February 2024

2024 National Money 

Laundering Risk

Assessment 
Department of the Treasury

National Money Laundering Risk 

Assessment (NMLRA) 
2024 ◆ National Money Laundering Risk Assessment i

Table of Contents

EXECUTIVE SUMMARY ......................................................................... 1

INTRODUCTION ................................................................................... 3

SECTION I. THREATS ........................................................................... 5

Fraud .......................................................................................................... 5

1. Investment Fraud .........................................................................................................................6

2. Healthcare Fraud..........................................................................................................................9

3. Update on COVID-19-Related Fraud ..............................................................................................11

4. Elder Financial Exploitation..........................................................................................................12

5. Special Focus: Check Fraud.........................................................................................................15

6. Business Email Compromise (BEC) ...............................................................................................17

Drug Trafficking ......................................................................................... 18

1. Illicit Synthetic Opioids (including Fentanyl) and Heroin ..............................................................19

2. Priority DTO Threat Actors ...........................................................................................................21

Cybercrime.................................................................................................. 23

1. Ransomware ................................................................................................................................23

2. Malware .......................................................................................................................................25

Professional Money Laundering ................................................................... 26

1. Money Mule Networks ..................................................................................................................27

2. Chinese Money Laundering Organizations and Networks..............................................................29

3. Special Focus: Russian Money Laundering and Sanctions Evasion...............................................31

Corruption .................................................................................................. 32

1. Foreign Corruption.......................................................................................................................33

2. Domestic Corruption ....................................................................................................................34

3. Special Focus: Unlawful Campaign Finance.................................................................................35

Human Trafficking & Human Smuggling ...................................................... 36

1. Human Trafficking........................................................................................................................36

2. Human Smuggling .......................................................................................................................39

Special Focus: Tax Crime............................................................................. 40

Update on Wildlife Trafficking and other Nature Crimes ............................... 41

1. The Intersection of Nature Crimes with Other Threats ..................................................................41

SECTION II. VULNERABILITIES AND RISKS............................................ 43

Cash ........................................................................................................... 43

1. Bulk Cash Smuggling....................................................................................................................43

2. Cash Consolidation Cities .............................................................................................................44

3. Cash-Intensive Businesses and Front Companies..........................................................................46

4. Funnel Accounts ...........................................................................................................................47

Financial Products and Services.................................................................... 48

1. Money Orders ...............................................................................................................................48
ii 2024 ◆ National Money Laundering Risk Assessment

2. Prepaid Cards...............................................................................................................................49

3. Peer-to-Peer Payments.................................................................................................................51

Legal Entities and Arrangements .................................................................. 53

1. Legal Entities................................................................................................................................53

2. Beneficial Ownership Information................................................................................................54

3. Trusts ...........................................................................................................................................56

Virtual Assets .............................................................................................. 58

1. Inconsistent Compliance with Domestic Obligations ....................................................................59

2. Inconsistent Implementation of International AML/CFT Obligations .............................................62

3. Obfuscation Tools and Methods....................................................................................................62

4. Mixing ..........................................................................................................................................63

5. Disintermediation ........................................................................................................................65

6. Special Focus: Decentralized Finance (DeFi) ...............................................................................65

AML/CFT Compliance Deficiencies ................................................................ 66

1. Banks ...........................................................................................................................................66

2. Money Services Businesses...........................................................................................................70

3. Securities Broker-Dealers and Mutual Funds.................................................................................72

4. Complicit Professionals ...............................................................................................................74

Luxury and High-Value Goods ...................................................................... 75

1. Real Estate ...................................................................................................................................75

2. Precious Metals, Stones, and Jewels.............................................................................................78

3. Update on Art...............................................................................................................................80

4. Automobiles .................................................................................................................................81

Casinos and Gaming .................................................................................... 82

1. Special Focus: Online Gaming ....................................................................................................84

Entities Not Fully Covered by AML/CFT Requirements.................................... 86

1. Investment Advisers ....................................................................................................................86

2. Third-Party Payment Processors...................................................................................................89

3. Attorneys .....................................................................................................................................91

4. Accountants .................................................................................................................................94

CONCLUSION ....................................................................................... 96

PARTICIPANTS .................................................................................... 97

METHODOLOGY ................................................................................... 98

TERMINOLOGY .................................................................................... 100

LIST OF ACRONYMS ............................................................................. 101
2024 ◆ National Money Laundering Risk Assessment 1

EXECUTIVE SUMMARY

Money laundering enables criminal activity and is necessary to disguise ill-gotten gains. It facilitates 

crime, distorts markets, and has a devastating economic and social impact on citizens. It also threatens 

U.S. national security as money laundering allows drug traffickers, fraudsters, human trafficking 

organizations, and corrupt officials, to operate and expand their criminal enterprises. 

The 2024 National Money Laundering Risk Assessment (NMLRA) examines the current money laundering 

environment and identifies the ways in which criminals and other actors seek to launder funds. It aims to 

inform the understanding of illicit finance risk by governmental and private sector actors, strengthen risk 

mitigation strategies of financial institutions, and enhance policy deliberations by the U.S. government. 

As this NMLRA discusses, criminals constantly develop and adopt new ways to launder illicit funds. Thus, 

there is a need to constantly track and address evolving money laundering trends and methodologies.

This risk assessment reflects an evolving understanding of the key money laundering threats, including 

crimes that generate illicit proceeds and criminal actors involved in the laundering process. The 2024 

NMLRA highlights how both old and relatively new schemes and threat actors are adapting to maximize 

profit from their criminal activities, including those related to check fraud, unlawful campaign finance, 

tax crime and Russian money laundering. For example, criminals have employed novel means, such as 

using telemedicine platforms and virtual asset investment scams, to carry out fraud schemes on a larger 

scale. Further, Russian money laundering organizations use a vast global network of shell companies, 

bank accounts, and trusts to launder funds or evade sanctions on behalf of others.

This evolution in coverage and understanding extends to long-standing and new money laundering 

vulnerabilities, to include gaps and weaknesses in regulation and policy. Shell companies and the lack of 

timely access to beneficial ownership information and, transparency for certain non-financed real estate 

transactions, are distinct vulnerabilities in the U.S. anti-money laundering/ countering the financing of 

terrorism (AML/CFT) system. The United States worked expeditiously to close these long-standing gaps. 

The establishment of a beneficial ownership information registry housed at Treasury’s Financial Crimes 

Enforcement Network (FinCEN) on January 1, 2024 will fundamentally enhance corporate transparency 

and address the United States’ most significant and longstanding gap in its AML/CFT regime. Additionally, 

FinCEN is drafting regulations to address money laundering vulnerabilities in the residential real estate 

sector. 

Another concerning money laundering vulnerability is the lack of comprehensive AML/CFT regulations 

for certain financial intermediaries, such as investment advisers, that may not be directly subject to 

comprehensive AML/CFT regulations or generally examined for AML/CFT compliance. Treasury plans to 

issue in the first quarter of 2024 an updated NPRM that would propose applying AML/CFT requirements 

pursuant to the Bank Secrecy Act, including suspicious activity reporting obligations, to certain 

investment advisers. Additionally, the 2024 NMLRA highlights a number of new financial services that 

criminals seek to exploit, such as so-called “decentralized finance” (DeFi) and online gaming. Illicit 

actors, including ransomware cybercriminals, thieves, scammers, and the Democratic People’s Republic 

of Korea (DPRK) cyber actors, are now using DeFi services to transfer and launder their illicit proceeds. 

In recent years, legal and technological developments have led to substantial growth in online gaming 

activity in the United States. The anonymity afforded by online gaming and the size and rapid growth of 

this sector now present unique money laundering risks.
2 2024 ◆ National Money Laundering Risk Assessment

Over the last 50 years the United States has built a robust AML/CFT framework to address illicit finance 

risk. The United States Department of the Treasury and its interagency partners continue to ensure that 

the U.S. AML/CFT regime stays ahead of criminals who use existing and emerging techniques to launder 

the profits of their crimes. 

This risk assessment, along with the 2024 National Terrorist Financing and Proliferation Financing Risk 

Assessments, serves as a prologue to the 2024 National Strategy to Combat Terrorist and Other Illicit 

Financing (2024 Strategy). The 2024 Strategy provides a detailed roadmap of the actions that the United 

States should take to further strengthen its AML/CFT regime and address both novel and lingering illicit 

finance vulnerabilities. 
2024 ◆ National Money Laundering Risk Assessment 3

INTRODUCTION

This report identifies the most significant money laundering threats, vulnerabilities, and risks the United 

States faces. With a gross domestic product (GDP) of 25 trillion dollars, the United States is the world’s 

largest economy and is particularly susceptible to the laundering of illicit proceeds. This risk is also due to 

the value, stability, and the centrality of the U.S. dollar in the global economy’s payment infrastructure.

Like 2022, this year’s risk assessment identifies the most significant money laundering crimes in the 

United States are linked to fraud, drug trafficking, cybercrime, human trafficking, human smuggling, and 

corruption. In addition, this report includes a “special focus” on risks that were not identified or fully 

addressed in previous risk assessments. 

Fraud remains the largest and most significant proceed-generating crime for which funds are laundered 

in or through the United States. Criminals make billions of dollars annually by deceiving U.S. government 

programs, private companies, and individuals into sending funds via a variety of methods where those 

funds are ultimately unaccounted for, diverted, or stolen.1 Investment fraud and healthcare fraud remain 

the most prevalent proceeds-generating crimes.

The gravity of the illicit drug problem, particularly the use of fentanyl, represents a crisis for U.S. public 

health and national security. Proceeds from illicit drug sales remain one of the main proceed-generating 

offenses. Mexican drug trafficking organizations (DTOs), particularly the Sinaloa Cartel and the Cartel 

Jalisco Nueva Generación (CJNG), remain the most predominant and sophisticated DTOs active in the 

United States, with consolidated control over drug corridors from Mexico and are heavily involved in the 

trafficking of fentanyl, methamphetamine, cocaine, heroin, and marijuana. 

Corrupt officials, both foreign and domestic, steal U.S. and foreign public funds and misappropriate 

wealth from U.S. citizens and others. They generate illicit proceeds in the form of bribes, kickbacks, and 

embezzled assets and launder them in the United States.

With respect to cybercrime, ransomware actors have increased the potency of their attacks over the last 

few years and have exerted greater pressure on victims to extract payments. Further, cybercrime groups 

linked to or receiving safe haven from Russia and the Democratic People’s Republic of Korea (DPRK) have 

been responsible for an overwhelming share of recently identified ransomware-related incidents and 

openly attacked U.S. organizations.

The prevalence of professional money laundering—by individuals, organizations, and networks that 

launder for a fee or commission—continues to grow as a threat to the U.S. financial system. Chinese 

Money Laundering Organizations (CMLOs) are now one of the key actors in professionally laundering 

money within the United States and around the globe. Money mules are also a constant feature in the 

movement of fraud or other illicitly earned proceeds.

While the United States has many legal, supervisory, and enforcement mitigation measures in place to 

prevent, detect and stop money laundering, criminals seek to identify and exploit gaps these measures. 

1 The potential loss from fraudulent scams and cyberattacks reported to the FBI in 2022 equaled $10.3 billion, which is assumed 

to underrepresent actual loss based upon the voluntary nature of reporting to the FBI Internet Crime Center (IC3). See Federal 

Bureau of Investigation (FBI), “2022 Internet Crime Report,” FBI Internet Crime Complaint Center, https://www.ic3.gov/Media/PDF/

AnnualReport/2022_IC3Report.pdf. See Figure 12.
4 2024 ◆ National Money Laundering Risk Assessment

Some regulated financial institutions remain a money laundering vulnerability despite many having 

adequate AML/CFT programs. Analysis of these vulnerabilities, including occasional AML/CFT compliance 

deficiencies, is a key feature of this report.

Criminals and transnational criminal organizations (TCOs) continue to use cash to launder illicit proceeds 

because it provides anonymity, stability, and is widely accepted. While bulk cash smuggling and the use 

of cash-intensive businesses are historically favored laundering methods for many DTOs, criminals have 

expanded the way they transport currency, including using new cities as cash consolidation points to 

convert bills more expeditiously. They also charter private aircraft to smuggle cash via less monitored 

routes. 

While the use of virtual assets for money laundering remains far below that of fiat currency, this 

assessment provides a comprehensive update on existing and evolving trends in AML/CFT risks 

associated with virtual assets, including inconsistent compliance with domestic laws and international 

AML/CFT obligations, obfuscation tools and methods, mixing, disintermediation, and other aspects of 

purported decentralized finance (DeFi).

This Report was prepared pursuant to Sections 261 and Section 262 of the Countering America’s 

Adversaries Through Sanctions Act (PL 115-44)as amended by Section 6506 of the FY22 National Defense 

Authorization Act (NDAA) (P.L. 117-81). The 2024 NMLRA primarily relies on open-source reporting from 

the Department of Justice (DOJ), the use of publicly available court documentation2, and consultations 

with law enforcement agencies (LEAs).3 The NMLRA also utilizes information from Bank Secrecy Act (BSA) 

reporting, such as strategic analysis on suspicious activity reports (SARs) conducted by the Financial 

Crimes Enforcement Network (FinCEN) as well as various types of enforcement actions taken by U.S. 

regulatory agencies. (See Annex on Methodology for further information.)

