Money laundering is a serious financial crime where criminals disguise the origins of illicit funds, making them appear legally earned. This process fuels illegal activities such as drug trafficking, fraud, and terrorism, posing a major risk to global financial systems. To combat this, governments and regulatory agencies have strengthened anti-money laundering (AML) measures to detect and prevent suspicious transactions.
The money laundering process typically involves three key stages:
Placement – Illicit funds are introduced into the financial system through businesses, casinos, or bank deposits.
Layering – The money is moved through multiple transactions, such as offshore accounts, shell companies, and cryptocurrency exchanges, to obscure its origin.
Integration – The funds are reinvested into the economy via real estate, luxury goods, or corporate investments, making them appear legitimate.
Understanding examples of money laundering is crucial in recognizing how criminals exploit financial systems. By analyzing real-world cases, businesses, financial institutions, and regulators can enhance their detection strategies and implement stricter AML policies. In this blog, we’ll explore notable examples of money laundering and discuss effective prevention methods to protect the financial sector.
Common Methods of Money Laundering
Money laundering schemes exploit various industries and financial systems to disguise illicit funds as legitimate income. Criminals continuously evolve their tactics, making it crucial for businesses and financial institutions to stay ahead of these threats. Below are some examples of money laundering techniques commonly used today:
Cash Business Money Laundering
Cash-intensive businesses such as restaurants, laundromats, and car washes are frequent targets for money laundering. These businesses handle high volumes of cash, making it easy to blend illicit funds with legitimate earnings.
Example of Money Laundering in Cash Businesses:
A restaurant records $4,000 in daily revenue but only generates $2,000 from actual sales. The additional $2,000 comes from illegal activities, allowing criminals to deposit it into bank accounts undetected. Financial institutions use transaction monitoring and industry benchmarking to flag discrepancies between reported revenue and expected cash flow.
Real Estate Money Laundering
Real estate transactions provide an effective way for criminals to clean dirty money by purchasing properties and reselling them at a later date. Fraudsters often use shell companies or third-party buyers to mask their true identities.
Example of Money Laundering in Real Estate:
A criminal purchases a luxury property using a shell company, ensuring anonymity. Over time, the property appreciates in value, providing a profitable and seemingly legitimate return. A well-known case involves Zamira Hajiyeva, who laundered illicit funds through high-value real estate in London.
To prevent real estate money laundering, financial institutions and regulators are enforcing stricter due diligence requirements, such as Know Your Customer (KYC) checks and Ultimate Beneficial Owner (UBO) verification.
Gambling Money Laundering
Casinos and online gambling platforms are frequently exploited for money laundering activities due to the high volume of cash transactions. Criminals buy gambling chips, play minimally, and cash out, creating a legitimate-looking paper trail.
Example of Money Laundering in Gambling:
A fraudster purchases $50,000 worth of casino chips using illicit funds, places a few small bets, and then cashes out the remaining chips as "winnings." These funds are now considered clean and can be deposited into a bank.
With the rise of online gambling, criminals can exploit multiple accounts, using different aliases to evade detection. Anti-money laundering (AML) measures in the gambling industry include enhanced transaction monitoring, player profiling, and reporting suspicious activity to financial regulators.
Cryptocurrency Laundering
Cryptocurrencies provide a pseudo-anonymous and decentralized way to move money across borders, making them an attractive tool for money laundering schemes. Criminals use techniques like mixing/tumbling services and smurfing to obscure transaction trails.
Example of Money Laundering in Cryptocurrency:
A fraudster splits $500,000 into thousands of smaller Bitcoin transactions (smurfing) and routes them through cryptocurrency mixers to blend illicit funds with legitimate transactions. Once complete, the cleaned funds are withdrawn and used for legal investments.
Although regulators have increased oversight with Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements for exchanges, crypto-based money laundering remains a growing challenge.
Art Money Laundering
The art market’s lack of price transparency and high-value, private transactions make it a perfect vehicle for money laundering. Criminals purchase expensive artwork with illicit funds, later selling it through legitimate auction houses to create clean earnings.
