It has never been easier to create an online business. On one hand, fast and easy merchant onboarding helps businesses flourish. On the other hand, criminals have capitalized on this to register merchant accounts, setting up front websites to run their insidious transactions.
Traditional money laundering has moved to the digital ecommerce space.
This continues to leave compliance and underwriting departments scrambling to filter out the legitimate merchants from the fraudulent ones in a rapid influx of online businesses. Poor AML controls makes it easier for criminals to infiltrate, putting the payments ecosystem at risk.
What is transaction laundering?
Transaction laundering occurs when an approved merchant processes payment card transactions on behalf of another entity unknown to the merchant acquirer or payment provider.
This is a major blind spot for the traditional banking sector as transaction laundering falls outside the scope of more established monitoring protocols. Moreover, the speed and sophistication of transaction laundering rings create an expensive and time-consuming problem for payment companies.
Transaction launderers will often use one or a combination of methods to procure and reintroduce their illicit funds into the financial system. This includes creating front companies, pass-through companies, or funnel accounts.
Using AI technology to fight transaction laundering
Because transaction laundering is a sophisticated, merchant-based fraud scheme, advanced technology is essential in detecting it. Recently, our world-class automated transaction laundering program uncovered a fraud ring operating hundreds of front merchants abusing multiple payment providers.
Our URL-based system allows for one test transaction to garner multiple hits instantaneously, exposing the interconnected web of confirmed transaction launderers and their associates and empowering EverC clients to proceed with risk mitigation.
Want to know more? The investigation is detailed in our whitepaper on transaction laundering.
EverC solutions look beyond the single transaction or customer
MerchantView provides payment organizations with complete visibility into their entire payment network and to ensure that only legitimate transactions are processed. Any data collected on transaction laundering any other illicit behaviors from bad merchants is applied across our extensive database to the benefit of all our clients.
Our advanced technology also continuously monitors merchant risk and suspicious activity to protect against fraudulent schemes such as transaction laundering.
Can our MerchantView solution help your organization detect and mitigate risk?