Independent Payment Agents

By channeling transactions through loosely supervised sub-agents operating under a licensed payment institution, criminals can bypass stricter KYC/AML checks and gain easier entry into the financial system.

Criminals exploit sub-agents or partner outlets operating under a licensed payment institution’s umbrella to bypass stricter AML controls. The aggregator or principal often sees only its own name on transactions, losing visibility into sub-agent activities. This fragmented delivery chain is the primary vulnerability, as it enables high-risk transactions to be funneled through loosely supervised intermediaries with minimal scrutiny.

This technique relies on cross-border or offshore sub-agents, exploiting varying AML requirements and enforcement levels across different jurisdictions. By segmenting operations abroad, criminals capitalize on regulatory gaps to further conceal illicit funds.

• Consolidates risk assessments for countries and regions, highlighting regulatory frameworks, AML/CFT enforcement levels, and potential vulnerabilities.
• Supports targeted oversight of sub-agents operating in offshore or high-risk jurisdictions, enabling risk-based monitoring of payment flows.

• Provides comprehensive records of financial transactions, including timestamps, amounts, currencies, involved parties, and transaction identifiers.
• Supports detection of sub-agent activity hidden under the aggregator’s name and reveals anomalies in transaction volumes or patterns that can indicate unreported or high-risk payment channels.

• Provides official licensing and regulatory status of payment institutions, including sub-agents and remittance providers.
• Supports verification of whether sub-agents are legally registered or exceed permitted scopes under the principal license, preventing unlicensed or white-labeled providers from operating illegally.

• Contains verified customer identity data, including personal details, addresses, and beneficial ownership information.
• Helps detect instances where sub-agents bypass or fail to document required onboarding steps, ensuring compliance with AML/CFT obligations.

• Provides official and aggregated data on corporate registration, ownership structures, and addresses.
• Enables verification of sub-agents’ legal status, identification of overlapping beneficial owners or contact details, and detection of unlisted premises potentially used for illicit activities.

Conduct deeper verification and ongoing monitoring for sub-agents or aggregator relationships, especially those in high-risk jurisdictions or demonstrating atypical transaction patterns. This involves verifying the legitimacy of sub-agent ownership structures, reviewing the nature and scale of operations, and imposing stricter reviews on sub-agents’ transactions. By applying Enhanced Due Diligence (EDD), the institution reduces the risk of enabling sub-agents who circumvent standard Anti-Money Laundering (AML) requirements.

Implement specialized monitoring rules to track individual sub-agent identifiers within aggregated payments. Flag transactions that lack complete KYC details, originate from unregistered premises, or exhibit volumes disproportionate to the sub-agent’s stated business activity. This enables the prompt escalation of potential misuse of sub-agency channels.

• Establish robust oversight and contractual AML requirements for sub-agents operating under the licensed payment institution.
• Verify sub-agent licensing, beneficial ownership, and compliance track record prior to onboarding.
• Impose mandatory AML training and procedures aligned with the principal’s standards.
• Conduct ongoing audits or site visits to ensure sub-agents do not knowingly or inadvertently facilitate illicit transactions.

Regularly audit sub-agent networks to ensure that principal-level AML requirements are enforced. Check sub-agent onboarding processes, transaction logs, the validity of business premises, and overall compliance with AML standards. Identify oversight gaps and recommend corrective actions to prevent sub-agents from circumventing established controls.

Cross-check sub-agent addresses, declared beneficial owners, and operating licenses with public records and reputable external databases. Investigate anomalies such as sub-agents operating from undisclosed or duplicate locations, or multiple sub-agents sharing identical beneficial owners without a legitimate business rationale to detect potential shell or fraudulent operations.

• Independent sub-agents deposit criminal proceeds into aggregator-held or aggregator-labeled bank accounts, obscuring the true origin of the illicit funds.
• Since only the aggregator’s name appears on transaction records, details of sub-agents or end-customers remain hidden, bypassing meaningful AML scrutiny.
• This layering tactic leverages the limited oversight of sub-agents to move illicit funds under the umbrella of a legitimate institution.

• Sub-agents accept physical currency from criminals without adequate KYC, then remit or deposit it through the aggregator’s payment network.
• The aggregator’s name on formal records conceals the direct handling of cash by sub-agents, reducing traceability.
• This anonymity allows criminals to inject large sums of illicit cash into the financial system under the guise of normal operations.

• Sub-agents load or reload prepaid instruments with criminal funds, exploiting lax or inconsistent KYC monitoring.
• Once funded, these instruments can be used or transferred elsewhere, fragmenting transaction records.
• The aggregator’s licensed name provides a veneer of legitimacy, while minimal documentation at the sub-agent level obscures the illicit source of funds.

• White-label or aggregator frameworks allow sub-agents to operate under the provider’s license, concealing sub-agent identities and activities.
• Transaction details typically reflect only the aggregator’s name, reducing transparency into underlying sub-agent transactions and beneficial ownership.
• Fragmented responsibility over AML/CFT controls leads to inadequate oversight, creating opportunities for illicit funds to flow undetected.

• Criminals introduce loosely supervised sub-agents or partner outlets that directly handle funds, bypassing full KYC/AML checks under the principal license.
• The principal or aggregator name alone appears on many transaction records, obscuring the sub-agent’s involvement and the ultimate sender or beneficiary.
• Complex agent networks fracture oversight, enabling criminals to mask higher-risk transactions as standard remittances.

Illicit operators exploit sub-agents placed under a licensed payment institution’s network by:

• Introducing loosely supervised partner outlets that handle customer funds while bypassing stricter KYC/AML requirements.
• Segmenting the payment chain to conceal the true origin of high-risk transactions, enabling illicit proceeds to appear legitimate.

These tactics obscure transaction flows from financial institutions, reducing their ability to identify or monitor suspicious activity effectively.

Payment service providers (the aggregator or principal) offer the licensed framework under which sub-agents transact. They may:

• Fail to maintain stringent oversight over sub-agents, allowing criminals to exploit these partner outlets.
• Obscure the actual sender or beneficiary in transaction records, as only the provider’s name often appears, limiting the visibility of sub-agent activities.

As sub-agents for a principal payment provider, money transfer agents directly handle transactions and customer onboarding. They may:

• Operate with minimal oversight, omitting complete KYC data or ignoring irregularities.
• Facilitate high-risk transactions that appear routine under the principal provider’s license, creating gaps in AML controls for financial institutions.