Example of Money Laundering in Art:
A fraudster buys a rare painting for $1 million using dirty money and resells it for the same amount at an auction house, effectively laundering the funds. The anonymous nature of art deals makes it difficult to trace the money’s origin.
To combat art money laundering, regulators now require dealers and auction houses to conduct due diligence, report suspicious transactions, and verify the identities of buyers and sellers.
Legal Framework and Examples of Money Laundering Offences in ASEAN
Money laundering is a serious financial crime with strict regulations across ASEAN countries to prevent illicit funds from infiltrating the financial system. Governments in the region have strengthened anti-money laundering (AML) laws to combat financial crime and ensure compliance with international standards set by the Financial Action Task Force (FATF).
Below are key examples of money laundering offences and the legal frameworks governing them in ASEAN.
Concealing Offense
A concealing offence occurs when an individual hides, disguises, transfers, or removes illicit funds to make them appear legitimate. Criminals often use offshore accounts, cryptocurrency transactions, and trade-based money laundering techniques to cover their tracks.
✅ Example of a Money Laundering Offence:
A syndicate transfers illegally obtained funds through multiple offshore bank accounts in Singapore and Malaysia, layering transactions to avoid detection.
📜 Legal Frameworks in ASEAN:
- Singapore: Corruption, Drug Trafficking, and Other Serious Crimes (Confiscation of Benefits) Act (CDSA)
- Malaysia: Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act (AMLA)
- Philippines: Anti-Money Laundering Act (AMLA)
- Thailand: Anti-Money Laundering Act B.E. 2542 (1999)
Arranging Offense
An arranging offence occurs when a person facilitates the movement or control of illicit funds for another party. Even if someone merely suspects the money is from an illegal source but still enables the transaction, they can be held accountable.
✅ Example of a Money Laundering Offence:
A company in Thailand sets up fake supplier contracts to launder money through legitimate-looking business transactions. The funds are then transferred to various bank accounts across Malaysia, Indonesia, and Vietnam to obscure their true origin.
📜 Legal Frameworks in ASEAN:
- Singapore: Monetary Authority of Singapore (MAS) AML Guidelines
- Malaysia: Central Bank of Malaysia (BNM) AML Regulations
- Thailand: Anti-Money Laundering Office (AMLO) Guidelines
- Indonesia: Law No. 8 of 2010 on the Prevention and Eradication of Money Laundering
Acquisition, Use, or Possession Offense
This offence applies when an individual knowingly acquires, uses, or possesses funds from illicit activities. Even if they did not directly launder the money, they can still face legal consequences.
✅ Example of a Money Laundering Offence:
A high-profile individual in the Philippines buys luxury properties and cars using funds traced to corruption and fraud schemes. The purchases are flagged by AML authorities for further investigation.
📜 Legal Frameworks in ASEAN:
- Philippines: Anti-Money Laundering Council (AMLC) Regulations
- Singapore: Financial Services and Markets Act (FSMA)
- Malaysia: Securities Commission Malaysia AML Guidelines
- Vietnam: Law on Anti-Money Laundering No. 14/2022/QH15
How Financial Institutions Can Prevent Money Laundering
Financial institutions are the first line of defence against money laundering, playing a crucial role in detecting, reporting, and preventing illicit financial activities. Strengthening anti-money laundering (AML) compliance not only ensures regulatory adherence but also protects the integrity of the financial system.
Here are key steps financial institutions must take to prevent money laundering effectively:
Implement Robust Know Your Customer (KYC) Measures
KYC verification is the foundation of AML compliance, ensuring financial institutions identify and assess customer risk before allowing transactions.
Key KYC Requirements:
✔ Collect and verify government-issued IDs, proof of address, and financial documents
✔ Conduct Enhanced Due Diligence (EDD) for high-risk customers, including politically exposed persons (PEPs)
✔ Monitor customers from high-risk jurisdictions and industries
✔ Periodically update customer records to reflect changes in risk profiles
Many ASEAN countries, including Singapore, Malaysia, and the Philippines, mandate strong KYC procedures to comply with FATF guidelines.