2 The charges contained in an indictment are merely allegations. All defendants are presumed innocent until proven guilty beyond 

a reasonable doubt in a court of law. Case examples will cite names of those only found guilty. 

3 Information from LEAs will be cited as “according to law enforcement sources.”
2024 ◆ National Money Laundering Risk Assessment 5

SECTION I. THREATS

In the context of the NMLRA, money laundering threats4 are the predicate crimes that generate illicit 

proceeds for laundering in, from, or through the United States. Money laundering threats also represent 

criminal actors such as those engaged in professional money laundering (PML), and TCOs, including 

DTOs.5 Where reliable data exists, this section also discusses the proceeds of crimes generated abroad 

(e.g., corruption) that are laundered through or in the United States. The findings related to money 

laundering threats within this risk assessment align with the 2021 AML/CFT National Priorities issued by 

the FinCEN.6

This report identifies the top money laundering threats as fraud; drug trafficking; cybercrime; corruption; 

human trafficking; human smuggling; and professional money laundering. This report also includes 

special focus sections on the increased risk identified during the reporting period for check fraud; tax 

crime; unlawful campaign finance; and Russian money laundering. The report also highlights a range of 

relatively novel schemes. including call center fraud; virtual currency investment scams (more commonly 

known as pig-butchering scams);7 prescription drug diversion; and schemes involving electronic goods. 

The report also provides an update on wildlife trafficking and other nature crimes. 

Fraud

Fraud,8 both in the private sector and in government benefits and payments, continues to be the largest 

driver of money laundering activity in terms of the scope of activity and volume of illicit proceeds, 

generating billions of dollars annually. Fraud is a broad criminal activity that can be categorized in a 

variety of ways: (1) by entity exploited (e.g., financial institution, government programs, or insurance 

companies); (2) by victim (e.g., elders, investors, or taxpayers); or (3) by how it is perpetrated (e.g., 

identity theft/fraud, business email compromise (BEC), account takeover, check fraud, loan fraud, wire 

fraud, credit/debit card fraud, securities fraud, or cyber-enabled fraud).9 There can be significant overlap 

in these classifications and with other money laundering typologies such as the use of professional 

money laundering organizations and money mules, which are addressed later in this report.

Investment scams and healthcare fraud continue to represent the highest proceeds-generating offenses. 

This year’s report also highlights check fraud, which has seen a major rise in the last few years, as well as new 

types of fraud involving the use of technology, such as telemedicine and virtual asset investment scams. 

Fraud groups are often well-organized, sophisticated, and can be cyber-enabled. They can use social 

media, darknet forums, and encrypted messaging apps for communication, coordination, sales, and 

recruitment of new criminal actors. The Fraud Section is designed not to focus on the predicate offense 

4 See ANNEX on METHODOLOGY.

5 TCOs, to include DTOs, are identified as AML/CFT National Priorities. 

6 FinCEN, “Anti-Money Laundering and Countering the Financing of Terrorism National Priorities”, (June 30, 2021), https://www.

fincen.gov/sites/default/files/shared/AML_CFT%20Priorities%20(June%2030%2C%202021).pdf.

7 FinCEN Alert, FIN-2023-Alert005, September 8, 2023

8 Fraud is identified as an AML/CFT National Priority.

9 The 2024 NMLRA has used recent work by the Financial Action Task Force to help classify cyber-enabled fraud. See: FATF, “Illicit 

financial flows from Cyber-enabled Fraud”, (November 9, 2023), https://www.fatf-gafi.org/content/dam/fatf-gafi/reports/Illicitfinancial-flows-cyber-enabled-fraud.pdf.coredownload.inline.pdf. 
6 2024 ◆ National Money Laundering Risk Assessment

but to highlight how fraudsters target U.S. citizens and companies and abuse the U.S. financial sector to 

launder illicit proceeds.

1. Investment Fraud

For the first time, investment schemes represented the highest aggregate reported dollar loss to victims, 

replacing BEC as the costliest scheme reported to the Federal Bureau of Investigation’s (FBI’s) Internet 

Crime Complaint Center (IC3). Based on an analysis by IC3, cyber-enabled investment fraud cost U.S. 

citizens a staggering $3.3 billion in 2022 alone, representing a 127 percent surge from the previous year.10

For 2022, the number of investment fraud complaints received ranked 6th when compared to other crime 

types; however, investment fraud complaints represented the highest reported dollar loss by crime type. 

Investment fraud complaints replaced BEC complaints as the highest aggregate reported dollar loss. BEC 

had been the highest aggregate dollar loss since at least 2014. 

Investment fraud refers to schemes where criminals provide false information so that the victim will 

invest or transfer control of assets to the perpetrator.11 This illicit activity includes types of securities 

fraud. Once the perpetrator has control of the assets in investment fraud schemes, they divert funds 

out of the investment vehicle. For the first time, investment schemes reported the highest financial loss 

to victims, as measured by aggregate dollar value.12 An estimated 10 percent of investors will become 

victims of an investment fraud scheme at some point.13

Although the increase in investment fraud is often attributed to the recent growth in the number of retail 

traders and price appreciation for securities and virtual assets from 2020 through 2022, the number of 

reported schemes and average dollar amount lost per victim have both been increasing since at least 

2018.14 Social media influencers have contributed to and have facilitated investment fraud by using their 

large audiences and fans’ rapport to solicit funds for investment fraud schemes.15 One case involved 

the unregistered offer and sale of crypto asset securities, the fraudulent manipulation of the secondary 

market, and the orchestration of a scheme to pay celebrities to tout crypto asset securities without 

disclosing their compensation.16 More traditional types of investment fraud, including through real 

estate, have remained stable over the years. In contrast, investment fraud involving virtual assets has 

rapidly increased in both the number of victims and losses, rising 183 percent between 2021 and 2022.3

Just as certain professions lend themselves to being used to facilitate certain types of schemes, each 

scheme type targets a certain demographic, based on investment fraud typology from the FBI and 

10 FBI, “Internet Crime Complaint Center Releases 2022 Statistics”, (March 22, 2023), https://www.fbi.gov/contact-us/field-offices/

springfield/news/internet-crime-complaint-center-releases-2022-statistics.

11 FBI, “Securities Fraud Awareness & Prevention Tips”, https://www.fbi.gov/stats-services/publications/securities-fraud.

12 FBI, “Internet Crime Report 2022” (March 2023), https://www.ic3.gov/Media/PDF/AnnualReport/2022_IC3Report.pdf.

13 Pension Research Council, “Understanding and Combating Investment Fraud”, (2016), https://pensionresearchcouncil.wharton.

upenn.edu/wp-content/uploads/2017/02/WP2016-19-Kieffer-and-Mottola.pdf.

14 FBI, “Internet Crime Report 2020”, (March 2021), https://www.ic3.gov/Media/PDF/AnnualReport/2020_IC3Report.pdf.

15 SEC, “Investor Alerts and Bulletins Social Media and Investment Fraud – Investor Alert,” (August 29, 2022), https://www.sec.gov/

oiea/investor-alerts-and-bulletins/social-media-and-investment-fraud-investor-alert.

16 SEC, “SEC Charges Crypto Entrepreneur Justin Sun and his Companies for Fraud and Other Securities Law Violations”, (March 22, 

2023), https://www.sec.gov/news/press-release/2023-59.
2024 ◆ National Money Laundering Risk Assessment 7

Securities and Exchange Commission (SEC).17 For example, high-yield investment schemes primarily 

target elderly victims, age 65 or older, due to the victims’ larger investable assets and increased reliance 

on investment income.18 Criminals also often target religious or ethnic communities, leveraging the builtin trust found in these communities.19

Once the criminal has identified a target or vulnerable population, initial contact typically involves 

advertising potentially high rates of returns with minimal risk via an investment vehicle or strategy 

that investors can only access through the criminal.20 Once the funds have been transferred into the 

investment vehicle controlled by the criminal, the criminals misappropriate the funds by transferring 

them to personal or otherwise undisclosed bank accounts. After they divert the funds out of the 

investment vehicle, the criminal typically uses them for purposes other than what they represented to 

the investor, such as for personal uses or luxury purchases.21

a) Ponzi Schemes

A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new 

investors. Ponzi scheme organizers often promise to invest your money and generate high returns with 

little or no risk. But in many Ponzi schemes, the fraudsters do not invest the money. Instead, they use it to 

pay those who invested earlier and may keep some for themselves. With little or no legitimate earnings, 

Ponzi schemes require a constant flow of new money to survive. When it becomes hard to recruit 

new investors, or when large numbers of existing investors cash out, these schemes tend to collapse. 

Ponzi schemes are named after Charles Ponzi, who duped investors in the 1920s with a postage stamp 

speculation scheme.22

If not identified early, losses to investors can expand exponentially as more individuals contribute money 

to the pool of funds under the perpetrator’s control.23 Ponzi schemes are not immediately apparent 

to victims, allowing the schemes to operate for months or even years. Like most types of frauds, Ponzi 

schemes have different variations and may exploit different types of investment, such as foreign 

exchange trading. In one such scheme, a fraudster persuaded at least 700 victims to invest through 

promissory notes and other means, causing victim losses exceeding $80 million.24 Investigators are now 

seeing the use of DeFi technology involving smart contracts to carry out traditional Ponzi and pyramid 

schemes. Criminals will develop and deploy smart contracts that employ Ponzi-pyramid techniques. 

17 FBI’s typology refers to the breakdown and subdivision of investment fraud as reported in “Internet Crime Report 2022”. SEC’s 

typology refers to that provided on Investors.Gov. 

18 SEC, “High Yield Investment Programs”, (March 2023), https://www.investor.gov/protect-your-investments/fraud/types-fraud/

high-yield-investment-programs.

19 SEC, “Affinity Frauds”, (June 2014), https://www.sec.gov/files/ia_affinityfraud.pdf.

20 DOJ, “Dearborn Resident Sentenced in Investment Fraud Scheme”, (May 4, 2022), https://www.justice.gov/usao-edmi/pr/dearbornresident-sentenced-investment-fraud-scheme#:~:text=DETROIT%20%2D%20Dearborn%20resident%20Ali%20Rameh,Ison..

21 Investment frauds differ greatly by scheme used. Based on analysis of DOJ cases, the most common narrative is what has been 

reflected and discussed. 

22 SEC, Types of Fraud, “Ponzi Scheme,” https://www.investor.gov/protect-your-investments/fraud/types-fraud/ponzi-scheme.

23 DOJ, “DC Solar Owner Sentenced to Over 11 Years in Prison for Billion Dollar Ponzi Scheme” (June 28, 2022), https://www.

justice.gov/usao-edca/pr/dc-solar-owner-sentenced-over-11-years-prison-billion-dollar-ponzi-scheme#:~:text=—%20U.S.%20

District%20Judge%20John%20A,Talbert%20announced.

24 DOJ, “Jury Finds Sarasota Man Guilty Of Running $80 Million "Oasis" Forex Ponzi Scheme”, (May 5, 2022), https://www.justice.gov/

usao-mdfl/pr/jury-finds-sarasota-man-guilty-running-80-million-oasis-forex-ponzi-scheme.
8 2024 ◆ National Money Laundering Risk Assessment

As soon as an investor places virtual assets into a smart contract, the smart contract automatically 

diverts the investor’s funds to other investors, such that earlier investors are paid with funds from later 

investors.25 

b) Virtual Asset Investment Schemes

Virtual asset investment schemes (VAIS) include a variety of traditional fraud fact patterns based on 

misrepresentations concerning potential investment opportunities in virtual assets. Recently, U.S. 

law enforcement is seeing a growing number of instances of fraud that are initiated when fraudsters 

contact victims on social media, dating platforms, or text messages purportedly sent to the wrong 

number. Scammers often portray outreach as an “innocent” connection when it is a scripted, calculated 

attempt designed to build rapport and gain trust with the victim. Eventually, these conversations lead to 

discussions of investment opportunities, wherein victims are lured into investing virtual assets using fake 

websites or applications that allow the scammers to manufacture fraudulent data about the investment. 

The deception becomes apparent when victims attempt to cash out their investments, or when the 

fraudster terminates communication with the victim. Unlike schemes involving wire transfers, where 

some restoration of financial losses may occur if it is quickly reported, victims of VAIS are less likely to 

recover their virtual asset losses because of the ability to rapidly transfer virtual assets across borders, 

potential challenges in identifying virtual asset service providers (VASPs) involved in transfers and 

relevant points of contact, and the fact that virtual asset transfers are typically irreversible.26

Losses from VAIS accounted for nearly 75 percent of all internet-enabled investment fraud in 2022.27 VAIS 

often target a younger demographic, with victims having a median age of between 30 and 49. Common 

schemes of this type include pig butchering (see snapshot below) and some Ponzi scheme variations 

(see above). While many of the methods used by these scammers are similar to those used by traditional 

fraudsters, they often take advantage of the publicity around virtual assets to victimize investors.

