Home » AML Compliance: How Criminals Exploit the Market for Money Laundering?

AML Compliance: How Criminals Exploit the Market for Money Laundering?

by Steven Brown

Under global law, it is unethical to use invalid references to transform fraudulent money into clean money. Since money laundering and financial fraud are on the upsurge, government agencies have created a slew of rules to keep fraudsters off the market. Lawbreakers find it very hard to use their illegal benefits to live a luxurious life because of well-established laws and codes, as there is always the risk of being caught and imprisoned.

Moreover, the banking industry is well informed of fraud incidents, and as a consequence, they have employed strict enhanced due diligence practices that evaluate the origin of revenue in order to open accounts. AML compliance, on the other hand, is a workable option for identifying and mitigating strange financial activities. 

What is AML Compliance?

Anti-money laundering is an online process that includes screening customers’ histories and tracking their daily operations to detect and remove the chances of black money being turned into white money. Such businesses are inspected against global finance-related crime lists and other sanctions for verification. AML solutions are as important as KYC in preparing businesses to battle frauds such as money laundering, terrorist financing, and drug smuggling. AML compliance is beneficial to all kinds of digital companies. According to Shufti Pro funding, the internal budget request was made in the US for $5 billion to implement AML sanctions.

AML screening aids in the identification of the primary originators of money laundering and other financial fraud, and AML verification provides a preemptive tool for organizations and businesses. AML compliance was primarily assisting financial firms in their efforts to combat drugs and child exploitation. The prime motive for these kinds of deceptive businesses was to give a safe source for black money flow, but as these offenses became extra prevalent, regulatory organizations implemented anti-money laundering (AML) laws to capture bad actors.

With the increase in money laundering and fraud, AML securities and counter-terrorism funding rules and regulations are becoming a worldwide concern. Government agencies which include FATF, FINCEN, and global banks are collaborating with financial institutions to remove money launderers from the surface. According to Shufti Pro news, there are more than 1700 sanctions worldwide that the financial sector has to follow while onboarding a customer. 

How Does Money Laundering Work?

  • Placement of Funds: This is the very first step when a criminal disguised as an innocent customer, buyer, or investor, enters a bank, organization, or any financial infrastructure
  • The layering of Money: Main goal of layering is to hide the original source of capital obtained from illicit practices. In this stage, a bad actor divides his money and hides it with the money already present in the account, moreover, they buy properties or real estate in the market. Which makes it difficult to trace the illegitimate funds back to the fraudster
  • Integration of Money: At this stage, the black money is ready to be put to use and bad actors introduce the money gained from ill means to the world. They use it to buy stocks are shares in the market, invest them in cryptocurrencies, buy NFTs, by creating a shell company and giving loans to themselves, or play the import/export card.

What Kind of Businesses can be Exploited for Money Laundering

There are many industries that get involved in money laundering operations, but some of the businesses that are largely hit by these types of crimes are:

Cryptocurrency Exchanges

In recent times, the widespread diffusion of cryptocurrency as a virtual asset has skyrocketed. Nevertheless, the influence of online currency is dwindling as lawbreakers enter the crypto industry to take part in illegal operations such as laundering money, deceiving people, and making fictitious purchases in order to gain finances. Cryptocurrencies are not regulated by financial authorities, but their confidentiality motivates lawbreakers to use crypto networks to swap their pawns in an attempt to launder the money. Since virtual money is completely undetectable, it is hard to track down these activities. As a consequence, in terms of protecting the cryptocurrency marketplace from scam artists, the AML system must be implemented.

Shell Companies

These are the companies that are only mentioned in the press but have no physical presence. Such sketchy enterprises give the appearance of being genuine and well-known businesses in order to provide assistance through which criminals accomplish fraudulent transactions. Benefits are cash obtained through these payment transactions and are categorized as clean equity. Just after the profits are deposited in banks and used to commit criminal acts such as terror finance, drug dealing, and so on. As a consequence, AML monitoring methods make sure that such dubious behavior is avoided.


Bad actors invest in restaurants with high cash volume business and have a strong customer traffic. Fraudsters operate these businesses to launder their money and use the company account to deposit business and illegitimate funds. 


AML services and solutions have the ability to stop these potential crimes from happening, businesses just have to comply with AML regulations during the digital onboarding process. The financial sector can grow tremendously and positive customer experience and satisfaction are assured.

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