Conduct Ongoing Transaction Monitoring
Real-time transaction monitoring enables financial institutions to detect suspicious activity before money laundering occurs. Advanced AI-powered AML systems analyze transaction patterns, flagging high-risk activities such as:
Red Flags for Money Laundering:
✔ Unusual cash deposits or frequent transactions just below reporting thresholds
✔ Rapid fund transfers between multiple jurisdictions or shell accounts
✔ High-value transactions involving high-risk countries or offshore accounts
✔ Inconsistent transaction behaviour compared to customer profiles
Solution:
Financial institutions should invest in AI-driven AML platforms capable of detecting unusual patterns and generating automated alerts for risk analysis.
Integrate AML Systems with Other Financial Systems
A siloed approach to AML and fraud detection weakens a financial institution’s defences. Integrated AML solutions allow banks and fintech companies to:
✔ Cross-check customer activities across financial services, credit reports, and digital wallets
✔ Detect inconsistencies in transaction history, avoiding blind spots in risk assessment
✔ Automate fraud detection by leveraging shared intelligence across financial institutions
For example, in Singapore and Malaysia, regulators encourage financial institutions to adopt AI-driven compliance solutions for real-time AML risk assessment.
Regularly Update Screening Lists
Sanctions and blacklists evolve constantly, and failure to update screening databases can expose financial institutions to compliance risks and penalties.
Essential AML Screening Lists:
✔ FATF Blacklist & Greylist – Countries with weak AML enforcement
✔ ASEAN Financial Intelligence Units (FIUs) – National risk databases from countries like Singapore, Thailand, and Indonesia
✔ UN & OFAC Sanctions Lists – Identifies high-risk individuals and entities
Best Practice: Implement automated sanctions screening tools to ensure real-time updates and prevent transactions with sanctioned individuals or organizations.
Provide Continuous AML Training & Employee Awareness
Human oversight is essential in identifying money laundering activities that automated systems might miss. Financial institutions must train employees to:
✔ Recognize red flags in customer transactions and account activities
✔ Stay informed on emerging money laundering techniques such as crypto mixing services and trade-based laundering
✔ Follow FATF AML guidelines and local financial crime laws
Example: In the Philippines, the Anti-Money Laundering Council (AMLC) requires financial institutions to conduct regular AML compliance training for staff to strengthen detection and reporting.
Conduct Independent AML Audits & Compliance Reviews
Regular AML audits ensure that financial institutions remain compliant with evolving regulations and identify gaps in AML controls before regulatory fines occur.
Key AML Audit Measures:
✔ Third-party AML audits to assess compliance gaps
✔ Testing of transaction monitoring systems to improve accuracy
✔ Review of suspicious activity reports (SARs) and risk assessments
ASEAN Focus: Singapore’s Monetary Authority of Singapore (MAS) and Malaysia’s Bank Negara Malaysia (BNM) require regular AML compliance audits for banks and financial institutions.
Final Thoughts: Strengthening AML Defenses Against Money Laundering
Money laundering is a global financial crime that not only enables fraud, corruption, and organized crime but also undermines the stability of financial institutions and economies. Criminals continuously evolve their laundering techniques, using cash businesses, real estate, gambling, cryptocurrencies, and art to disguise illicit funds.
To effectively combat money laundering, financial institutions and regulatory bodies must:
✅ Enhance transaction monitoring to detect suspicious activities in real-time
✅ Strengthen KYC & AML compliance to prevent financial crime at the source
✅ Integrate AI-driven AML solutions to improve fraud detection and reduce false positives
✅ Adopt a proactive approach by leveraging cross-border intelligence and regulatory collaboration
Future-Proof Your AML Strategy with Tookitaki
Staying ahead of evolving financial crimes requires cutting-edge technology and collective intelligence. Tookitaki’s FinCense platform empowers financial institutions with:
✔ AI-powered transaction monitoring to detect complex laundering patterns
✔ Federated learning for AML to enhance risk detection across global financial networks
✔ A dynamic AFC Ecosystem that continuously updates money laundering scenarios based on real-world trends
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