Funnel Accounts

Funnel accounts systematically move structured deposits across multiple locations or jurisdictions, explicitly creating transactional layers that obscure the origin of illicit proceeds and hinder investigators' ability to trace funds. This aligns directly with layering as the primary strategic objective.

Funnel accounts exploit the vulnerabilities of common deposit and transfer products, such as personal checking or business bank accounts. Criminals structure small cash deposits below reporting thresholds and quickly transfer or withdraw those funds, taking advantage of the product’s ability to accommodate rapid movement of funds with minimal scrutiny. This is the central vulnerability that enables layering and obfuscation.

Funnel accounts leverage multiple regions or financial institutions across jurisdictions with varying AML controls. By dispersing deposits and withdrawals internationally or across regions, criminals exploit cross-border enforcement gaps and differing reporting thresholds, further complicating investigations.

• Consolidates risk ratings and AML standards for different regions.
• Pinpoints funnel account transactions involving high-risk or lax regulatory jurisdictions, highlighting suspicious cross-border flows.

• Includes official financial statements, business filings, and tax returns.
• Validates whether sudden cross-border transfers or funnel deposit patterns align with legitimate financial activity, uncovering concealed or illicit proceeds.

• Documents currency conversions, including timestamps, volumes, exchange rates, and counterparties.
• Identifies frequent or unexplained multi-currency exchanges that lack a legitimate business rationale, which is a red flag for funnel account usage.

• Provides detailed records of all deposits, withdrawals, transfers, and related metadata, including timestamps, amounts, and counterparties.
• Enables detection of structured deposits below reporting thresholds and rapid inbound-outbound flows, directly revealing funnel account patterns.

• Lists registered or licensed remittance and money service providers.
• Helps identify unlicensed or suspicious third-party remitters potentially used to deposit or move funds through funnel accounts, especially across borders.
• Allows compliance teams to check if frequent cross-border transfers involve regulated MSBs or unregistered entities, indicating heightened funnel-account risk.

• Comprises invoices, bills of lading, and shipping records for international transactions.
• Distinguishes legitimate trade activities from fabricated sales or suspicious payments funneled through trade-based channels.

• Contains verified customer information, including identities, beneficial ownership, and stated account purposes.
• Supports the detection of funnel accounts by comparing declared business activities against actual cross-border transaction patterns, exposing inconsistencies.

• Logs deposit locations, timestamps, and details for ATM or branch transactions.
• Reveals patterns of structured cash deposits in multiple locations consistent with funnel account operations.

• Contains call logs, emails, and messaging app data (where permissible).
• Discloses instructions or coercion related to funnel account usage, as well as contradictory explanations for cross-border transfers.

• Tracks the origin, destination, and geo-coordinates of financial transactions.
• Helps trace multi-jurisdictional routes and layering strategies indicative of funnel account schemes.

Identify and categorize jurisdictions commonly exploited for funnel accounts due to lax regulations, low transparency, or minimal AML oversight. Apply additional scrutiny when cross-border transfers involve these areas, requiring documented explanations for frequent or sizable transmissions.

When initial monitoring flags suspicious funnel activity, conduct a deeper verification of the customer’s ownership structure, sources of funds, and reasons for multi-location deposits and rapid transfers. Collect supporting documentation for cross-border transactions, verifying the legitimacy of beneficiaries to thwart layering via funnel accounts.

Verify the identity of each account holder and authorized user, requiring documentation for multiple cross-regional transfers. Ensure that the nature of the business or personal activity justifies frequent inbound deposits from geographically dispersed sources. Investigate discrepancies or a lack of credible explanations to address funnel account risk.

Implement automated monitoring scenarios specifically targeting funnel account behaviors, such as:

• Repeated sub-threshold cash deposits at different branches or ATMs.
• Immediate transfers to unrelated beneficiaries in other regions.
• Frequent currency exchanges without legitimate business reasons.
• Abrupt changes in transaction velocity or direction.

Flag accounts exhibiting these patterns for investigation.

