How Well Do You Know Your Money Launderer?

Most of us are familiar with the three stages of money laundering, traditionally referred to as Placement, Layering and Integration. Similarly, there are vast amounts of literature in the public domain around typical money laundering techniques including electronic fund transfers, correspondent banking, prepaid cards, shell companies and trusts alongside new techniques including cryptocurrencies and online gaming. 

However, how does this help when it comes to fully understanding and appreciating the modus operandi of a money launderer? How can we think differently in order to improve detection and prevention of money laundering?

Looking at single factors in isolation is not particularly helpful or insightful and, in some instances, can provide a misleading picture. Money laundering, the criminals behind it and the technology used are increasingly complex and in order to stand a chance of keeping up, let alone getting ahead of the criminals, we need to move to consider all of the multiple factors involved in the money laundering process.

A proposed new framework, as set out in further detail in the below paper, is the APPT framework which aims to provide insights into the techniques launderers adopt:

the proposed APPT framework is named after four factors that explain the choice of techniques: the Actors involved, Predicate crime, the Purpose of laundering, and Technological innovations.

Some of the considerations highlighted for each of the factors are as follows:

• Actors involved: How skilled are the actors and to what extent are they laundering the proceeds themselves or via more complex networks?
• Predicate crime: What is the nature and amount of money involved? What is the location and associated legal/regulatory regime of the predicate crime?
• Purpose of laundering: Is the primary purpose of the money laundering to "clean" i.e. legitimise the funds or is the primary purpose to finance further crimes?
• Technological innovations: Is a large or small amount of technology available to the actor and what is their level of technological competency? 

All of these factors are interrelated and interdependent. Therefore, by thinking about all of the factors in combination, rather than in isolation, we gain a better understanding and appreciation of all of the various facets involved and strengthen our fight against money laundering through the implementation of greater detection and deterrence mechanisms.

The views expressed herein are those of the author(s) and not necessarily the views of FTI Consulting, Inc., its management, its subsidiaries, its affiliates, or its other professionals. 

FTI Consulting, Inc., including its subsidiaries and affiliates, is a consulting firm and is not a certified public accounting firm or a law firm.