Trending: Transaction Laundering, Panamanian Money Launderer Extradited, and more

Trending: Transaction Laundering, Panamanian Money Launderer Extradited, and more

Transaction Laundering’s Continued Growth

With the rise in terrorist attacks seen and felt around the world over the past five years, the question of how terrorist groups are gaining access to the weapons necessary to commit these acts of violence is one that has been somewhat difficult to answer, until now. Several months ago, Global RADAR reported on a troubling trend that began gaining traction within the financial services sector in 2016. This trend, known as transaction laundering (TL), is defined as “the action whereby one ecommerce merchant processes payment card transactions on behalf of another merchant” (Teicher, 2017). However, as the scope of this practice has continued to expand, as has this basic definition. Today, transaction laundering has gradually grown from simple money transfers to the creation of “entire networks of unregistered, unreported, and often unlawful lines of businesses”, including narcotics & illegal pharmaceuticals, child pornography, and the sales of counterfeit goods and weapons (Teicher, 2017). This development poses a significant threat to the counter terrorism financing (CTF) movement both domestically and abroad, as transaction laundering is being used now more than ever on the global scale to obtain funds for terrorism financing.

One of the key factors in the continued growth of transaction laundering practices is the reliance that is now being placed on counterfeiting to finance terrorist groups. The article “When Transaction Laundering Finances Terror”, cited in BSA News Now on January 18th, discusses this and other developments that have led to the success of transaction laundering for terrorist financing. According to a report published by the French Union of Manufacturers (UNIFAB) on Counterfeiting and Terrorism, “counterfeiting is now a preferred mode of financing of terrorist groups, which organize the production and distribution of fake products to power their operations”(Teicher, 2017). In many recent cases, terrorists have utilized counterfeit items, which are nearly identical to the real product and can be purchased or produced for far less than market value, and eventually sold at retail price online. The funds received are then to be used for the funding of the terrorist operations. Where transaction laundering comes into play is in the use of these legitimate marketplaces to conduct illegal activity of this nature. Writer Ron Teicher writes, “Criminals can easily set up websites, through which they sell high value items such as diamonds, and then process payments from these sites by routing them to legitimate, registered online stores” such as restaurants and supermarkets, effectively “washing” their funds through the internet (Teicher, 2017).

The article also provides concerning figures on just how common this practice is becoming in today’s society. In his research, Teicher found 508,632 websites that had merchants selling illegal goods, and over 90,000 sites that sold firearms (Teicher, 2017). This trend is unlikely to slow down any time soon, as international transfers through currency providers are at an all-time high, and the use of legal payment systems continues to provide a shield which criminals can operate under with no fear of repercussion. With the success that terrorist organizations are having in using Internet commerce for their personal funding, it is safe to say that these statistics will continue to rise in 2017.

In addition, financial institutions themselves have become susceptible to financial crime. In a previous article written on this subject, Teicher illustrated how the entire card payments industry bases its risk management procedures off of “chargeback optimization”, and how this is a faulty process that can leave banks susceptible to illegal financial activity without them even realizing these acts are occurring. He also stated that in today’s society, banks have focused the majority of their efforts and manpower on “high-risk” merchants and their activity, when low-risk merchants who are flying under the radar are illicitly performing illegal activities (Teicher, 2016). Financial criminals and terrorist groups have capitalized on the loopholes created by the growth of payment systems and online marketplaces, using transaction laundering to process payments for the sales of their counterfeit and illegal merchandise, and are thus able to safely conduct their business. It is clear that stronger anti-money laundering (AML) legislation and enforcement are necessary to combat what is becoming the go-to means of money laundering and terrorism financing worldwide, and the sooner these changes are adopted, the better the chances of preventing the next large scale terrorist attack.

Panamanian Money Launderer in U.S. Custody

On Thursday, a Panamanian businessman was extradited to the United States by Colombia on suspicions of running a prominent, global money-laundering organization for drug trafficking. The man, Nidal Waked, is accused of “laundering millions in drug profits through a web of companies including a luxury mall, a bank and the duty-free zone at Panama City’s international airport” in addition to other shops in the area (AP, 2017).

Global Corruption Rankings

As reported by Business Insider, the World Economic Forum (WEF) released its annual “Inclusive Growth and Development Report” this week. In the report, the WEF has ranked how well corruption is fought within countries around the world at the national level, and factors in the ethics of political and business environments, as well as the legal and competitive frameworks governing these countries. Countries found in Europe, which accounted for six of the nine entries on the list, dominated the list. The list, in order from top corruption fighter to bottom, is as follows: Luxembourg, Japan, Sweden, Finland, Norway, New Zealand, Switzerland, Singapore, and Denmark.

Illegal Bitcoin Operations in China

The People’s Bank of China (PBOC), the central authority on monetary policy and financial institution regulation in China, has recently been engaged in investigations over “major Bitcoin exchanges within the state, including BTCC, Huobi and OKcoin” (Dhaliwal, 2017). During the investigation, the PBOC discovered that each of these Bitcoin exchanges had been carrying out illegal operations and financing activities – including margin trading. These exchanges were reportedly “not in accordance with the provisions of the establishment of a sound anti-money laundering internal control system” (Dhaliwal, 2017).

Additionally, the days of China’s Bitcoin trades being fee-less are expected to end. It is expected that exchanges will begin to introduce trading fees at some point in 2017 in order to recover lost revenues.




Dhaliwal, Shivdeep. “PBOC Investigation Reveals Illegal

Operations in Chinese Bitcoin Exchanges, Bitcoin Price Affected.” CoinTelegraph. 19 Jan. 2017. Web.

Martin, Will. “The 9 Countries Best at Fighting Corruption.”

Business Insider. Business Insider, 17 Jan. 2017. Web.

Associated Press. “Colombia Extradites to US Alleged Top Money

Launderer.” Daily Mail Online. Associated Newspapers, 19 Jan. 2017. Web.

Teicher, Ron. “Traditional Risk Scoring Is Dead.” International

Banker. 19 Sept. 2016. Web.

Teicher, Ron. “When Transaction Laundering Finances Terror.”

Finextra. 17 Jan. 2017. Web.

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