Provide targeted training on identifying funnel account indicators: multiple small deposits across different branches, immediate cross-border withdrawals, and inconsistent explanations regarding currencies or beneficiaries. Ensure staff know how to escalate these cases swiftly.

Actively exchange intelligence on funnel account typologies, structured deposit patterns, and multi-jurisdictional layering with peer institutions and relevant authorities. Coordinate efforts to map cross-bank funnel networks, aiding in the identification of linked accounts operating regionally or internationally.

Restrict or suspend high-risk services, such as frequent cross-border wires or large currency exchanges, for accounts showing repeated signs of funneling. Allow further usage of these services only after the customer provides documented business needs and passes additional scrutiny.

Monitor transactions related to trade-related payments originating from multiple funnel accounts that consolidate funds into a single account. Cross-check invoices, shipping documents, and goods valuations for inconsistencies that may indicate trade-based layering facilitated by funneled funds.

• Funnel accounts are bank accounts, either personal or business, used to place multiple small deposits of illicit cash.
• Once funds are deposited, fraudsters rapidly transfer or withdraw them from a different region, making it difficult for financial institutions to maintain a clear transactional link between deposits and ultimate recipients.

• Criminals structure their deposits of physical currency below reporting thresholds into funnel accounts, obscuring the funds' illicit origin.
• Because physical cash is difficult to trace, once deposited into different locations, it can be quickly withdrawn or transferred, fragmenting the audit trail and hindering investigators.

• Allows structured deposits from numerous sources into a single account via digital channels.
• Rapid subsequent EFT transactions redistribute funds to hide their illicit origin and complicate detection.

• Frequent low-value deposits or withdrawals across multiple ATMs fragment the money trail.
• The quick relocation of funds via ATM networks masks the ultimate beneficiary or account holder.

• Layering occurs through multiple small-value P2P payments funneled into consolidated accounts.
• Quick onward transfers to new or third-party wallets obscure the money trail and hamper investigations.

• Criminals route numerous small, ostensibly legitimate transactions through merchant or payment gateways.
• They quickly settle or withdraw funds in other regions, making it difficult to detect the layering of illicit proceeds via disparate payment channels.

• Fraudulent or coerced business accounts enable rapid aggregation of small, structured deposits.
• Subsequent transfers or withdrawals from different branches or regions camouflage the true origin of the funds under perceived business activities.

• Criminals deposit multiple structured sums of illicit proceeds across different remittance agents or online portals.
• The funds are then rapidly transferred or withdrawn in other regions, obscuring the initial sources of the deposits and frustrating investigators.

• Individuals deposit cash below reporting thresholds across various branches or ATMs.
• Funds are moved within short intervals to other accounts or locations, obfuscating the connection between deposits and withdrawals.

• Permits fast cross-border or domestic transfers from funnel accounts, fragmenting the financial trail.
• Brief holding times and rapid withdrawals in different jurisdictions frustrate regulators' attempts to follow illicit funds.

Human traffickers use funnel accounts to:

• Maintain or coerce control over multiple accounts in different locales, directing victims or third parties to deposit proceeds.
• Withdraw or transfer funds quickly, fragmenting transaction records and frustrating investigations.

Business entities, including those involved in trade-based activities, support funnel accounts by:

• Holding accounts where multiple structured deposits converge before transferring funds under the guise of business expenses or goods purchases.
• Providing a façade of legitimate business operations that obscures the origin of funds, particularly when consolidating multiple funnel account inflows for rapid onward movement.

Illicit operators drive the funnel account scheme by:

• Establishing or directing accounts across multiple regions to deposit structured cash sums below reporting thresholds.
• Rapidly transferring or withdrawing funds to obscure their source and ownership, often relocating flows before financial institutions can effectively track them.

They exploit differences in regional compliance regimes, making it harder for banks and regulators to identify a cohesive money trail.

Money mules facilitate funnel accounts by:

• Depositing illicit cash into personal or business accounts under criminal instruction, often below threshold reporting limits.
• Subsequently transferring or withdrawing funds in other regions, breaking the transaction chain between deposits and ultimate beneficiaries.

They may act knowingly or unknowingly, enabling criminals to layer and move funds.

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.