According to Bradley Elliott, CEO of Anti-Money Laundering (AML) platform RelyComply, criminals are turning to a host of new techniques leveraging digital technology, websites – and even hapless victims – to move money around.

Elliott noted that the scale of global money laundering is immense—between R14.3 and R35.7 trillion (2% and 5%) of global GDP. This is the estimate according to the United Nations Office on Drugs and Crime (UNODC).

By funding terrorism and criminal activities and disguising profits generated through human trafficking, drug and arms smuggling, and corruption, money laundering makes the world less safe.

However, stamping out laundering has proved challenging, and authorities have battled it for centuries.

To combat laundering effectively, financial institutions must remain vigilant and follow Anti-Money Laundering (AML) protocols.

How dirty money gets clean

According to Elliott, common laundering techniques fall into three stages:

Placement: This is when dirty money is introduced into the system. It’s often done by using “smurfs” to deposit small amounts across different accounts, blending illicit funds with legitimate business revenue, or enlisting corrupt insiders.
Layering: This stage creates distance between the funds and their origins, using tactics like cross-border transfers, currency exchanges, gambling, and purchasing luxury goods, art, and antiques to obscure the source.
Integration: This is when laundered money re-enters the economy as clean. It can involve taking out loans through shell companies, cashing out layered investments, or using poorly regulated jurisdictions with weak AML enforcement.
Traditional methods for placing, layering, and integrating dirty money are evolving in response to regulatory clampdowns from the Financial Action Task Force (FATF) and the advent of new technologies.

Criminals are also developing new techniques to bypass AML checks.

1. Digital finance loopholes

Digital onboarding means money launderers no longer need to visit bank branches or fill in documents to open accounts.

Deepfakes and generative AI make it easier for financial institutions to forge or steal identities, creating new challenges.

2. Unregulated websites

Launderers can conduct transactions without revealing their locations using proxies and anonymous browsers.

They can transfer illicit gains into legitimate accounts through unregistered gambling sites, illegal e-commerce platforms, and transactions through legal platforms like gaming services.

3. Digital muling

Digital muling has grown more complex, with criminals now using scams on social media and recruitment sites to recruit mules who transfer dirty money across borders.

During COVID-19, financially vulnerable people became targets for these schemes.

4. Social media schemes

Like money muling, criminals target and recruit unsuspecting people to withdraw and transfer their illegal funds using fake social media identities or programmes.

Terrorists are exploiting crowdfunding platforms to fund their activities.

5. Cryptocurrency and digital assets

Cryptocurrencies provide new avenues for laundering, such as ransomware payments and cross-border transfers. Regions with lax AML controls for digital assets are especially vulnerable, giving launderers safe-havens.

The South African Revenue Service (SARS), National Treasury and the South African Reserve Bank (SARB) and other stakeholders have taken significant measures over the past year to clamp down on many of these avenues as part of a concerted bid to get off the FATF’s grey list.

Apart from processing key financial regulations and amendments to South Africa’s laws, authorities are also trying to close in on measures that are often seen as beyond their control.

Most recently, The Financial Intelligence Centre (FIC) published a new directive related to crypto trades in South Africa, which aims to hold crypto asset service providers (CASPs) accountable for tracking the origin and destination of transfers.

The directive will come into operation on 30 April 2025.

Broadly, the new directive is tightening regulation and requires crypto asset service providers (CASPs) to track and verify various details on both sides of a trade and ensure there is full information from origin to destination.

According to Elliott, legitimate financial flows “make the world go round”, but financial players need to implement robust compliance measures and constantly adapt to new criminal techniques to keep the system clean.

“Each financial institution must uphold FATF’s recommendations and their local compliance rules so they can promptly flag suspicious activity.” he said.