Operational risk management

Easily identify, measure, control and monitor the operational risks of your organization→


security risks

Ensures the confidentiality, integrity and availability of your information assets →



Keep track of all regulations and regulations that your organization must comply with →


Anti-Money Laundering

Easily identify, establish controls, and monitor AML risks→



Improve your internal audit processes, support regulatory compliance, and generate value for your organization through continuous improvement →

What will you learn? Learn with our experts about critical topics on Risk Management that will be useful in your daily work.

Piraní Academy

What are the methods for money laundering?

written by Maria Camila Arévalo, On January 24, 2020


Nowadays, criminals use different forms to carry out illicit activities associated with money laundering and terrorism financing.

Drug traffickers, smugglers or people associated with criminal organizations use different modalities to launder money and make their profits appear legal to evade the authorities. Many oversight bodies have publicized how it is done and how it affects the financial system, in turn showing the risks associated with it.

To avoid falling into this type of business that often appears to be legal, it is important to be well informed so that you are not a victim of money laundering.

Below is a list of systems that will help you prevent money laundering.

Purchasing lotteries or bogus prizes

Criminal organizations are always looking for the winners of these multi-million dollar prizes, in order to contact them and offer to buy their winning ticket in exchange for paying them more than what they will receive from the entity in charge of the game.

Once the winner accepts this exchange, what he receives is money or goods associated with money laundering and sometimes bogus prizes that were awarded abroad and would be legally brought into the country.


In this modality, people provide their names and documents so that numerous remittances can be made each year for amounts of money that are not high enough to create suspicion, thus earning a commission. They are commonly known as "smurfs".

Fictitious exports of goods

The number of exports effectively made is lower than what is actually being declared. In some cases, what they do is record the sale, but it never actually took place.

Illicit funds

Most of the time criminals are looking for organizations that are recognized and reputable, but are in financial trouble, in order to offer them help and share the illicit capital with money from legal businesses, in order to rescue them from their financial problems.

Fictitious exports of services

They pretend to sell services justified by the difficulty inherent to their quantification, claiming the reimbursement of foreign currency that, once legalized in local currency, is distributed to individuals incurring in money laundering.

Infiltration in organizations

Money laundering organizations infiltrate legally incorporated companies to intervene in the operation and financial system by allocating resources for the creation of new companies.

Fictitious foreign investment

Local companies that are having financial trouble receive financial support from organizations abroad to carry out charity projects. The company receiving the aid receives the foreign currency through exchange brokers and legalizes it in the local currency. This money is used for payments that have nothing to do with the proposed objectives.

Foreign debt replacement

Companies with the ability to export locally and that have collection problems abroad get help from criminal organizations that purchase the debt at a discount. Once this happens, the company's financial entity receives a payment order from abroad. The buying organization receives the foreign currency through foreign exchange brokers and translates it into local currency.

Peso broker

A financial broker contacts an illegal company abroad through an individual requesting foreign currency in the country. The criminal organization does the work of providing the foreign currency and the person makes resources available to the local company.

Border money changers

The foreign currency enters the country in cash and is given to the money changers so that they can then transfer it to dollars; once this is done the money is exchanged to dollars and deposited in accounts of non-existent companies. This money is withdrawn by issuing checks, used to send transfers in the name of payment of suppliers.

Tax havens

Increasingly scarce, these sanctuaries are places that most money launderers dream of. Foreign investors or those who have agreements with an entity domiciled there do not pay local taxes. Neither do visitors who create bank accounts, thus safeguarding their money with no legal implications.

One of the aspects that most motivate launderers to use this strategy, is the overwhelming lack of oversight on personal wealth.

Real estate acquisition and construction

This consists of the purchase and construction of various types of properties, from condos to luxury hotels.

Using this method, they comply with the objective of legalizing their income, declaring that they are from their constructions. Under this measure, unusual transactions are also reflected in invoices, with construction companies and material distribution companies as partners.

Hotels located in tourist sites are the most remarkable, since these are the places where there are high volumes of visitors and where the most "income" can be recorded. That is why it is not only financial institutions that should beware of this type of crime. Real estate companies should also have a system in place for preventing money laundering and terrorism financing.

"Shell" companies

The creation of these companies is a safe strategy for criminals. There are launderers that create companies, submit monthly income reports and pay some taxes, which allows them to be incorporated as a stable and functional company.

But the surprising fact is that many of them have not even opened in years, as they are only fronts to show that income is being generated by the sale of goods or services, and expenses are made for the purchase of new materials or payroll payments to employees.

Front men

Launderers who have considerable, but not exorbitant sums of money are the ones who use this approach.

Front men allow criminals to distribute their money among several people, usually friends or relatives, so that they can create bank accounts with the amount given to them. In order not to cause any suspicion, they are careful that the accounts do not exceed the limits of money to be declared by each country.

Front men are used mainly by those starting out in the business.

Thus, in order to detect these efforts of criminals in time, it is important to identify signs of unusual transactions. 

Download a free ebook about money laundering and terrorism financing prevention manual

Try Pirani For FREE NOW
Download a free Excel Risk Matrix Template
Free e-book Prevention & Correction of Human Error For Risk Management

Leave us your comments