Pig Butchering 

Pig butchering scams are investment scams involving virtual currency fraud. In “pig butchering” 

schemes, the perpetrator develops an online relationship, sometimes romantic, with the victim. The 

perpetrator entices the victim to “fatten” an account by transferring virtual assets into a virtual asset 

wallet, usually on a fake virtual asset platform controlled by the perpetrator. Then, metaphorically, 

“butcher” the victim or their accounts by taking the victim’s funds.28

After gaining their victim’s trust – sometimes as soon as over a few days or as long as a few months – 

scammers eventually introduce the idea of investing in virtual assets. The scammers then direct victims 

25 DOJ, “Forsage Founders Indicted in $340M DeFi Crypto Scheme”, (February 22, 2023), https://www.justice.gov/opa/pr/

forsage-founders-indicted-340m-defi-crypto-scheme#:~:text=A percent20federal percent20grand percent20jury percent20in, 

percent24340 percent20million percent20from percent20victim percent2Dinvestors.

26 FBI, “Consumers Intending to Invest with Cryptocurrency: Be Aware, Be Cautious and Be Educated”, (March 9, 2023), https://www.

fbi.gov/contact-us/field-offices/richmond/news/consumers-intending-to-invest-with-cryptocurrency-be-aware-be-cautiousand-be-educated.

27 The VA amount for 2022 ($2.57 billion) was divided by the total for investment fraud claims for 2022 ($3.31 billion) to get 77.6 

percent, see FBI, “2022 IC3 Report,” p.12. https://www.ic3.gov/Media/PDF/AnnualReport/2022_IC3Report.pdf.

28 DOJ, “Middlesex County Man Charged with Laundering $2.1 Million Obtained from Internet-Related Frauds”, (October 11, 

2022), https://www.justice.gov/usao-nj/pr/middlesex-county-man-charged-laundering-21-million-obtained-internet-relatedfrauds#:~:text=Okuonghae percent20laundered percent20at percent20least percent20 percent242.1,the percent20transfer 

percent2C percent20whichever percent20is percent20greater.
2024 ◆ National Money Laundering Risk Assessment 9

to fake virtual asset investment platforms, controlled by the scammer or co-conspirators posing as 

investment advisers or customer service representatives. Once victims make an initial “investment,” the 

fake platforms are manipulated to show substantial gains. Sometimes, victims are allowed to withdraw 

some of these initial “funds” to further engender trust in the scheme. It is not until a large investment is 

made that victims find that they are unable to withdraw their funds. Even when a victim is denied access 

to their funds, the fraud is often not yet over. Scammers request additional payments for purported taxes 

or fees, promising these payments will allow victims access to their accounts. Scammers often continue 

to steal from their victims and do not stop until they have deprived victims of any remaining savings. In 

some cases, the criminals prompt victims to liquidate holdings in tax-advantaged accounts or take out 

home equity lines of credit and second mortgages on their homes to fund purported investments.29

Law enforcement has observed scammers then laundering the funds through several unhosted wallet 

addresses or by exchanging virtual assets on different blockchains through cross-chain bridges, referred 

to as chain hopping, before sending the funds to foreign-located VASPs. In some cases, these are nested 

VASPs, smaller financial institutions that offer services to their customers through accounts and subaccounts at larger VASPs to benefit from the greater liquidity in larger VASPs. Scammers have also been 

observed using VASPs in Southeast Asia to exchange virtual assets from victims for fiat currency. In 

April 2023, the DOJ seized virtual assets worth an estimated $112 million linked to accounts that were 

allegedly used to launder the proceeds of various virtual asset confidence scams.30 Law enforcement 

also identified cases in which VASPs identified and halted victim transfers; in such instances, the 

scammers directed victims to send funds via wire transfers to foreign bank accounts associated with shell 

companies or held by money mules associated with the scammers.

Some of the perpetrators of these scams may themselves be victims of separate crimes, including 

human trafficking. Pig butchering schemes are often run by criminal networks, which often place fake 

job advertisements to attract young English-speaking people from Asian countries. These individuals are 

then held, against their will, in secure compounds, generally in Asia, where they are forced (often under 

threat of violence) to scam people throughout the globe.31

2. Healthcare Fraud

Healthcare fraud continues to generate significant proceeds and victimize government programs as 

well as private entities. In fiscal year 2022, health care fraud remained a leading source of False Claims 

Act settlements and judgments.32 Accordingly, the DOJ and federal law enforcement agencies devote 

significant resources to combating this type of fraud, including through the development of a “strike 

force” model of investigative and prosecutorial resources. In Fiscal Year (FY) 2022, the U.S. Sentencing 

Commission received 431 cases of healthcare fraud, and 90 percent of all healthcare offenders were 

U.S. citizens.33 Schemes often involve hundreds of millions, if not billions, of dollars generated through 

29 FinCEN, “FinCEN Alert on Prevalent Virtual Currency Investment Scam Commonly Known as “Pig Butchering” (FIN-2023-Alert005)”, 

(September 8, 2023), https://www.fincen.gov/sites/default/files/shared/FinCEN_Alert_Pig_Butchering_FINAL_508c.pdf.

30 DOJ, “Justice Department Seizes Over $112M in Funds Linked to Cryptocurrency Investment Schemes”, (April 3, 2023), https://

www.justice.gov/opa/pr/justice-department-seizes-over-112m-funds-linked-cryptocurrency-investment-schemes.

31 HSI, “Special Edition Cornerstone Newsletter, HSI and ACAMS Alert: “Pig Butchering”, (April 2023), https://www.ice.gov/doclib/

cornerstone/pdf/cornerstoneACAMS_SpecialIssue40_Apr21_2023.pdf.

32 DOJ “False Claims Act Settlements and Judgments Exceed $2 Billion in Fiscal Year 2022”, (February 7, 2023), https://www.justice.

gov/opa/pr/false-claims-act-settlements-and-judgments-exceed-2-billion-fiscal-year-2022. 

33 USSC, “Health Care Fraud”, (August 2023), https://www.ussc.gov/sites/default/files/pdf/research-and-publications/quick-facts/

Health_Care_Fraud_FY22.pdf.
10 2024 ◆ National Money Laundering Risk Assessment

fraudulent activity and run the gamut from corporate fraud, bribery, and kickbacks, to activity resulting 

in the illicit distribution and diversion of narcotics. These large-scale fraud schemes increase healthcare 

costs, waste limited resources, and cause an increased risk of mortality.34 Investigators and prosecutors 

have employed innovative methods to target particularly egregious activity, given the complexity of these 

schemes.35

One of the most common types of fraud perpetrated against Medicare, Medicaid, and other Federal 

healthcare programs involves filing false claims for reimbursement.36 Groups ranging from large networks 

to small groups are actively filing false claims to generate funds. One recent case saw Francisco Patino, 

M.D., convicted of fraud and money laundering, among other charges, for his role in running a scheme 

that required patients to receive unnecessary medical treatment and prescriptions of dangerous and 

unnecessary addictive opioids. Patino and a handful of co-conspirators submitted over $250 million 

in false and fraudulent claims to Medicare,37 Medicaid,38 and other health insurance programs for 

unnecessary medical treatment.39 Another example of healthcare fraud includes the use of fake medical 

supply companies to fraudulently bill Medicare, Medicaid, and private healthcare insurers to generate 

hundreds of thousands of dollars in illicit proceeds.40

Fraudsters are often repeat money laundering offenders. For example, Carlos Alberto Padron pleaded 

guilty to money laundering involving two separate money laundering conspiracies while on supervised 

release from a prior federal prison sentence. During 2022, Padron laundered $249,901 in Medicare fraud 

proceeds related to two fraudulent durable medical equipment (DME)41 companies. Padron and his coconspirator picked up nearly $229,920 in cash in parking lots after they laundered the money. During 

2021, Pardon also laundered $2,185,392 in Medicare fraud proceeds related to two other DME companies. 

Padron was involved in managing the nominee owner of those two companies and received some of the 

approximately $260,000 in withdrawals of Medicare fraud proceeds from the nominee owner.42

34 CMS, “Exploring Fraud, Waste, and Abuse within Telehealth”, https://www.cms.gov/files/document/hfpp-white-paper-exploringfraud-waste-abuse-within-telehealth.pdf-0.

35 DOJ, Health Care Fraud Unit Website (accessed 11/1/23), https://www.justice.gov/criminal-fraud/health-care-fraud-unit.

36 HHS, “Semiannual Report to Congress”, (Spring 2023), https://oig.hhs.gov/reports-and-publications/semiannual/index.asp.

37 Medicare is Government health insurance for people 65 or older. See What is Medicare, https://www.medicare.gov/whatmedicare-covers/your-medicare-coverage-choices/whats-medicare.

38 All states, the District of Columbia, and the U.S. territories have Medicaid programs designed to provide health coverage for lowincome people. Although the Federal government establishes certain parameters for all states to follow, each state administers 

their Medicaid program differently, resulting in variations in Medicaid coverage across the country. See Medicaid Program History, 

https://www.medicaid.gov/about-us/program-history/index.html.

39 DOJ, “Doctor Sentenced for Role in Illegally Distributing 6.6 Million Opioid Pills and Submitting $250 Million in False Billings”, 

(January 1, 2023), https://www.justice.gov/opa/pr/doctor-sentenced-role-illegally-distributing-66-million-opioid-pills-andsubmitting-250.

40 DOJ, “Woman Convicted of Laundering Over $750,000 from Health Care Fraud Scheme”, (May 13, 2022,) https://www.justice.gov/

opa/pr/woman-convicted-laundering-over-750000-health-care-fraud-scheme#:~:text=According percent20to percent20court 

percent20documents percent20and, percent2C percent20to percent20her percent20co percent2Dconspirators.

41 Durable medical equipment (DME) is defined as equipment and supplies ordered by a health care provider for everyday or 

extended use. Coverage for DME may include oxygen equipment, wheelchairs, crutches or blood testing strips for diabetics.

42 DOJ, “Repeat Offender Sentenced to a total of 90 Months in Prison for Money Laundering of Medicare Fraud Proceeds”, 

(September 20, 2023), https://www.justice.gov/usao-sdfl/pr/repeat-offender-sentenced-total-90-months-prison-moneylaundering-medicare-fraud. 
2024 ◆ National Money Laundering Risk Assessment 11

a) Telemedicine Fraud

Recent adjudicated law enforcement cases and court documentation indicate an increase in fraudulent 

activity related to telemedicine. For example, a 2023 Nationwide Healthcare Fraud Enforcement Action 

resulted in criminal charges against telemedicine platform owners, laboratory owners, DME providers, 

hospice operators, and pharmacists, with losses totaling approximately 1.1 billion U.S. dollars (USD).43

This corresponds to the increase in telemedicine visits due to the COVID-19 pandemic when many 

patients stopped in-person visits with medical providers. One indictment demonstrates how one 

doctor allegedly signed prescriptions and order forms via telemedicine services for DME that were not 

medically necessary. The defendant based the submission of the claims based solely on short telephone 

conversations with beneficiaries they had not physically examined and evaluated and that were induced, 

in part, by the payments of bribes and kickbacks the doctor received from telemedicine companies. 

The doctor and others submitted or caused the submission of approximately $10 million in false and 

fraudulent claims to Medicare, resulting in the payout of more than $4 million.44 

In another case, an individual was criminally charged for their role in a scheme in which they invested in 

a pharmacy. The defendant operated a call center where telemarketers persuaded Medicare beneficiaries 

to accept prescriptions for expensive medications that the beneficiaries neither needed nor wanted. The 

individual allegedly obtained signed prescriptions by paying kickbacks to two telemedicine companies. 

Through two companies the individual controlled, the individual was paid kickbacks from the pharmacy 

he invested in and other pharmacies In the network in exchange for supplying signed prescriptions for 

the medications.45

3. Update on COVID-19-Related Fraud

As indicated in the 2022 NMLRA, the COVID-19 pandemic accelerated online financial activity, leading 

to increased fraud risk for online financial services and an overall spike in activity related to healthcare, 

bank, elder, and government benefit fraud schemes with a connection to COVID-19. Since March 2020, 

Congress provided over $4.6 trillion to help the nation respond to and recover from the COVID-19 

pandemic. The public health crisis, economic instability, and increased flow of federal funds associated 

with the pandemic increased pressures on federal agency operations and presented opportunities for 

individuals to commit fraud. The COVID-19 pandemic saw an increase in the number of fraud-related 

charges, including schemes by individuals and large, complex syndicates. Many individuals and entities 

facing fraud-related charges in cases involving COVID-19 relief programs have already been found guilty 

of criminal violations or were found liable for civil violations. For example, the DOJ has brought federal 

fraud-related charges against at least 2,191 individuals or entities in cases involving federal COVID-19 

relief programs, consumer scams, and other types of fraud as of June 30, 2023.46

43 DOJ, “National Enforcement Action Results in 78 Individuals Charged for $2.5B in Health Care Fraud,” (June 28, 2023), https://

www.justice.gov/opa/pr/national-enforcement-action-results-78-individuals-charged-25b-health-care-fraud.

44 DOJ, “Physician Indicted in $10 Million Telemedicine Health Care Fraud Scheme”, (April 21, 2022), https://www.justice.gov/usaoedny/pr/physician-indicted-10-million-telemedicine-health-care-fraud-scheme.

45 DOJ, “DOJ Announces Nationwide Coordinated Law Enforcement Action to Combat Health Care Fraud and Opioid Abuse”, case 

summaries, January 28, 2023, https://www.justice.gov/criminal-fraud/health-care-fraud-unit/2023-national-hcf-case-summaries.

