Scam operators are growing more sophisticated every year, especially in their methods for moving and hiding illicit gains. The process no longer stops at tricking a victim out of their savings—the most lucrative frauds are powered by networks that launder money through a web of banks, fintech companies, and shell entities. This article breaks down how scammers actually launder stolen funds, naming the banks and payment companies most frequently abused and examining the real-world cases that highlight the challenges for AML and compliance.

How scammers steal money via banks and digital financial services

Scammers running investment and romance frauds rarely work alone. Once they succeed in manipulating a victim—often after weeks or months of psychological pressure—they act swiftly to extract money. To do this without setting off alarms, they guide victims to financial service providers that are perceived as less vigilant in anti-fraud procedures or are slower to respond to warning signs. These recommendations are targeted and tactical. Victims are often told to avoid their main bank, especially if it’s known for strict compliance, and are instead nudged to open new accounts at digital-only banks or fintech apps with quick onboarding and minimal face-to-face checks.

A common trick involves prepping victims to handle compliance questions from the bank. Scammers coach them with pre-written explanations for large or unusual transactions—stories involving real estate, tuition, or family support are favorites. Sometimes, fraudsters even provide fake documents like invoices or contracts so victims can persuade the bank their transactions are genuine. This step is designed to outwit transaction monitoring algorithms and deflect suspicion from customer service agents. If an alert is triggered, a coached victim confidently delivers the scripted story, undermining both automated and human checks.

Digital-first banks and fintech apps are particularly popular among fraud networks. One UK-registered fintech, offering borderless currency wallets and instant transfers, has appeared repeatedly in case studies and leaked data tied to Georgian call center scams. Hundreds of transactions have flowed through such apps, many of them linked to a single criminal enterprise. While these platforms tout their “robust controls,” the real-life experience of victims is often delayed action and few options for recovering funds once transferred. This situation exposes a tension between speed, convenience, and genuine AML effectiveness within newer digital banking models.

Victims are subtly but consistently guided toward platforms that offer rapid, cross-border transfers and limited customer protection. While traditional banks use transaction monitoring and balance checks to flag risky behavior, many digital banks set high thresholds for intervention or lack real-time monitoring. Coached victims, who present as rational and confident, can sometimes bypass these controls entirely. When institutions do act, they may only do so after the money is long gone, or require victims to fight for months to even be heard.

Money laundering banks: victims advised to use specific franchises

Financial criminals have studied the banking landscape in detail, steering victims to institutions with the weakest barriers or slowest customer support. High-velocity banks, especially those that market themselves as fast, borderless, or low-paperwork, are often at the center of abuse. Scam operators instruct victims to open new accounts at these digital banks, framing them as “investment accounts” or “trading wallets.” The goal is to minimize the oversight that might otherwise block or reverse a suspicious transfer.

Onboarding at these banks typically requires only digital ID upload and basic verification, with no face-to-face checks. This allows criminals to guide victims—sometimes elderly or otherwise vulnerable—into opening accounts that can immediately send and receive large payments. When daily limits or friction arise, scammers pressure victims to send multiple smaller transactions or switch to other banks and payment apps, fragmenting the transfers to avoid detection. The effect is a rapid and efficient pipeline for stolen funds.

The lack of harmonized fraud policies across banks compounds the problem. One Italian business owner lost more than €50,000 while traveling, after being convinced to move money through a digital account. Despite notifying the bank within days, the loss was written off as “user error.” Another UK case saw a victim lose £20,000 after their phone and banking app were stolen; the bank delayed reimbursement for over a year, only relenting after pressure from police and consumer advocates. Each case demonstrates the reality: some banks’ policies leave victims stranded, either by refusing refunds or by stalling for so long that recovery becomes impossible.

These scenarios illustrate systemic weaknesses in digital banking’s approach to transaction monitoring, customer support, and fraud redress. Many fintechs focus on speed and user experience, but their fraud and AML measures lag behind, creating exploitable gaps for organized crime. Until these weaknesses are addressed, certain banks will remain disproportionately represented in victim complaints and law enforcement investigations.

