Transaction laundering is a new advanced form of money laundering according to the founder and CEO of EverCompliant, a company that aims to prevent this type of financial crime.
Ron Teicher explains in an article that transaction laundering occurs when a cyber criminal takes advantage of a legitimate payment ecosystem by funnelling unknown transactions through seemingly unrelated ecommerce merchant accounts.
A typical case would be when a dealer sets up a website to sell illegal drugs while actually accepting payment via credit card from his customers by rerouting payments through a legitimate merchant account.
The legitimate merchant, such as an online clothing shop, and the credit card provider that processes the payments have no idea the payments are actually for drugs and not for clothes.
It is estimated that transaction laundering for online sales of products and services has reached over $150 billion a year in the US alone and over $300 billion globally, according to Teicher.
He reckons US$10 billion of this trade involves illegal goods, sold online by over 400,000 unregistered merchants.
Ron Teicher’s article, Financial crime online, can be found here.
Categories: Trade Based Financial crimes News