneficial ownership checks and hamper effective monitoring.

Criminals instruct family members or close associates to send or receive funds on their behalf:

• These individuals may be unaware or complicit, enabling offenders to layer illicit proceeds.
• Financial institutions struggle to confirm true beneficial ownership when transactions appear under trusted personal relationships.

Shell or front companies serve as third-party payers or recipients, despite lacking legitimate commercial operations:

• Criminals use these entities to layer or mask their control of funds.
• Financial institutions face challenges verifying genuine business activities or identifying ultimate beneficiaries.

Payment service providers, such as electronic billers or aggregator platforms, can be manipulated to process third-party payments:

• Criminals input incomplete or inaccurate payer details, obscuring the true account holder.
• Financial institutions see fragmented payer information, making suspicious activity detection more difficult.

Nominees formally hold accounts or assets in their own name, concealing the criminal’s true ownership:

• This makes it difficult for financial institutions to identify the ultimate controller of funds.
• Criminals exploit nominees to obscure direct links between illicit proceeds and their real source.

Money mules directly receive or transfer illicit funds on behalf of criminals:

• They often act as unwitting participants, depositing or withdrawing funds through personal accounts.
• This masks the origin and flow of proceeds, complicating financial institution monitoring and beneficial owner checks.