Globally, the amount of transaction laundering of illicit goods and services is estimated to be $1-2 trillion annually. In a recent survey, 1 in 5 financial services respondents said they have experienced enforcement actions by regulators at some point in time. Just who is responsible for the illegal transactions that are being processed daily? How exactly do these launderers operate? What are some of the most common violations regulators are assessing for?
Below are five transaction laundering resources that will help answer some of the tough questions acquiring banks and other service providers might ask.
1. Merchant-Based Money Laundering Part 3: The Medium Is The Method
In this article Keith Furts, Founder of Data Derivatives, emphasizes the importance of balance between payment innovation and regulation.
Rather than a race to the top, “the payments industry has almost become a race to the bottom to offer no hassles and low fee structures in a highly competitive marketplace,” allowing new methods of transaction laundering to evolve.
Fursts illustrates the complexity of the payments ecosystem and how illicit transactions are entering through a variety of channels. Acquiring banks and other service providers must understand how these illegal crime networks operate.
2. Why Cybercrooks Love Alternative Payments
Regulatory pressure has made traditional methods of transaction laundering difficult. However, the introduction of alternative payments has created a new playground for bad actors.
This is a great resource to familiarize yourself with these new payment methods and how they are being abused.
3. Real Life Launderers: A Collection of Transaction Laundering Case Studies
Online businesses are now created with ease — making boarding for acquirers challenging. Violating front merchants are difficult to detect and seem legitimate on the surface. Yet, subtle details have unveiled more than these unsuspecting acquirers could have ever imagined.
If you are looking for recent examples of transaction laundering, then this is an excellent resource.
4. Watch List: The Most Common Synthetic Drugs, Topicals and Designer Drugs
Pharmaceuticals, illegal drugs and topicals are continuously evolving — signifying new risk categories for well-meaning acquirers. The latest designer drugs copy the effects of common pharmaceuticals and can pose fines if not quickly eradicated. Some topicals, or medications applied directly to the skin, might also contain harmful substances that put acquirers at risk.
This watch list is a great tool to incorporate into underwriting and boarding processes, as well as when conducting investigations on merchants. Stay on top of changing regulations and help ensure your portfolio remains compliant. Print this list out and share it with your team.
Also, checkout this 30-minute webinar recording for a more in-depth view on drug regulations.
5. Reuters Uncover Fake Websites Used to Process Gambling Payments
Online gambling is expected to reach a global net worth of $66 billion by 2020 (PR Newswire, 2016). More than 80 nations have legalized online gambling; however, acquirers must be aware that it is still illegal in many countries and states.
Gambling can be a tricky merchant category for acquirers and this Reuters investigation reveals seven London-based front sites processing illegal transactions for a massive global online gambling network.
For information regarding transaction laundering, merchant monitoring and boarding solutions, then visit our website. If you are looking for additional case studies, fact sheets or infographics, please see our resource library.