46 Government Accounting Office (GAO), “COVID-19: Insights from Fraud Schemes and Federal Response Efforts”, GAO-24-106353, 

(November 2023), https://www.gao.gov/assets/d106353.pdf.
12 2024 ◆ National Money Laundering Risk Assessment

While in-person healthcare and financial activity has resumed, a significant amount of healthcare and 

commerce is still conducted virtually, leaving ample opportunity for online criminal activity. The number 

of individuals or entities facing fraud charges related to COVID-19 relief programs has grown since March 

2020 and will likely continue to increase as these cases take time to develop. For example, an individual 

charged in an indictment in 2022 may not receive a trial until 2023, and if found guilty, the sentencing 

may occur in 2024 or later. As of August 2022, the statute of limitations has been extended to 10 years to 

prosecute individuals who committed Paycheck Protection Program (PPP) and Economic Injury Disaster 

Loan (EIDL)-related fraud. Many of these cases continue to demonstrate the magnitude of proceeds 

generated from COVID-related fraud. 

FinCEN has issued a number of COVID-19-Related Advisories and Alerts during 2020-2023.47 For example, 

in November 2023, FinCEN and IRS-CI issued a joint alert regarding the Employee Retention Credit (ERC) 

to highlight its significance (323 investigations involving more than $2.8 billion of potentially fraudulent 

ERC claims in 2020-2023) and the existence of “ERC mills” that are perpetrating the fraud.48

A wide array of COVID-19-related fraud cases demonstrate money laundering schemes. The leader of one 

such scheme, Seattle-Paradise Williams, pleaded guilty to wire fraud and money laundering charges. 

Williams personally received more than $2 million in fraudulent proceeds and spent the money on 

extravagant expenses such as luxury cars, lavish trips, cosmetic surgery, jewelry, and designer goods. 

Upon receipt of the illegal funds, Williams and her associates methodically laundered the funds through 

cash withdrawals, wire transfers, and expensive personal purchases. Williams also received more than 

$1.2 million in kickback payments from her associates for facilitating the fraudulent submissions.49 In 

another case, a real estate broker, Chad Wade, pleaded guilty to wire fraud and money laundering and 

bankruptcy fraud, and entered into a $4 million civil settlement for submitting false information to obtain 

COVID-19 loans and using those proceeds to purchase high-end real estate and luxury items.50

4. Elder Financial Exploitation

Elder financial exploitation (EFE) —also referred to as elder fraud—is a growing money laundering threat 

linked to more than $3 billion of reported financial losses annually, with victims on average losing 

$35,000.51 EFE is defined as the illegal or improper use of an older adult’s funds, property, or assets.52

Elder abuse, a broader category of illegal activity that includes EFE as well as physical and emotional 

abuse, affects at least 10 percent of those age 65 or older in the United States according to the DOJ.53

Several of FinCEN’s recent alerts and advisories, including a 2022 advisory on EFE, highlight that an 

47 FinCEN, https://fincen.gov/coronavirus. 

48 FinCEN, “FinCEN Alert on COVID-19 Employee Retention Credit Fraud,” FIN-2023-Alert007, (November 22, 2023), https://fincen.

gov/sites/default/files/shared/FinCEN_ERC_Fraud_Alert_FINAL508.pdf.

49 DOJ, “Leader of $6.8 Million Pandemic Fraud Scheme Pleads Guilty to Wire Fraud and Money Laundering Charges,” (December 11, 

2023), https://www.justice.gov/usao-wdwa/pr/leader-68-million-pandemic-fraud-scheme-pleads-guilty-wire-fraud-and-moneylaundering.

50 DOJ, “Florida Real Estate Broker Agrees To Pay Over $4 Million To Resolve False Claims Act Allegations Relating To Fraudulent 

Cares Act Loans”, (August 16, 2023), https://www.justice.gov/usao-ndfl/pr/florida-real-estate-broker-agrees-pay-over-4-millionresolve-false-claims-act.

51 FBI, “Elder Fraud Report,” (2022), https://www.ic3.gov/Media/PDF/AnnualReport/2022_IC3ElderFraudReport.pdf.

52 CFPB and FinCEN, “Memorandum on EFE,” (August 30, 2017), https://www.fincen.gov/sites/default/files/2017-08/8-25-2017_

FINAL_CFPB percent2BTreasury percent2BFinCEN percent20Joint percent20Memo.pdf.

53 For more information on EFE, see DOJ, “About Elder Abuse,” https://www.justice.gov/elderjustice/about-elder-abuse.
2024 ◆ National Money Laundering Risk Assessment 13

increasing number of these schemes are now cyber-enabled.54 According to the FBI, virtual asset-related 

losses reported by older adults increased by 350 percent from 2021 to 2022.55

Targets of EFE schemes are often victimized after having accumulated life savings in conjunction with 

perceived or actual declining cognitive or physical abilities, decreased social interactions, increased 

reliance on others for financial management and physical well-being, and potential unfamiliarity with 

different technology.56,57 Victims may be exploited for an extended period, are often re-victimized, and are 

subject to potential further loss due to compromised personally identifiable information (PII), which may 

be sold on darknet marketplaces. 

EFE schemes consist of two types of fraud: elder theft and elder scams. With elder theft, the perpetrator 

typically has a preexisting relationship with the victim that the perpetrator exploits to steal assets, 

funds, or income.According to the FinCEN Advisory on Elder Financial Exploitation, 46 percent of elder 

theft cases are perpetrated by a family member.58 Exploitation of legal guardianships, power of attorney 

arrangements, and Ponzi schemes targeting older adults are common examples of elder theft schemes. 

In elder scams, the perpetrator is often unknown to the victim.59 These perpetrators are frequently 

located outside of the United States and use cyber-enabled techniques. Scammers often impersonate 

government officials, law enforcement officers, customer support representatives (e.g., computer repair), 

social media connections, and even family, friends, and other known persons to induce victims to send 

money. Perpetrators attempt to create high-pressure situations to create urgency and take advantage of 

their victim’s trust, emotions, or fear to solicit payments. Some elder scams involve online dating; these 

are broadly referred to as “romance scams.”60 

Cases involving EFE often utilize traditional money laundering techniques such as in-person cash pickups 

from victims,61 receiving cash or checks via the mail, use of shell and front companies, wire transfers, 

54 FinCEN, “Advisory on Elder Financial Exploitation), (June 15, 2022), https://www.fincen.gov/sites/default/files/advisory/2022-06-15/

FinCEN percent20Advisory percent20Elder percent20Financial percent20Exploitation percent20FINAL percent20508.pdf; FinCEN, 

“Advisory on Cybercrime and Cyber-Enabled Crime Exploiting the Coronavirus Disease 2019 (COVID-19) Pandemic”, (July 30, 2020), 

https://www.fincen.gov/sites/default/files/advisory/2020-07-30/FinCEN percent20Advisory percent20Covid percent20Cybercrime 

percent20508 percent20FINAL.pdf.

55 FBI, “Elder Fraud Report,” (2022), https://www.ic3.gov/Media/PDF/AnnualReport/2022_IC3ElderFraudReport.pdf. In 2022, the 

FBI’s Internet Crime Complaint Center received almost 10,000 complaints from victims over the age of 60 involving the use of 

some type of virtual asset, such as Bitcoin, Ethereum, Litecoin, or Ripple. Losses incurred by these victims totaled over $1 billion.

56 CFPB and FinCEN, Memorandum on EFE, supra Note 1. See also, FTC Older Consumers Report, supra Note 1.

57 DOJ, “Associate Attorney General Vanita Gupta Delivers Remarks at the Elder Justice Coordinating Council Meeting,” (Dec. 7, 2021), 

https://www.justice.gov/opa/speech/associate-attorney-general-vanita-gupta-delivers-remarks-elder-justice-coordinating; DOJ, 

“Statement of Attorney General Merrick B. Garland on World Elder Abuse Awareness Day,” (Jun. 15, 2021) https://www.justice.gov/opa/pr/

statement-attorney-general-merrick-b-garland-world-elder-abuse-awareness-day?utm_medium=email&utm_source=govdelivery.

58 FinCEN, “Advisory on Elder Financial Exploitation”, (June 15, 2022), https://www.fincen.gov/sites/default/files/advisory/2022-06-15/

FinCEN percent20Advisory percent20Elder percent20Financial percent20Exploitation percent20FINAL percent20508.pdf.

59 These include lottery phone scams, grandparent scams, romance scams, IRS or government imposter scams, and sham business 

opportunities.

60 DOJ, “Woodbridge Money Launderer Sentenced for his Role in a Romance Fraud Scheme” (Mar. 11 2022) https://www.

justice.gov/usao-edva/pr/woodbridge-money-launderer-sentenced-his-role-romance-fraud-scheme#:~:text=Woodbridge 

percent20Money percent20Launderer percent20Sentenced percent20for percent20his percent20Role percent20in percent20a 

percent20Romance percent20Fraud percent20Scheme,-Friday percent2C percent20March percent2011&text=ALEXANDRIA 

percent2C percent20Va.,scheme percent20against percent20mostly percent20elderly percent20victims.

61 DOJ, “Defendant in ‘Grandparent Scam’ Network Sentenced for RICO Conspiracy Targeting Elderly Americans,” (Aug. 17, 2022), 

https://www.justice.gov/opa/pr/defendant-grandparent-scam-network-sentenced-rico-conspiracy-targeting-elderly-americans.
14 2024 ◆ National Money Laundering Risk Assessment

virtual assets, and laundering funds through multiple bank accounts, often using fake PII, 62 and through 

the use of money mules.63

Call Center Fraud

Illegal call centers defraud thousands of victims each year and are responsible for over $1 billion in losses 

to victims.64 Call center fraud encompasses a variety of financial fraud typologies, but generally refers to 

scams that illicit actors perpetrate over the phone from call centers located overseas. Call center fraud, 

while not new, has proliferated rapidly in recent years and now includes timeshare fraud (see below). Call 

center fraud overwhelmingly targets older adults, making it also a form of EFE.65

According to the FBI, tech and customer support fraud reports were up 132 percent in 2022. In these 

scams, fraudsters may pose as customer or tech support representatives from well-known companies 

and claim that the victim’s account or computer has been compromised. They then may ask victims 

to install desktop software remotely (e.g., “trojan horses” or other types of malware) to allow them to 

monitor activity, which then gives the fraudster complete control over the victim’s computer.66

In government impersonation scams, the fraudster impersonates a law enforcement agent, Internal 

Revenue Service (IRS) representative, or other government official. The scammers may also spoof 

phone numbers or use fake credentials to appear legitimate. Scammers create various scenarios to elicit 

payment, including that the victim has missed jury duty and must provide payment immediately to avoid 

arrest or must provide personal information to renew a driver’s license, passport, or medical license.67

These types of scams frequently emanate from call centers in South Asia, mainly India, and often target 

Americans.68 In 2022, with the assistance of U.S. law enforcement, Indian law enforcement accomplished 

multiple call center raids, disruptions, seizures, and arrests of the individuals alleged to be involved in 

perpetrating these cyber-enabled financial crimes and global telemarketing frauds.

In recent years, organized crime groups such as CJNG have committed timeshare fraud using call centers 

in Mexico.69 The FBI, SEC, and U.S. Embassy in Mexico have all issued warnings in recent years about the 

increasing prevalence of these types of call center-based scams aimed at Americans who own timeshares 

62 DOJ, “Four Individuals Charged with Conspiring to Launder Money Obtained from Romance Scams” (Apr. 13, 2022), https://www.

justice.gov/usao-nj/pr/four-individuals-charged-conspiring-launder-money-obtained-romance-scams.

63 DOJ, “Two Californians Indicted in Multi-Million Dollar Tech-Support Scam Targeting Elderly Victims” (May 12, 2022), https://www.

justice.gov/usao-wdpa/pr/two-californians-indicted-multi-million-dollar-tech-support-scam-targeting-elderly.

64 FBI Annual Internet Crime Report 2022, https://www.ic3.gov/Media/PDF/AnnualReport/2022_IC3Report.pdf, p. 16.

65 Id.

66 FBI, “FBI Warns Public to Beware of Tech Support Scammers Targeting Financial Accounts Using Remote Desktop Software”, 

(October 18, 2023), https://www.fbi.gov/contact-us/field-offices/boston/news/press-releases/fbi-warns-public-to-beware-oftech-support-scammers-targeting-financial-accounts-using-remote-desktop-software.https://www.fbi.gov/contact-us/fieldoffices/boston/news/press-releases/fbi-warns-public-to-beware-of-tech-support-scammers-targeting-financial-accounts-usingremote-desktop-software

67 IC3, “FBI Warns of the Impersonation of Law Enforcement and Government Officials” (March 07, 2022), https://www.ic3.gov/

Media/Y2022/PSA220307.

68 DOJ, “Multiple India-based call centers and their directors indicted for perpetuating phone scams affecting thousands of 

Americans”, (February 3, 2022), https://www.justice.gov/usao-ndga/pr/multiple-india-based-call-centers-and-their-directorsindicted-perpetuating-phone-scams.

