Complicit or Controlled FIs

Criminals deliberately secure or retain complicit Money Service Business (MSB) channels to bypass genuine oversight, enabling illicit funds to flow under the guise of standard money services without triggering AML controls. This is the primary objective, as it grants direct access to financial systems while subverting compliance mechanisms.

Criminals conceal or falsify the beneficial ownership of the MSB using nominee structures or shell companies, obscuring their true identities. This hidden ownership presents an elevated risk profile to counterparties, as it thwarts customer due diligence and masks who ultimately controls the funds.

Criminals take over or establish MSBs and subvert their internal governance. By installing complicit or corrupt compliance staff, they ensure suspicious transactions go unreported and bypass standard AML controls. The technique’s core vulnerability lies in compromised oversight and active manipulation of internal control frameworks.

• Includes data on individuals who hold (or have held) prominent public or political positions, along with known affiliations.
• Reveals if MSB owners, directors, or connected parties are PEPs, raising corruption and high-risk flags.
• Assists investigators in prioritizing scrutiny of MSBs potentially controlled or influenced by high-risk or politically exposed actors.

• Provides detailed records of financial transactions, including timestamps, amounts, parties, currencies, and transaction identifiers.
• Enables detection of large or round-figure transactions, layering across multiple MSB-owned accounts, and unusual volumes compared to the MSB’s declared operations.
• Supports AML teams in identifying and investigating transaction patterns that may indicate complicit or controlled MSBs masking illicit flows.

• Captures user actions within internal systems, including timestamps, login details, and administrative overrides.
• Identifies repeated or unjustified suppression of AML alerts, manual overrides of monitoring rules, and other complicit staff activities.
• Enables auditors and investigators to trace potential internal collusion that allows illicit transactions to remain undetected.

• Contains detailed staff employment data, roles, and affiliations within the financial institution.
• Reveals potential conflicts of interest or unusual staff assignments that could facilitate illicit activities.
• Supports internal investigations to identify complicit employees who may manipulate compliance measures or reporting processes.

Official or government-run registries of licensed MSBs include licensing status and operational details. Cross-referencing an MSB’s declared operations and ownership with these registries helps detect unlicensed or fraudulently acquired licenses, identifying potential front or controlled MSBs used for illicit transactions.

• Contains verified customer identities, business details, beneficial ownership information, and risk profiles.
• Highlights gaps or inconsistencies in customer onboarding and monitoring, such as employees creating accounts on behalf of multiple unrelated clients or bypassing KYC checks.
• Assists AML teams in detecting MSB staff collusion and subversion of internal controls used to hide beneficial owners or high-risk relationships.

• Documents cross-border payments, correspondent banking relationships, transaction volumes, and currency flows.
• Helps detect excessive or complex layering of funds through multiple MSB or correspondent accounts beyond established business needs.
• Supports AML investigations by highlighting international movement of funds indicative of controlled or complicit MSBs facilitating hidden beneficiaries.

• Provides official information on company registration, shareholders, directors, and ownership structures.
• Enables confirmation of an MSB’s declared ownership against actual beneficial owners, helping expose shell companies or undisclosed controllers.
• Aids in verifying whether the MSB is covertly owned or directed by criminals or high-risk parties seeking to evade detection.

Require in-depth verification of MSB ownership and management structures, such as cross-checking with official registries, confirming licensing and regulatory statuses, and evaluating any nominee or shell arrangements. Closely scrutinize compliance managers and key staff for undisclosed affiliations or negative media, ensuring that criminals cannot conceal ultimate ownership or install complicit staff to bypass oversight.

Implement targeted monitoring scenarios for MSB accounts, focusing on large round-figure movements, negligible holding periods, and rapid fund layering across multiple agent locations. Compare actual transaction volumes against the MSB’s stated business model to detect discrepancies that may indicate covert criminal ownership or complicit staff enabling illicit transfers.

Conduct ongoing due diligence of the MSB’s agent network, verifying that each sub-agent meets KYC and record-keeping standards and is subject to routine oversight. This measure reduces the exploitation of poorly monitored agents by criminals controlling or infiltrating the MSB’s extended network, ensuring complete visibility into high-volume or unusual transaction flows.

Mandate thorough background checks, including criminal record searches, financial misconduct history, and reference verification, on MSB owners, leadership, and compliance officers before establishing or maintaining business relationships. This step detects potential criminal infiltration within the MSB’s decision-making and compliance functions, mitigating the risk of complicit staff enabling illicit transactions.

