Transaction laundering is a sophisticated, hidden form of illegal payment processing. Criminals disguise illicit transactions as ordinary purchases by funneling them through seemingly reputable merchant accounts, facilitating illegal gambling, dealing in drugs, or even laundering proceeds from other crimes.
The deteciton challenge is immense, and the stakes are high: your reputation, compliance obligations, and bottom line are on the line.
How Transaction Laundering Works
1. Two-Site Strategy
A bad actor sets up two websites:
- Site A: The primary, illicit site selling illegal goods or unlicensed services
- Site B: A legitimate-looking front used to process payments, like a generic ecommerce store
2. Hidden Processing
The consumer's card is charged by the "clean" front (Site B), appearing to buy a normal product like a book. In reality, the funds flow to the criminal behind Site A. On credit card statements, everything looks above-board, concealing the true nature of the transaction.
3. Variations and Conspiracies
In some cases, the underwritten merchant is a victim, unaware of being used. In others, they're complicit co-conspirators, skimming a fee to allow criminals access to established payment channels. Shell companies might be created solely to facilitate these schemes.
Why transaction laundering is such a threat
Financial Risk: Transaction laundering can lead to hefty fines from card networks like Visa and MasterCard. Your organization may face legal and regulatory scrutiny, steep penalties, and even potential loss of acquiring licenses.
Reputational Damage: If illicit transactions slip through your systems, it damages trust. Your partners, customers, and regulators expect tight controls and due diligence, not loopholes for bad actors.
Complex Global Challenge: Criminals operate worldwide, constantly adapting their methods. Traditional screening tools often struggle to detect the subtle red flags of transaction laundering, making it essential to have comprehensive, data-driven, and expert-supported monitoring in place.
SafetyKit detects and stops transaction laundering
SafetyKit specializes in catching hidden fraud. We don’t just skim data; we dive deep—analyzing content, statement descriptors, every product page, and countless nuanced signals.
Uncover Hidden Connections: Reveal secret links between your approved merchants and shadowy networks selling prohibited goods or services.
Prevent Fines and Compliance Violations: Stay ahead of regulators and card networks by proactively catching laundering schemes before they escalate into costly penalties.
Empower Your Risk Officers: We arm your risk and compliance teams with actionable, validated evidence so they can confidently halt suspicious activity.
Access Unrivaled Technology: Our vast, continuously updated AI models spot emerging trends others miss.
Automate merchant monitoring at scale
SafetyKit covers every transaction laundering risk and thousands more, analyzing every merchant, product, and transaction on your platform.
Human-level
Accuracy
10,000
Reviews per hour
100%
MCC coverage