69 Treasury, “Treasury Sanctions Fugitive, Others Linked to CJNG Timeshare Fraud Network,” (April 27, 2023), https://home.treasury.

gov/news/press-releases/jy1443.
2024 ◆ National Money Laundering Risk Assessment 15

in Mexico.70 In these schemes, fraudsters may pose as travel or real estate agents, sales representatives, 

or brokerage firms, and make unsolicited offers to owners of timeshare properties. If the timeshare 

owner agrees, the scammer tells the victim to pay an “upfront fee” to facilitate or expedite the sale of 

the property. Once this fee is paid, all communication by the scammer may cease, or they may demand 

additional fees from the victim. Some victims reported that they were contacted by a fake “timeshare 

fraud recovery company” that promised to assist victims in recovering their money and then asked for 

additional fees for this service. 71 As with the prior call center fraud typologies noted, this kind of fraud 

overwhelmingly affects retirees and older Americans. 

5. Special Focus: Check Fraud

While the use of checks in the financial system has declined, check fraud over the last few years has 

boomed due to the limited capability of financial institutions to verify the legitimacy of checks in a 

timely manner, the lack of self-verification systems built into checks, the prevalence of remote capture 

technology,72 and the ability to directly access all funds within a specified account through a single 

check.73

The U.S. government continues to use checks, in addition to other payment options, to issue federal 

payments, including for Medicare and Medicaid reimbursement and income tax refunds. However, the 

use of paper checks by the U.S. government is declining overall both in terms of number of payments and 

total value moved. However, checks remain a major monetary instrument, with check payments worth 

$27.23 trillion in 2021, according to the 2022 Federal Reserve Payments Study.74 For example, the average 

dollar value per commercial check has been trending upward in recent years.75

Check fraud refers to the illicit use of either paper or digital checks76 to unlawfully gain money. Some 

examples of check fraud include check washing,77 counterfeit checks or “check kiting” (checks presented 

based on fraudulent identification or are false checks drawn on valid account), and fraudulent checks 

(either as a signature or endorsement). BSA reporting by financial institutions has documented the rapid 

growth of check fraud.78 The number of SARs relating to check fraud increased by 94 percent between 

2021 and 2022 and 23 percent between 2020 and 2021. 

70 U.S. Embassy Mexico, “Real Estates and Time Shares - Fraud Typology”, (May 3, 2023), https://mx.usembassy.gov/real-estate-andtime-shares-fraud-typology/.

71 Id.

72 FDIC, “Remote Deposit Capture: A Primer,” (Updated: June 6, 2023), https://www.fdic.gov/regulations/examinations/supervisory/

insights/sisum09/sisummer2009-article02.html#:~:text=RDC percent20allows percent20financial percent20institution 

percent20customers,instant percent20credit percent20to percent20their percent20account.

73 Federal Reserve Board (FRB) “The Federal Reserve Payments Study: 2022 Triennial Initial Data Release”, (Updated July 27, 2023), 

https://www.federalreserve.gov/paymentsystems/fr-payments-study.htm. 

74 Id.

75 FRB, “Commercial Checks Collected through the Federal Reserve--Quarterly Data,” (update November 17, 2023), https://www.

federalreserve.gov/paymentsystems/check_commcheckcolqtr.htm.

76 Investopedia, “Check: What It Is, How Bank Checks Work, and How to Write One,” (Updated June 2, 2023), https://www.

investopedia.com/terms/c/check.asp.

77 USPIS, “Check Washing,” (Updated October 13, 2023), https://www.uspis.gov/news/scam-article/check-washing.

78 FinCEN, “FinCEN Alert on Nationwide Surge in Mail Theft-Related Check Fraud Schemes Targeting the U.S. Mail,” FIN-2023-

Alert003, (February 27, 2023), https://www.fincen.gov/sites/default/files/shared/FinCEN%20Alert%20Mail%20Theft-Related%20

Check%20Fraud%20FINAL%20508.pdf.
16 2024 ◆ National Money Laundering Risk Assessment

U.S. law enforcement has also observed an increase in check fraud activity, with fraudsters targeting 

checks from businesses and checks with large dollar amounts due to a perception that the accounts the 

checks draw from are well funded and the checks will not bounce, leading to large losses and unpaid bills 

for victims. 

There have been several criminal cases demonstrating money laundering activity involving check fraud. 

A 2022 case related to a nationwide check kiting “bust out” scheme where bank accounts were opened 

using a fake passport to receive checks from accounts with insufficient funds. Fraudsters then withdrew 

those funds before the checks cleared.79

Mail Theft-Related Check Fraud

Mail theft-related check fraud refers to the fraudulent negotiation of checks stolen from the U.S. Mail.80

According to discussions with U.S. law enforcement, there has been a notable spike in mail theft in 2023, as 

evidenced by a 139 percent increase in reports of high-volume mail theft from mail receptacles over the past 

four fiscal years. Due to a nationwide surge in mail theft-related check fraud targeting the U.S. Mail, FinCEN 

issued an alert in collaboration with the United States Postal Inspection Service (USPIS) in February 2023 

that identified trends, risks, typologies, and red flags of these schemes.81 By issuing the mail theft-related 

check fraud alert, FinCEN sought to ensure that SARs filed by financial institutions appropriately identify 

and report suspected check fraud schemes that may be linked to mail theft in the United States. 

According to FinCEN’s alert, after a check is stolen from the mail, criminals will often “wash” the checks, 

which is altering them using acetone chemicals to remove the original ink applied by the check issuer.82

The criminal then replaces the payee information with their own, a fraudulent identity (or that of a 

money mule), or fraudulent business they control. They also frequently increase the dollar amount of the 

check. Similarly, criminals engaged in mail theft-related check fraud will often take the information found 

on the original victim’s check, such as routing and account numbers, and use those numbers to generate 

additional checks. Criminal actors involved in mail theft can also sell checks or PII stolen from the mail 

over darknet marketplaces or on encrypted social media platforms such as Telegram.83

Once the altered or counterfeit check has been deposited, criminals quickly withdraw cash or transfer the 

funds via wire transfers to alternative accounts to obfuscate the individuals involved or the destination of 

79 DOJ, “Korean National Sentenced to 7 Years and 9 Months in Prison for “Bust Out” Bank Fraud Scheme in Sacramento Area and 

Elsewhere”, (November 10, 2022), https://www.justice.gov/usao-edca/pr/korean-national-sentenced-7-years-and-9-monthsprison-bust-out-bank-fraud-scheme#:~:text= percentE2 percent80 percent94 percent20Kyung percent20Min percent20Kong 

percent2C percent2055 percent2C,Talbert percent20announced; DOJ, “Colorado Man Pleads Guilty to “Bust Out” Bank Fraud 

Scheme in Sacramento Area and Elsewhere”, (July 14, 2022), https://www.justice.gov/usao-edca/pr/colorado-man-pleadsguilty-bust-out-bank-fraud-scheme-sacramento-area-and-elsewhere#:~:text=Area percent20and percent20Elsewhere-,Colorado 

percent20Man percent20Pleads percent20Guilty percent20to percent20 percentE2 percent80 percent9CBust percent20Out 

percentE2 percent80 percent9D percent20Bank percent20Fraud percent20Scheme,in percent20Sacramento percent20Area 

percent20and percent20Elsewhere&text=SACRAMENTO percent2C percent20Calif.,Talbert percent20announced.

80 Business checks may be more valuable because business accounts typically hold higher account balances, and these victims 

take longer notice the fraud on average.

81 FinCEN, “FinCEN Alert on Nationwide Surge in Mail Theft-Related Check Fraud Schemes Targeting the U.S. Mail”, (February 

7, 2023), https://www.fincen.gov/sites/default/files/shared/FinCEN percent20Alert percent20Mail percent20Theft-Related 

percent20Check percent20Fraud percent20FINAL percent20508.pdf.

82 USPIS, “Check Washing” (updated October 13, 2023), https://www.uspis.gov/news/scam-article/check-washing.

83 For more information regarding Telegram, see SEC, “Telegram to Return $1.2 Billion to Investors and Pay $18.5 Million Penalty to 

Settle SEC Charges,” (June 26, 2020), https://www.sec.gov/news/press-release/2020-146.
2024 ◆ National Money Laundering Risk Assessment 17

the funds. Additionally, the criminal may use the victim’s PII to continue to engage in check fraud, open 

new bank accounts, or perpetrate credit card fraud. 

For example, in October 2023, Ishmael Benreuben pleaded guilty to a conspiracy to deposit 

approximately $760,000 in fraudulent checks into bank accounts across New York, New Jersey, and 

Washington, D.C., and to fraudulently withdraw approximately $115,000. Between 2021 and 2022, 

Benreuben stole checks from the mail, forged and altered them, deposited them into various bank 

accounts, and then quickly withdrew the funds before the banks could void the checks or close the 

accounts. Benreuben worked alongside 26 others who owned the bank accounts and received a portion 

of the fraudulent funds.84

To facilitate mail theft-related fraud, criminals will often use money mules, individuals who receive and 

move criminal proceeds. Criminals can recruit mules in person or over social media. (See Section on 

Money Mule Networks) Some criminals will offer the money mule a fee (e.g., a portion of a check’s value) 

in exchange for using their bank account to clear the check.85 The funds are then quickly transferred out 

of the account before the checks are returned or flagged. Once this occurs, the mule who deposited the 

checks is responsible for the stolen funds, and the financial institution will hold them accountable for the 

missing or stolen funds. 

Check fraud actors will also pay mules for access to their banking information, including debit card, bank 

pin, and password. After receiving the information, the check fraud actor will access the mule accounts 

to deposit checks and withdraw proceeds. Criminal actors prefer using these already established bank 

accounts with demonstrated regular banking activity as said accounts generally have fewer checking 

restrictions placed on them by financial institutions, allowing for a larger percent of the checks’ value to 

be accessed immediately upon deposit. 

6. Business Email Compromise (BEC)

In 2022, the FBI received 21,832 BEC complaints with adjusted losses totaling more than $2.7 billion, 

which makes it a top money laundering threat in the United States. BEC is a scam that elicits fraudulent 

payments or sensitive identifying information using compromised email accounts. Scammers may take 

over a legitimate email address and use it to contact victims or create their own email address that is 

nearly identical to a legitimate one and then contact victims. 

These scams often target businesses or individuals who regularly perform wire transfer payments to 

send funds. The fraudsters may also compromise or spoof other forms of communication, such as phone 

numbers and virtual meeting applications, social engineering, or other computer intrusion techniques. 

These schemes aim to induce targets to transfer funds to bank accounts thought to belong to trusted 

partners.86

Further, in 2022, the FBI saw a slight increase in instances whereby criminal actors targeted victims’ 

investment accounts rather than traditional banking accounts. Additionally, the FBI noted increased 

84 DOJ, “Mount Vernon Man Pleads Guilty To Elaborate Check Fraud Scheme”, (October 10, 2023), https://www.justice.gov/usaosdny/pr/mount-vernon-man-pleads-guilty-elaborate-check-fraud-scheme.

85 USPIS, “Check Fraud”, (updated May 1, 2019), https://www.uspis.gov/news/scam-article/check-fraud.

86 FinCEN, “Updated Advisory on Email Compromise Fraud Schemes Targeting Vulnerable Business Processes”, (July 16, 2019), 

https://www.fincen.gov/sites/default/files/advisory/2019-07-16/Updated percent20BEC percent20Advisory percent20FINAL 

percent20508.pdf.
18 2024 ◆ National Money Laundering Risk Assessment

instances where BEC perpetrators spoof legitimate business phone numbers to confirm fraudulent 

banking details with victims.87 Over the last several years, methodologies have evolved and now involve 

the impersonation of more entities with greater levels of detail (e.g., vendors, lawyers, requests for 

seeming legitimate paperwork like W-2 information), diverting payroll funds, targeting real estate 

payments, and requests for large amounts of gift cards.88 As noted in the 2022 NMLRA, BEC in the real 

estate sector has become more prevalent, with individual homebuyers suffering disproportionately from 

these incidents.

In March 2023, FinCEN issued a Financial Trends Analysis on patterns and trends identified in BSA 

data relating to BEC in the real estate sector in 2020 and 2021.89 FinCEN found that the sector remains 

a target for BEC attacks exploiting the high monetary values generally associated with real estate 

transactions and the various communications between entities involved in the real estate closing process 

(e.g., title companies, title agents, closing agents, and escrow companies, and other individuals and 

entities involved in the title and closing processes). Perpetrators of BEC in the real estate sector may 

obtain unauthorized access to networks and systems to misappropriate confidential and proprietary 

information to increase the likelihood that their scam is successful. 

Those involved in BEC scams often use several traditional ML techniques to launder their illicit funds. For 

example, fraudsters may establish a fake business whose name closely resembles that of a legitimate 

company and then use unwitting money mules to establish bank accounts that will be used for the 

layering process. Once a victim has sent the funds to a fake business, the manager of the fraud group will 

work with others to transfer the funds from the mule accounts before they ultimately end up in accounts 

under the group’s control. In other cases, the fraudsters may simply withdraw funds as cash or negotiable 

instruments such as cashier’s checks or have mules make withdrawals on their behalf.90

Drug Trafficking

The trafficking of illicit drugs, and related money laundering remains a significant threat to U.S. public 

health and national and economic security. TCOs, primarily based in Mexico but operating a global illicit 

supply chain, engage in the trafficking of a variety of drugs, including counterfeits, into the United States. 