Shell company laundering: complex layering to hide illicit flows

The story doesn’t end when money leaves a victim’s account. The next, and often most critical, step is to hide the criminal origin of those funds. Shell companies—entities with no physical presence or real economic activity—are the go-to tool for this stage. Registered in secrecy-friendly jurisdictions, shell companies allow scammers to move stolen funds through layers of corporate ownership, forward them to other entities, or even convert them into cryptocurrency, all while masking the true beneficiaries.

A prime example is the Moldovan bank fraud, where over $1 billion disappeared from state banks into a maze of UK, Hong Kong, and Cypriot shell companies. The scammers created fake loan agreements and bogus collateral, funneling money through Latvian banks under foreign names. Each layer of this structure served to distance the stolen funds from their criminal origin, exploiting regulatory blind spots and the fragmented nature of global AML enforcement.

Another notorious operation, the Troika Laundromat, relied on a now-defunct Lithuanian bank and dozens of shell companies scattered across the British Virgin Islands, Belize, and Scotland. Fake business deals and invoices were used to justify payments, which flowed through major European banks like Deutsche Bank, ING, and Raiffeisen. These transactions routinely slipped through the cracks, either because of inadequate due diligence or because the payments appeared to match normal business flows on the surface.

These case studies show how shell companies serve both the placement and layering phases of money laundering. Without robust beneficial ownership rules and cross-border cooperation, authorities struggle to trace the funds back to their source. The result is that criminals are often able to cash out well before their activity is detected, and victims’ money disappears into a legal and financial black hole.

How AML frameworks should catch shell-based schemes

Robust anti-money laundering systems are supposed to stop criminal flows at the source, but the combination of digital banking and complex shell company networks strains even the best frameworks. International standards like the FATF 40 Recommendations and EU AML Directives require banks to verify beneficial ownership, screen transactions for red flags, and apply enhanced due diligence in high-risk scenarios. In theory, these rules are designed to uncover the kind of shell layering seen in high-profile laundering cases.

The United States has made strides with the Corporate Transparency Act, requiring many legal entities to disclose real owners in a federal database. FinCEN and other regulatory bodies have published extensive guidance on the risks posed by shell companies and nominee directors, urging financial institutions to adopt robust KYC processes and monitor transactions for patterns indicative of layering. Still, the rapid movement of funds, use of multiple jurisdictions, and increasing sophistication of digital fraud schemes often outpaces the capacity of banks and regulators to respond.

Banks and fintech companies are being urged to deploy advanced analytics, AI-driven monitoring, and deeper relationship mapping to identify the networks underlying suspicious activity. Whistleblower programs, employee training, and greater investment in cross-border information sharing are also key. Ultimately, compliance must move beyond box-ticking toward truly proactive, intelligence-led financial crime prevention.

Why Closing Laundering Loopholes Demands Action from Every Corner

The rise of digital banking and global payment apps has opened the door to an era where criminals can launder millions at the tap of a smartphone. Fraud rings do more than steal money—they exploit systemic weaknesses in banks, digital platforms, and global corporate registration regimes to make illicit funds disappear. High-profile cases involving shell companies and complicit financial institutions have exposed the limits of current AML efforts and the urgent need for coordinated, technology-driven solutions. Only with real transparency, cross-border enforcement, and a shift in industry priorities from speed to security can the financial sector hope to stem the tide of criminal money laundering.

Related Links

• Official FATF Recommendations on AML standards
• EU Anti-Money Laundering Directives information page
• U.S. FinCEN Corporate Transparency Act guidance
• FinCEN Guidance on Potential Money Laundering Risks Related to Shell Companies
• UK FCA Guidance on Preventing Money Laundering

Other FinCrime Central Article About How Scam Money Gets Recycled

• Exposing the Sinister World of Pig Butchering Scams and Money Laundering
• The Global Spread of Scam Farms and the Unstoppable Worldwide Billion-Dollar Cyberscam Industry
• Record-Breaking $12.4B Lost to AI-Powered Pig Butchering and Romance Scams in 2024

Source: Loosely inspired by OCCRP

Some of FinCrime Central’s articles may have been enriched or edited with the help of AI tools. It may contain unintentional errors.

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