Require periodic external audits of the MSB’s AML controls and governance to verify effective suspicious activity identification and reporting. Independent reviewers should examine override logs, staff escalation processes, and agent oversight procedures to detect hidden or suppressed red flags, ensuring that criminals cannot mask illicit activities by subverting internal compliance.

Restrict or deny the MSB’s access to high-risk services, such as large-sum foreign currency exchanges or multiple consecutive cross-border transactions, if it fails to demonstrate adequate AML controls or shows indicators of complicit ownership. Limiting high-risk channels prevents the continuous flow of illicit proceeds through compromised MSBs.

• Complicit MSBs maintain corporate bank accounts where they deposit illicit funds disguised as legitimate transactions. By controlling internal compliance, they avoid filing necessary reports on suspicious deposits.
• Criminals layer funds across multiple accounts and branches, making it difficult for regulators or partner financial institutions to detect unusual patterns or identify the true beneficial owners.

• Controlled MSBs issue multiple money orders below reporting thresholds, enabling criminals to convert large amounts of illicit cash into official-looking instruments.
• Complicit staff deliberately overlook suspicious structuring, thereby obscuring transactional trails and bypassing typical reporting requirements.

• Complicit MSBs specialize in currency exchange, enabling criminals to convert proceeds from one currency to another without triggering alerts.
• By neglecting suspicious activity reporting, the MSB blends illicit sums with normal exchange transactions, complicating tracing efforts by authorities.

• Under criminal control, MSBs accept large volumes of physical currency, often splitting deposits to avoid regulatory scrutiny.
• Staff intentionally ignores AML thresholds or reporting obligations, allowing criminals to integrate illicit cash directly into the MSB’s legitimate operations.

• Criminals use complicit MSBs to load illicit funds onto prepaid cards or digital wallets, circumventing robust KYC/AML checks.
• The prepaid balances can later be spent or withdrawn in different locations, effectively concealing the criminal origins and volumes of cash.

• Criminals can insert complicit staff or owners to omit suspicious transaction reporting, blending illicit proceeds with regular remittance flows.
• Large agent networks enable transactions to be divided among multiple outlets, obscuring patterns and hampering regulatory oversight.

• Controlled or complicit currency exchange locations allow criminals to commingle illicit funds with genuine currency conversions, concealing the true origin of funds.
• By shifting funds through multiple currencies, criminals create additional complexity and reduce transparency, thwarting AML monitoring efforts.

Complicit or subverted compliance employees within the MSB abet money laundering by:

• Failing to file required suspicious transaction reports.
• Overriding internal AML alerts or omitting negative indicators from customer documentation.

This hampers financial institutions’ ability to detect illicit flows, as key warning signs are removed at the source.

Organized crime groups covertly acquire or partner with MSBs to:

• Embed complicit owners or staff who manipulate compliance processes.
• Blend illicit funds with legitimate transaction flows while evading suspicious transaction reporting.

These actions hamper financial institutions’ due diligence efforts by obscuring the illicit source of funds, potentially allowing large-scale laundering operations to continue undetected.

Professional money launderers create or gain control of MSBs to:

• Oversee funds entering and leaving the MSB under the guise of legitimate transactions.
• Manipulate internal records or staff to bypass or minimize suspicious reporting.

This approach undermines financial institution efforts to implement AML controls, as external counterparties may receive incomplete or misleading compliance data.

Shell or front companies mask the true owners of controlled MSBs by:

• Serving as the official registrant of the MSB license while concealing the real criminal beneficiaries.
• Holding bank accounts or financial relationships in the entity’s name, shielding beneficial ownership details from external scrutiny.

Financial institutions struggle to identify the authentic source or ultimate controllers of funds when dealing with these opaque entities.

Nominees appear as the owners or directors of the MSB but do not exercise genuine control. Criminals exploit nominees to:

• Hide the real parties responsible for suspicious transactions.
• Mislead financial institutions' attempts to verify beneficial ownership.

By relying on nominees for registrations or account openings, criminals obscure their involvement in MSB operations.

MSBs with extensive agent networks allow criminals to:

• Disperse illicit flows through multiple service points, limiting centralized oversight.
• Structurally avoid detection or suspicious thresholds by fragmenting large sums into smaller transfers.

Financial institutions face greater difficulty tracking and aggregating these dispersed transactions, impeding effective monitoring.