Since at least 2017, illicit fentanyl has been the largest driver of overdose deaths and the number one 

counter-narcotics priority for the U.S. government. Illicit fentanyl is often mixed with other illicit drugs 

or pressed and sold as counterfeit versions of other substances (such as prescriptions or veterinary 

medication). 

Consistent with the 2022 NMLRA, criminal actors in the drug trade embrace several methods to launder 

proceeds, including bulk cash smuggling (BCS), funnel accounts, structured money transfers, tradebased money laundering (TBML), purchase of real estate and luxury items, and virtual assets. While 

the laundering of drug trafficking proceeds is predominantly cash-based, the use of virtual assets is 

87 FBI, “2022 Internet Crime Report”, https://www.ic3.gov/Media/PDF/AnnualReport/2022_IC3Report.pdf.

88 FBI, “2022 Congressional Report on BEC and Real Estate Wire Fraud”, https://www.fbi.gov/file-repository/fy-2022-fbicongressional-report-business-email-compromise-and-real-estate-wire-fraud-111422.pdf/view.

89 FinCEN, “FinCEN Analysis of Business Email Compromise in the Real Estate Sector Reveals Threat Patterns and Trends,” (March 30, 

2023), https://www.fincen.gov/news/news-releases/fincen-analysis-business-email-compromise-real-estate-sector-reveals-threat.

90 DOJ, “Carson Man Sentenced to More Than 11 Years in Prison for Role in International Conspiracy to Launder Money Taken from 

Fraud Victims,” (February 27, 2023), https://www.justice.gov/usao-cdca/pr/carson-man-sentenced-more-11-years-prison-roleinternational-conspiracy-launder-money.
2024 ◆ National Money Laundering Risk Assessment 19

a growing concern for U.S. law enforcement. Drug traffickers are also turning to professional money 

launderers to launder their ill-gotten proceeds. In particular, drug traffickers use Chinese Money 

Laundering Organizations (CMLOs),91 which employ an informal value transfer system (IVTS) to move 

value across borders without needing to use the U.S. financial system. CMLOs have come to dominate 

money laundering services for some DTOs.

This section focuses on the major money laundering threats involving proceeds generated from the 

trafficking of illicit synthetic opioids, given that is the biggest narcotics-related challenge currently facing 

the United States. The section also highlights prescription drug diversion and addresses the priority DTO 

threat actors. 

1. Illicit Synthetic Opioids (including Fentanyl) and Heroin

According to the Drug Enforcement Administration (DEA), the availability of fentanyl throughout the 

United States has reached “unprecedented heights.”92 Since 2019, Mexican TCOs predominately import 

fentanyl precursor chemicals and related manufacturing equipment93 by air and marine shipping from 

the People’s Republic of China (PRC). This diversion of fentanyl precursor chemicals and manufacturing 

equipment can also be facilitated by a loose network of brokers who identify buyers and sellers. Once 

the precursor chemicals and manufacturing equipment are diverted to Mexico, cooks and chemists 

associated with the TCOs fabricate illicit fentanyl into pill and powder form, sometimes mixed with other 

illicit drugs or as counterfeit versions of pharmaceuticals (such as Vicodin). 

In 2022, the DEA seized more than 58 million counterfeit pills containing fentanyl, and 13,000 pounds 

of fentanyl powder, equating to nearly 400 million deadly doses of fentanyl.94 Data from the Centers 

for Disease Control and Prevention consistently cite that about 75 percent of all overdose deaths are 

attributed to illicit synthetic opioids, particularly fentanyl and its analogues.95

Given the global nature of DTOs, the proceeds of fentanyl sales in the United States will intersect many 

jurisdictions. A January 2024 case denotes this reality. This case involved a Utah-based company that 

was allegedly the laundering hub for multiple drug trafficking organizations which laundered more 

than $20 million of dollars via wire transfers from Utah to Mexico and Honduras. According to court 

documents, the company served as a money-remitting business for fentanyl and other drug proceeds, 

which the defendants then used to falsify wire transfer information to avoid detection.96

91 See Section on CMLOs. 

92 DEA, “Statement of Anne Milgram Administrator DEA, DOJ At a Hearing Entitled “Drug Enforcement Administration Oversight” Before the 

House Subcommittee on Crime and Federal Government Surveillance”, (July 27, 2023, https://www.dea.gov/sites/default/files/2023-07/

Administrator percent20Written percent20SFR percent20July percent202023 percent20 percent28Final percent29.pdf.

93 To include pill presses, encapsulating machines, and die molds. 

94 DEA, “Statement of Anne Milgram Administrator DEA, DOJ At a Hearing Entitled “Drug Enforcement Administration Oversight” 

Before the House Subcommittee on Crime and Federal Government Surveillance”, (July 27, 2023, https://www.dea.gov/sites/

default/files/2023-07/Administrator percent20Written percent20SFR percent20July percent202023 percent20 percent28Final 

percent29.pdf.

95 CDC, “Drug Overdose Deaths Remained High in 2021” (update August 22, 2023), https://www.cdc.gov/drugoverdose/deaths/

index.html#:~:text=Opioids percent20were percent20involved percent20in percent2080 percent2C411,and percent20without 

percent20synthetic percent20opioid percent20involvement.

96 DOJ, “24 Defendants, including a Utah Business Owner, Accused of Running a Drug and Money Laundering Operation from Utah 

to Mexico and Honduras,” (January 8, 2024), https://www.justice.gov/usao-ut/pr/24-defendants-including-utah-business-owneraccused-running-drug-and-money-laundering.
20 2024 ◆ National Money Laundering Risk Assessment

In the first criminal charges against China-based chemical manufacturing companies and nationals of 

the PRC for trafficking fentanyl precursor chemicals into the United States, the DOJ announced the arrest 

of two individuals and the unsealing of three indictments charging China-based companies and their 

employees with crimes related to fentanyl production, distribution, and sales resulting from precursor 

chemicals. One of the indictments also charges defendants with money laundering offenses.97 According 

to the allegations contained in the indictment and other court filings, a chemical manufacturer based 

in the city of Wuhan, China, exported vast quantities of the precursor chemicals used to manufacture 

fentanyl and its analogues. This manufacturer has openly advertised online its shipment of fentanyl 

precursor chemicals to the United States and to Mexico, where drug cartels operate clandestine 

laboratories, synthesize finished fentanyl at scale, and distribute the deadly fentanyl into and throughout 

the United States. According to court documents, the defendants took payment for the shipments in 

virtual assets.98

In May 2023, the DOJ’s Joint Criminal Opioid and Darknet Enforcement team and international partners 

announced the results of Operation SpecTor, which included 288 arrests.99 One investigation that was 

part of Operation SpecTor resulted in a May 2022 indictment of two defendants charging them with 

conspiracy to distribute and possess with intent to distribute fentanyl and methamphetamine and 

with conspiracy to launder money.100 According to court documents, the defendants operated vendor 

accounts on darknet marketplaces, through which they sold tens of thousands of counterfeit oxycodone 

pills containing fentanyl in exchange for virtual assets. One defendant deposited into his wallet at a 

virtual asset exchange101 approximately $800,000 worth of bitcoin that originated from purchases made 

on his and the co-defendant’s darknet vendor accounts. One defendant converted some part of those 

bitcoin holdings into fiat currency. 

In October 2023, the DOJ unsealed a series of indictments against another set of PRC-based chemical 

companies similarly engaged in the illicit shipment of precursor chemicals.102 In addition to accepting 

virtual assets as payment, according to the charging documents, the defendants also used wire transfers 

and a U.S.-based money services business (MSB) to process transactions.

97 DOJ, “Justice Department Announces Charges Against China-Based Chemical Manufacturing Companies and Arrests of 

Executives in Fentanyl Manufacturing”, (June 23, 2023), https://www.justice.gov/opa/pr/justice-department-announces-chargesagainst-china-based-chemical-manufacturing-companies. 

98 DOJ, SDNY, U.S. v. Hubei Amarvel, case 23 cr 302, https://www.justice.gov/d9/2023-06/sdny_unsealed_2023.06.22_amarvel_

biotech_indictment_stamped_redacted.pdf.

99 DOJ, “Largest International Operation Against Darknet Trafficking of Fentanyl and Opioids Results in Record Arrests and Seizures”, 

(May 2, 2023), https://www.justice.gov/opa/pr/largest-international-operation-against-darknet-trafficking-fentanyl-and-opioidsresults.

100 DOJ, “Sacramento Grand Jury Indicts Riverside County Man and Woman for Fentanyl Distribution and Money Laundering 

Conspiracy”, (May 12, 2022), https://www.justice.gov/usao-edca/pr/sacramento-grand-jury-indicts-riverside-county-man-andwoman-fentanyl-distribution-and.

101 The use of the term “exchange” in this assessment does not indicate registration as such or any legal status of any such 

platform. This definition is for the purpose of the risk assessment and should not be interpreted as a regulatory definition under 

the BSA or other relevant regulatory regimes.

102 DOJ, “Justice Department Announces Eight Indictments Against China-Based Chemical Manufacturing Companies and 

Employees,” (October 3, 2023), https://www.justice.gov/opa/pr/justice-department-announces-eight-indictments-againstchina-based-chemical-manufacturing. 
2024 ◆ National Money Laundering Risk Assessment 21

SNAPSHOT: Prescription Drug Diversion

While illicit production of synthetic opioids remains a significant concern, U.S. law enforcement 

also prioritizes the investigation of medical professionals (or those representing themselves as 

such) who divert controlled substances from legitimate medical supply. Many of these offenses are 

associated with other predicates for money laundering, such as healthcare fraud. 

In March 2023, 14 defendants were sentenced for their respective roles in a variety of crimes 

stemming from a wide-ranging racketeering conspiracy involving diversion of prescription drugs, 

money laundering, mail and wire fraud, and additional crimes.103 According to the government’s 

filings, prescription drugs were procured illicitly at below-market value and then were resold and 

re-introduced into the market as legitimate drugs at near-market prices. Illicit procurement can 

involve stealing drugs from manufacturers; buying drugs from patients with prescriptions at belowmarket prices (the patients’ costs are offset or reduced by insurance, including Medicare); buying 

drugs using false prescriptions and straw patients, usually with the aid of a corrupt doctor (again, 

with the costs offset or reduced by insurance); and purchasing drugs from a manufacturer at a 

discounted price through fraud (e.g., falsely claiming a charitable or similar discount). 

2. Priority DTO Threat Actors 

The illicit financial activities of DTOs pose risks to banks, money services businesses, and other entities, 

such as real estate agents and attorneys. DTOs have also made use of VASPs.104

a) Sinaloa and CJNG (Mexico) 

According to its 2023 Annual Threat Assessment, the U.S. intelligence community cited Mexico-based 

TCOs as the dominant producers and suppliers of various illicit drugs destined for the domestic U.S. 

market.105 Mexican TCOs, particularly the Sinaloa Cartel and the CJNG remain the most predominant and 

sophisticated groups overseeing the transportation and distribution routes from Mexico to the United 

States. According to the DEA, these two cartels, as well as their associates, facilitators, and brokers, 

operate in all 50 U.S. states and over 50 countries around the world. Both groups have consolidated 

control over drug corridors from Mexico and are heavily involved in the trafficking of fentanyl, 

methamphetamine, cocaine, heroin, and marijuana. Both have a history of establishing drug trafficking 

hubs, strong criminal partnerships, and using violence and corruption to gain control over the territory 

where they operate.106

According to the DOJ, the Sinaloa Cartel operates as an affiliation of drug traffickers and money 

launderers who obtain precursor chemicals, mainly from suppliers in China, for the manufacture of 

103 DOJ, “Judgment Entered Against Fourteen Defendants In Case Dismantling Nationwide Racketeering Conspiracy”, (March 30, 

2023), https://www.justice.gov/usao-ndca/pr/judgment-entered-against-fourteen-defendants-case-dismantling-nationwideracketeering.

104 DTO Activity as a national AML/CFT priority. 

105 DNI, “Annual Threat Assessment of the U.S. Intelligence Community”, (February 6, 2023), https://www.dni.gov/files/ODNI/

documents/assessments/ATA-2023-Unclassified-Report.pdf.

