- Home >
- Services >
- Access to Knowledge >
- Trend Monitor >
- Domain of Application >
- Trend snippet: A growing number of online platforms and -applications makes it increasingly difficult for law enforcement agencies to detect money laundering schemes
Trends in Security Information
The HSD Trendmonitor is designed to provide access to relevant content on various subjects in the safety and security domain, to identify relevant developments and to connect knowledge and organisations. The safety and security domain encompasses a vast number of subjects. Four relevant taxonomies (type of threat or opportunity, victim, source of threat and domain of application) have been constructed in order to visualize all of these subjects. The taxonomies and related category descriptions have been carefully composed according to other taxonomies, European and international standards and our own expertise.
In order to identify safety and security related trends, relevant reports and HSD news articles are continuously scanned, analysed and classified by hand according to the four taxonomies. This results in a wide array of observations, which we call ‘Trend Snippets’. Multiple Trend Snippets combined can provide insights into safety and security trends. The size of the circles shows the relative weight of the topic, the filters can be used to further select the most relevant content for you. If you have an addition, question or remark, drop us a line at info@securitydelta.nl.
visible on larger screens only
Please expand your browser window.
Or enjoy this interactive application on your desktop or laptop.
A growing number of online platforms and -applications makes it increasingly difficult for law enforcement agencies to detect money laundering schemes
Money laundering is connected to virtually all criminal activities generating criminal proceeds in the EU. Money laundering allows OCGs to invest the illicit proceeds of their criminal activities in the legal and illicit economy. Almost all criminal groups need to launder profits generated from criminal activities. However, the way in which the money is laundered greatly varies on an OCG’s level of expertise and the frequency and scale of money laundering activities. There are significant obstacles to identifying eventual beneficiaries of criminal proceeds as OCGs make effective use of anonymisation tools and process transactions quickly. A growing number of online platforms and applications offer new ways of transferring money and are not always regulated to the same degree as traditional financial service providers. This makes money laundering a technical challenge for law enforcement authorities to investigate.
Money launderers frequently set up and use shell companies that possess no significant assets and do not perform any significant operations, only serving the purpose of laundering funds. The shell companies used to send and receive money transfers are typically embedded in complex corporate structures which conceal the links to account beneficiaries. In many cases, these companies are registered in offshore jurisdictions.
In exchange for a commission of between 5% and 8%, these syndicates offer complex laundering techniques and carry out the laundering operations on behalf of other OCGs. Professional enablers such as solicitors, accountants, company formation agents provide the skills and knowledge of financial procedures necessary to operate these schemes. Although only a few groups are known to provide these services, they launder large amounts of money and have a considerable impact on the ability of other OCGs to disguise and invest criminal proceeds. These syndicates are a significant obstacle to tracing criminal assets. The criminal groups that possess the expertise or have access to skilled online money launderers are potentially of a bigger threat than those using traditional money laundering tools such as cash.
Money laundering techniques
Informal value transfer systems
Underground banking systems are financial networks operating outside of regulated financial systems to transfer money or value internationally and outside regulations of conventional banks. They can operate in multiple jurisdictions and allow hidden transactions between users facilitating the laundering of large amounts of money.
Abuse of money services business
A number of criminal groups generating smaller but regular amounts of cash still use this alternative financial service as a suitable conduit to place and transfer their criminal funds.
Trade-based money laundering
Legal entities remain a key tool for money laundering activities and are instrumental in enabling trade-based schemes, which limit the movement of cash and provide a façade of legitimacy to money transfers.
Virtual assets solutions (cyptocurrencies)
Bitcoin and Ethereum are the two cryptocurrencies that form 80% of the market value. The growing popularity and adoption of cryptocurrencies have also led to their increasing use in money laundering schemes. Drug traffickers use bitcoin automated teller machines (ATMs) to convert criminal cash into virtual currency. Money laundering networks use the €500 banknote to store and transport proceeds using cash couriers travelling to destinations outside of the EU. Larger amounts are easier to transport using high denomination banknotes. While the production of €500 banknotes has stopped, the banknote has not been fully withdrawn from circulation and continues to be legal tender. Abuse of banking services and digital banking services (open online accounts, mule accounts, cheap international transfers, offer of e-money services).
Alternative value transfer commodities
OCGs originating from North Africa, the Middle East and China are heavily involved in compensation schemes using gold or
diamonds. The misuse of gold has been addressed in Regulation (EU) 2018/1672 on cash control, which expands the definition of cash to cover gold and imposes declarations upon those entering or leaving the EU with a value exceeding
€10000.
Interest free loans
Criminals offer interest-free cash loans in Europe to be repaid in a country of destination, usually in the Middle East or South America, within a set period of time. This allows an OCG to franchise their money laundering activities.
Real estate
Despite measures taken across the EU to decrease the laundering of money via real estate, investing criminal money into property development to launder money remains a threat.
A number of modi operandi are used, such as partial payment via cash, over- or under-valuing real estate and using non-transparent companies and trusts or third parties.
Gambling and hospitality
Cash-intensive businesses and gambling services continue to be used to launder criminal proceeds.
Cash movements
Using money mules to traffic cash has been the traditional modus operandi used in money laundering schemes. However, the COVID-19 pandemic has diminished, and in some places even almost eliminated, the use of cash as a payment medium as cash-intensive businesses in the hospitality sector have closed and many other businesses have switched to payment card transactions exclusively. It remains to be seen whether this will have a longer-term impact and reduce the attractiveness of cash to money launderers.