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Transaction Laundering: The Emerging Threat

Updated: Aug 30, 2019

The rise of many FinTech companies making processing of online payments faster, the adoption of digital currency as value transfer for goods and services and change in consumer behaviour with more dependence on online shopping (avoiding face to face purchases from in-store) has created a lucrative ecosystem for money launderers to thrive.


Transaction Laundering (TL) is a method where criminal may make use of the digital payment system to launder funds using stolen credit cards, prepaid cards, digital wallets and virtual currency. The transactions created by the criminal are merged with the millions of genuine merchant transactions (either by colluding with the merchant or by making use of the merchant’s payment gateway unknowingly) which makes transaction laundering very difficult to detect.


The payments network consists of various parties such as cardholder or customer, merchant (either in store or online), acquirer or merchant bank, card network, cardholder’s bank or Issuing bank. Many different parties involved in the network, complexity of the transactions and the speed with which the payments are processed makes it very convenient for launderers to disguise illicit payments across different currencies and geographical regions also called layering.


The anonymity which the new payment systems provide for the money launderers is one of the major factors for this method of laundering becoming widespread. The acceptance of digital wallets, mobile payments and cryptocurrency (such as Bitcoin, Ethereum etc) by some of the merchant sites and payment service providers have provided the launderer with more choices to launder money.


Lysis will be publishing a White Paper in September 2019 in which Vanitha discusses, analyses and provides real life examples of the growing threat of transaction based money laundering.


To register for the White Paper please sign up here.

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