106 Europol-DEA, “Complexities and Convenances in the International Drug Trade: The involvement of Mexican criminal actors in the EU 

drug market”, (December 5, 2022), https://www.dea.gov/sites/default/files/2022-12/Europol_DEA_Joint_Report_Final.pdf, pg. 3.
22 2024 ◆ National Money Laundering Risk Assessment

synthetic drugs in Mexico. The Sinaloa Cartel will then traffic those drugs into the United States and 

collect, launder, and transfer the illicit proceeds back to Mexico. Once led by Joaquin Guzman Loera, 

aka El Chapo, and Ismael Zambada Garcia, aka El Mayo, the Sinaloa Cartel’s members and associates, 

allegedly including the sons of Guzman Loera (collectively known as Los Chapitos), smuggled significant 

quantities of illicit drugs through Mexico and into the United States.107

In April 2023, the DOJ announced charges against several leaders of the Sinaloa Cartel, including the 

sons of incarcerated former Sinaloa leader Guzman Loera.108 According to court documents, Los Chapitos 

leveraged several methods for laundering proceeds from fentanyl and other illicit drug sales, using 

various methods long used by the Sinaloa cartel and similar Mexican TCOs such as BCS, domestic and 

offshore bank accounts, shell companies, real estate, TBML, and virtual assets.109 

As explained further in the Los Chapitos indictment, two of the defendants allegedly conspired to 

repatriate the value of drug proceeds through smuggling mobile phones as part of a TBML scheme. As 

part of the scheme, one defendant allegedly purchased U.S. dollars in bulk from Mexico-based Sinaloa 

Cartel traffickers at a discount in exchange for Mexican pesos, which represents the proceeds of cartellinked fentanyl sales in the United States. The defendant directed U.S.-based couriers to collect drug 

proceeds in specific U.S. cities, which they then used to purchase cellphones in bulk. The defendant then 

smuggled the phones into Mexico to sell at an inflated price. (See CMLO section for further information on 

schemes involving electronics). 

A two-year Organized Crime Drug Enforcement Task Forces (OCDETF) investigation dismantled a 

sophisticated money laundering organization linked to the Sinaloa Cartel. The investigation led to the 

indictment of 12 people, the seizure of over $17 million in cash and bank accounts, and the rescue of two 

extortion victims. The organization allegedly used shell companies incorporated in Wyoming to launder 

millions of dollars in cash belonging to the cartel. The leader of the organization was Enrique Daan 

Esparragoza Rosas, a Mexican national based in Sinaloa, who received requests from top cartel leaders 

like Ismael “El Mayo” Zambada and Joaquin “Chapo” Guzman. One of the defendants, Cristian Amaya 

Nava, admitted that he extorted two victims to repay a drug debt and laundered over $2.4 million for the 

cartel. Amaya Nava was sentenced to 60 months in prison.110 

b) Clan del Golfo (Colombia) 

During the assessment period, Clan del Golfo (CDG), a Colombia-based TCO and paramilitary organization, 

remained a significant producer and trafficker of cocaine destined for U.S. drug markets and earned a 

significant amount of proceeds in U.S. dollars. According to the DOJ, CDG is one of the most violent and 

powerful criminal organizations in Colombia, and it is one of the largest distributors of cocaine in the world. 

With as many as 6,000 members, the CDG exercises military control over vast amounts of territory in the 

Urabá region of Antioquia, Colombia, one of the most lucrative drug trafficking areas within Colombia due 

to its proximity to the Colombia-Panama border and the Caribbean and Pacific coasts.

107 DOJ, “Justice Department Announces Charges Against Sinaloa Cartel’s Global Operation”, (April 14, 2023,) https://www.justice.

gov/opa/pr/justice-department-announces-charges-against-sinaloa-cartel-s-global-operation.

108 Ibid.

109 DOJ, SDNY, USA v. Ivan Archivaldo Guzman, case we CR 203, https://www.justice.gov/d9/press-releases/

attachments/2023/04/14/u.s._v._salazar_et_al_indictment_2.pdf.

110 DOJ, “Sophisticated Sinaloa Cartel Money Laundering Organization Dismantled”, April 11, 2023, https://www.justice.gov/usaosdca/pr/sophisticated-sinaloa-cartel-money-laundering-organization-dismantled.
2024 ◆ National Money Laundering Risk Assessment 23

The CDG funds its operations primarily through drug trafficking. It imposes a so-called “tax” on any 

drug traffickers operating in territories under its control, charging fees for every kilogram of cocaine 

manufactured, stored, or transported through areas controlled by the organization. The CDG also directly 

exports cocaine and coordinates the production, purchase, and transfer of weekly and bi-weekly multiton shipments of cocaine from Colombia into Central America and Mexico for ultimate importation to the 

United States.

Cybercrime

For this report, Cybercrime111 is defined as criminal activity that targets or uses computers under one 

network for the purpose of harm, often putting critical infrastructure at risk. It is distinct from cyberenabled fraud, such as BEC. 

1. Ransomware

Ransomware criminals and related payments continue to pose a potent threat to U.S. national security, 

our infrastructure, and our economy according to FBI reporting.112 The number of ransomware attacks 

and the amount paid in ransoms is estimated to have decreased in 2022 before rebounding in 2023. 

For example, FinCEN identified 1,215 ransomware-related incidents reporting approximately $655.98 

million in ransomware-related payments during 2022, compared to 1,410 ransomware-related incidents 

reporting roughly $1.12 billion in payments during 2021. 

Ransomware actors have increased the potency of their attacks and exerted greater pressure on victims 

to pay. These actors also share resources or form partnerships with other cybercriminals to enhance the 

effectiveness of their attacks. Some ransomware groups use a “ransomware-as-a-service” model. This 

is a subscription-based model where administrators create an easy-to-use interface and then recruit 

affiliates to deploy attacks. Affiliates of these groups identify targets and deploy malicious software, and 

then share a percentage of each ransom payment. Affiliates often use specialized teams for various steps 

in the ransomware process, including the laundering process. In other cases, affiliates can purchase data 

from other cyber criminals on darknet markets to gain unauthorized access to a victim’s system.

Ransomware actors will often target entities that they assess are more likely to pay a ransom, focusing 

the attack on the victim’s most sensitive data. Attackers may also use multiple forms of extortion. 

Ransomware actors may pressure victims or a family member to pay a ransom, for example, by stealing 

confidential data and threatening to publish the data. However, law enforcement identified that 

ransomware groups have learned that they can extract ransoms by only stealing data and forgoing 

encryption, which is often the first step of traditional ransomware attacks.

Ransomware criminals mainly demand payments in virtual assets and direct victims to send ransom 

payments to specified virtual asset wallet addresses. 113 These addresses can be held at a VASP.114

Ransomware criminals may also use accounts belonging to money mules115 or unhosted wallets. 

111 Cybercrime is identified as an AML/CFT National Priority. 

112 FBI, “Internet Crime Report”, (March 2022), https://www.ic3.gov/Media/PDF/AnnualReport/2022_IC3Report.pdf.

113 FATF, “Countering Ransomware Financing”, (March 14, 2023), https://www.fatf-gafi.org/en/publications/Methodsandtrends/

countering-ransomware-financing.html.

114 See Virtual Assets Section.

115 See Money Mule Networks Section.
24 2024 ◆ National Money Laundering Risk Assessment

Ransomware criminals use various tools and methods, such as mixers or chain hopping, to hinder the 

ability of financial institutions or competent authorities to trace or attribute transactions. These criminals 

will use VASPs with weak AML/CFT controls, to exchange their illicit proceeds for fiat currency.116 For 

example, in January 2023, under section 9714(a) of the Combating Russian Money Laundering Act, 

as amended by section 6106(b) of the NDAA for Fiscal Year 2022, FinCEN identified the VASP Bitzlato 

Limited (Bitzlato) as a “primary money laundering concern” in connection with Russian illicit finance, in 

part for its facilitation of illicit transactions for Russian ransomware actors. This order prohibits certain 

transmittals of funds involving Bitzlato by any covered financial institution.117 

According to the DOJ, which concurrently announced charges against a Bitzlato senior executive for 

operating an unlicensed money transmitting business, Bitzlato allegedly received more than $15 million 

in ransomware proceeds.118 Bitzlato allegedly became a haven for criminal proceeds and funds intended 

for use in criminal activity because of deficient AML/CFT controls. In other instances, ransomware 

proceeds have been converted into Chinese Renminbi (RMB) or sent to China-based money launderers.119

Ransomware attacks continue to frequently stem from jurisdictions with elevated sanctions risk or with 

ties to sanctioned persons, including Russia, the DPRK, and Iran.120 Russia is a haven for ransomware 

actors, enabling cybercriminals to engage openly in ransomware attacks against U.S. organizations.121

According to FinCEN analysis, 75 percent of ransomware-related incidents reported between July and 

December 2021 were linked to Russia, its proxies, or persons acting on its behalf. Additionally, the 

FBI reports that DPRK state-sponsored actors have deployed Maui ransomware against healthcare 

organizations to disrupt access to electronic health records.122 The Office of Foreign Assets Control (OFAC) 

has also designated several entities responsible for perpetrating ransomware attacks, VASPs responsible 

for laundering ransomware payments, and cybercriminal groups responsible for developing and 

distributing ransomware, such as Evil Corp.123

The DOJ has also worked to prosecute individuals guilty of laundering the proceeds of ransomware 

attacks, including Bitzlato referenced above. Additionally, in February 2023, Denis Mihaqlovic Dubnikov, 

116 See Virtual Assets Section, jurisdictional arbitrage.

117 FinCEN, “FinCEN Identifies Virtual Currency Exchange Bitzlato as a “Primary Money Laundering Concern” in Connection with 

Russian Illicit Finance”, (January 18, 2023), https://www.fincen.gov/news/news-releases/fincen-identifies-virtual-currencyexchange-bitzlato-primary-money-laundering.

118 DOJ, “Founder and Majority Owner of Bitzlato, a Cryptocurrency Exchange, Charged with Unlicensed Money Transmitting”, 

(January 18, 2023), https://www.justice.gov/usao-edny/pr/founder-and-majority-owner-bitzlato-cryptocurrency-exchangecharged-unlicensed-money.

119 DOJ, “Justice Department Seizes and Forfeits Approximately $500,000 from North Korean Ransomware Actors and their 

Conspirators”, (July 19, 2022), https://www.justice.gov/opa/pr/justice-department-seizes-and-forfeits-approximately-500000-

north-korean-ransomware-actors.

120 Treasury, “Treasury Sanctions IRGC-Affiliated Cyber Actors for Roles in Ransomware Activity,” ( September 14, 2022), https://

home.treasury.gov/news/press-releases/jy0948; DOJ, “Three Iranian Nationals Charged With Engaging In Computer Intrusions 

And Ransomware-Style Extortion Against U.S. Critical Infrastructure Providers,” (September 14, 2022), https://www.justice.gov/

usao-nj/pr/three-iranian-nationals-charged-engaging-computer-intrusions-and-ransomware-style.

121 Treasury, “Treasury Sanctions Russian Ransomware Actor Complicit in Attacks on Police and U.S. Critical Infrastructure”, (May 

16, 2023), https://home.treasury.gov/news/press-releases/jy1486.

122 CISA, “North Korean State-Sponsored Cyber Actors Use Maui Ransomware to Target the Healthcare and Public Health Sector”, 

(July 7, 2022), https://www.cisa.gov/news-events/cybersecurity-advisories/aa22-187a.

123 Treasury, “Treasury Sanctions Evil Corp, the Russia-Based Cybercriminal Group Behind Dridex Malware”, (December 5, 2019), 

https://home.treasury.gov/news/press-releases/sm845.
2024 ◆ National Money Laundering Risk Assessment 25

a Russian virtual asset money launderer, pleaded guilty to one count of conspiracy to commit money 

laundering. Dubnikov and his co-conspirators laundered the proceeds of Ryuk ransomware attacks 

on individuals and organizations throughout the United States and abroad. After receiving ransom 

payments, Ryuk actors, including Dubnikov, engaged in international financial transactions to conceal 

the nature, source, location, ownership, and control of the ransom proceeds. 124

2. Malware 

Ransomware actors and other cybercriminals often use malware to commit their crimes. Malware refers 

to software or code intended to damage or disable a computer or computer systems or destroy data. 

Malware can enable criminals’ computer access to steal credentials, alter account information, and 

conduct fraudulent transactions. Criminals often deliver malware to victims through phishing emails, 

malicious websites and downloads (e.g., via illicit streaming and digital privacy sites), domain name 

system hijacking, and fraudulent mobile applications. Law enforcement identified that cybercriminal 

groups using malware often take advantage of highly specialized, repurposing tools already installed 

on a victim’s environment to gain access to their system for malicious purposes. Because these existing 

programs and tools can be used by a victim’s legitimate network administrator, the malicious use of the 

tools can be more difficult to detect than traditional malware.

Cybercriminal groups continue to develop and sell malware via darknet markets and online forums, 

while others use the malware to harvest and monetize financial data and other PII on an industrial scale. 

Criminals can traffic the harvested data, such as banking passwords and login credentials, through 

marketplaces that specialize in the sale of compromised or stolen personal, financial, and banking 

information. Malicious actors can use this data to initiate unauthorized transfers from compromised 

bank accounts or to preform social engineering attacks against victims whose data was stolen.

Law enforcement has observed that cybercriminal groups using malware often launder funds using 

similar methods as ransomware actors. For example, in April 2023, the FBI announced a coordinated 

international operation against Genesis Market, a criminal online marketplace that advertised and sold 

packages of account access credentials that had been stolen from malware and infected computers 

around the world.125 Since its inception in March 2018, Genesis Market has offered access to data stolen 

from over 1.5 million compromised computers worldwide containing over 80 million account access 

credentials. Genesis Market sold device “fingerprints,” unique combinations of device identifiers and 

browser cookies that may be used to circumvent anti-fraud detection systems used by many websites. 

The combination of stolen access credentials, fingerprints, and cookies allowed purchasers to assume 

the victim’s identity by tricking third-party websites into thinking the Genesis Market user was the actual 

owner of the account. OFAC concurrently designated Genesis Market as a specially designated national 

(SDN) under its cyber-related sanctions program.126

Additionally, in March 2023, the DOJ charged the founder of BreachForums for creating and administering 

124 DOJ, “Russian Cryptocurrency Money Launderer Pleads Guilty”, (February 7, 2023), https://www.justice.gov/usao-or/pr/russiancryptocurrency-money-launderer-pleads-guilty.

125 DOJ, “Criminal Marketplace Disrupted in International Cyber Operation”, (April 5, 2023), https://www.justice.gov/opa/pr/

criminal-marketplace-disrupted-international-cyber-operation.

126 Treasury, “Treasury Sanctions Illicit Marketplace Genesis Market”, (April 5, 2023), https://home.treasury.gov/news/pressreleases/jy1388. 
26 2024 ◆ National Money Laundering Risk Assessment

a major hacking forum and marketplace for cybercriminals.127 The founder allegedly operated 

BreachForums as a marketplace for cybercriminals to buy, sell, and trade hacked or stolen data, harming 

millions of U.S. citizens and hundreds of U.S. and foreign companies, organizations, and government 

agencies. According to the complaint, the platform offered stolen data such as bank account information, 

social security numbers, other PII, hacking tools, breached databases, and account login information for 

compromised online accounts with service providers and merchants. 

Professional Money Laundering

Professional money laundering encompasses individuals, organizations, and networks involved in thirdparty laundering for a fee or commission.128 Although typically associated with laundering narcotics 

proceeds, many money laundering organizations (MLOs) do not discriminate among sources of the dirty 

money, laundering the proceeds from a variety of crimes, sometimes concurrently. This topic was first 

included in the 2022 NMLRA and we are continuing to focus on this key threat enabler, exploring in more 

depth those MLOs not previously covered. Therefore, this section will address new and emerging actors 

including PML services used by kleptocrats when trying to extract assets from the United States, the 

connected predicate offenses, and common methodologies. 

There has been an increased use of professional enablers who facilitate the money laundering process 

by further obfuscating the source of the funds, such as through a network of shell, front and legitimate 

companies or the provision of supporting documentation. As noted in the Drug Trafficking Section, PML 

methods often involve using TBML techniques. For example, in Mexico, professional enablers include 

“factureros,” whose sole job is to create false invoicing and billing for seemingly legitimate services 

never rendered and used to further obfuscate the money trail. A relevant case involves Ghacham Inc., a 

clothing wholesaler fined for customs fraud and violating U.S. drug trafficking sanctions. The company 

pleaded guilty in December 2022 to one count of conspiracy to pass false and fraudulent papers through 

a customhouse and one count of conspiracy to engage in any transaction or dealing in properties of 

a specially designated narcotics trafficker. Ghacham Inc. was ordered to pay financial penalties and 

ordered to create and maintain an AML/CFT compliance and ethics program.129

As noted earlier, drug cartels commonly employ MLOs. One 2022 OCDETF investigation involved a Tampabased MLO responsible for laundering more than $21.5 million in drug proceeds. Spread out over 400 

transactions, this MLOreceived the cash proceeds and then used the cash to purchase cashier’s checks, 

visiting several banks in the same day to avoid suspicion. The couple purchased the cashier’s checks 

themselves, on behalf of businesses they created, and recruited additional individuals to do so as well. 

According to the DOJ, the checks “were then remitted to various other individual and business accounts 

to receive, disguise, conceal, and distribute the drug trafficking proceeds.” 130

127 DOJ, “United States v. Conor Brian Fitzpatrick”, (March 15, 2023), https://www.justice.gov/usao-edva/united-states-v-conorbrian-fitzpatrick.

128 PML can be categorized as (1) individuals, (2) groups or (3) networks. See FATF, Professional Money Laundering, pp. 12-13, (2018), 

https://www.fatf-gafi.org/en/publications/Methodsandtrends/Professional-money-laundering.html.

129 ICE, “HSI Los Angeles investigation ends with clothing wholesaler fined for customs fraud and violating U.S. drug trafficking 

sanctions,”(December 13, 2023), https://www.ice.gov/news/releases/hsi-los-angeles-investigation-ends-clothing-wholesalerfined-customs-fraud-and.

130 DOJ, “Tampa Couple Sentenced In Multimillion Dollar Money Laundering Scheme”, (October 24, 2022), https://www.justice.gov/

usao-mdfl/pr/tampa-couple-sentenced-multimillion-dollar-money-laundering-scheme.
2024 ◆ National Money Laundering Risk Assessment 27

Another example of a professional launderer is Djonibek Rahmankulov, who was convicted of committing 

bank fraud as well as laundering the proceeds of fraud and hacking schemes. Rahmankulov was 

described as “laundering money for a living” for receiving proceeds from hacked bank accounts, COVID 

fraud, and Medicare and Medicaid fraud. Rahmankulov operated a network of shell companies and bank 

accounts and funded an unlicensed money transmitting business that illegally moved money to and 

from multiple countries, including Iran.131 This reflects a broader trend in which MLOs have established 

unlicensed Money Service Businesses (MSBs) to facilitate their schemes. 

1. Money Mule Networks

The role of money mules in facilitating cyber-enabled frauds and scams have been highlighted in both 

the 2018 and 2022 NMLRAs and this year’s report is placing a special focus on these networks as a 

category of PMLs. Money mules are recruited by MLOs and are used to transfer value, either by laundering 

stolen money or physically transporting goods or other merchandise. Money mules may be witting 

or unwitting participants and are often recruited by criminals via job advertisements for ‘transaction 

managers’ or through online social media interactions. Money mule recruiters or directors are referred 

to as mule herders.132 Money mules provide critical services to fraud syndicates by receiving money from 

fraud victims and forwarding the fraud proceeds to the perpetrators (many of whom are based overseas).

Some individuals first interact with herders as victims and may be unaware that their activity is 

furthering criminal activity. For example, these unwitting mules often have trust in the actual existence 

of their romance or job position. Other mules continue to operate after they have been warned by bank 

employees that they were involved in fraudulent activity or even after U.S. law enforcement informs them 

of their role in the criminal activity. These may be witting mules who are motivated by financial gain or 

an unwillingness to acknowledge their role. For example, one alleged mule opened 11 bank accounts at 

seven separate financial institutions and law enforcement informed that person that they were moving 

fraud proceeds between various bank accounts. Despite this warning, the alleged mule continued to 

receive more than $1.8 million into various bank accounts. These funds came directly from fraud victims 

who were deceived into sending the funds to bank accounts controlled by the alleged mule, rather than 

to the victims’ intended recipients. After receiving this money, the alleged mule quickly withdrew or 

transferred it to various individuals or entities, including converting the funds into virtual assets.133 

In addition to moving fraudulent proceeds, complicit mules are also used to create shell companies 

to open business bank accounts that can be used as part of the laundering process.134 These complicit 

mules may advertise their services as a money mule (e.g., on darknet marketplaces), to include what 

actions they offer (e.g., recruiting other mules-see below) and at what prices. These mules are also 

131 DOJ, “Queens Man Sentenced To 121 Months In Prison For Laundering Millions Of Dollars Of Fraud And Hacking Schemes And 

Committing Bank Fraud”, (March 17, 2023), https://www.justice.gov/usao-sdny/pr/queens-man-sentenced-121-months-prisonlaundering-millions-dollars-fraud-and-hacking#:~:text=Damian percent20Williams percent2C percent20the percent20United 

percent20States,Business percent20Administration percent20loan percent20fraud percent2C percent20as.

132 FBI, "Money Mules: Don’t Be a Mule: Awareness Can Prevent Crime,” https://www.fbi.gov/how-we-can-help-you/scams-andsafety/common-scams-and-crimes/money-mules.

133 DOJ, “Westminster Woman Charged in Federal Indictment Alleging She Acted as ‘Money Mule’ Who Laundered Funds for 

Cybercriminals”, (February 16, 2023), https://www.justice.gov/usao-cdca/pr/westminster-woman-charged-federal-indictmentalleging-she-acted-money-mule-who.

134 DOJ, “Rhode Island Man Arrested and Charged with Laundering More than $35 Million in Fraud Proceeds and Obstruction of 

Justice”, (February 23, 2023), https://www.justice.gov/usao-ma/pr/rhode-island-man-arrested-and-charged-laundering-more35-million-fraud-proceeds-and.
28 2024 ◆ National Money Laundering Risk Assessment

motivated by financial gain but often are loyal to a known criminal group. Mule networks are also 

involved in IVTS described in the previous section. The illicit couriers will move the funds that are raised 

via fraud to a location which will facilitate the sale of the proceeds as part of IVTS transactions.

Managers and recruiters of money mule networks will recruit money mules to provide their PII 

in connection with the incorporation of sham businesses under the money mules’ names. Under 

the instruction of these herders, money mules open bank accounts under the names of the sham 

corporations. Mule networks are often used to facilitate BEC scams (see previous section on BEC scams) 

and other on-line scams. For example, when the victims of these scams comply with the fraudulent 

wiring instructions, the money is quickly debited or transferred out of the bank account created under 

the mule’s name but that the herder ultimately controls. Money is quickly transferred out via in-person 

and Automatic Teller Machine (ATM) withdrawals, debit card purchases often in thousands of dollars, or 

via wire from the bogus bank accounts to foreign bank accounts controlled by conspirators.135

Some criminal networks also utilize online forums, including online classifieds and Darknet forums, 

to advertise for and recruit cyber actors to establish sophisticated money laundering networks. For 

example, herders advertise their cash-out services to cyber actors in online forums and communicate 

with these actors on various messaging applications. After negotiating a portion of the cyber actors’ 

stolen funds as fee for their services, the herders direct their money mules to transfer funds from victim 

accounts in the United States to drop accounts domestically and abroad.136 

These groups use several techniques to recruit new mules to receive and transmit fraud proceeds. Victims 

may be asked to receive money or checks mailed to them or sent to their bank account for someone 

they have met over the phone or online. Victims may be asked to open a bank or cryptocurrency account 

at someone else’s direction. Fraudsters will lie to persuade victims to help them. They may falsely tell 

victims that they are helping them get a lottery prize, initiate a purported romantic relationship, pretend 

to offer them a job, present an opportunity to invest in a business venture, or offer the chance to help in 

a charitable effort. In addition, according to law enforcement sources, the use of virtual businesses (e.g., 

check depositing service) has the potential to be abused by having third-party deposit checks to funnel 

accounts on behalf of the criminals. 

International students are particularly vulnerable to being recruited as money mules for a variety of 

reasons, including the allure of quick and easy money.137 Mules are often targeted using social media, 

including messaging apps such as WeChat. Students may be told that they are providing money 

transmission services for other students, or that they are servicing unbanked Chinese citizens residing in 

the United States. They are asked to open bank accounts or tasked with collecting and depositing cash 

into banks on behalf of the CMLO. Some mules may even be asked to travel into or out of the United 

States carrying bulk cash or transport high value luxury items to China. 

135 DOJ, “Recruiter and Director of Money Mule Sentenced to Two Years in Prison for Participation in Business Email Compromise 

Scheme”, (March 24, 2023), https://www.justice.gov/usao-nj/pr/recruiter-and-director-money-mule-sentenced-two-yearsprison-participation-business.

136 DOJ, “Ukrainian Nationals Plead Guilty to Financial Crimes”, (July 12, 2022), https://www.justice.gov/usao-ndtx/pr/ukrainiannationals-plead-guilty-financial-crimes#:~:text=Viktor percent20Vorontsov percent2C percent2040 percent2C percent20and 

percent20Zlata,wire percent20fraud percent2C percent20and percent20bank percent20fraud.

137 Barclays, “Barclays warns of 23 per cent surge in student money mules,” (October 2, 2023), https://home.barclays/news/pressreleases/2023/10/barclays-warns-of-23-per-cent-surge-in-student-money-mules/.
2024 ◆ National Money Laundering Risk Assessment 29

2. Chinese Money Laundering Organizations and Networks

CMLOs were addressed as a special focus topic in the 2022 NMLRA.138 Since that time, law enforcement 

has reported that CMLOs have become more prevalent and are now one of the key actors laundering 

money professionally in the United States and around the globe.139 CMLOs continue to work with other 

international MLOs, such as Colombian peso brokers, and are able to penetrate their competitor’s 

markets given their lower fees and rapid pay-out options. This capability is due to their effective use of 

near real-time mirror transactions offsetting transfers of money which can handle large amounts of cash, 

overcome currency controls, and provide the rapid repatriation of proceeds. In addition, CMLOs have 

been known to offer to absorb losses due to providing guarantees on any funds delivered. By charging 

low fees and providing these guarantees, CMLOs are becoming one of the most significant money 

laundering threat actors facing the U.S. financial system.

CMLOs, like other types of MLOs, are not typically involved in the underlying crimes which generate 

proceeds (e.g., drugs, human smuggling, and fraud) and operate in a very compartmentalized fashion. 

However, CMLOs are often associated with larger TCOs engaged in a wide array of criminal activity. 

Additionally, the CMLO cells will sometimes engage in low-level criminal activity to facilitate funds 

movement as part of their laundering scheme, including through the use of counterfeit identification 

or employing insiders to open bank or casino accounts. What makes these CMLOs effective is that 

they are insular and often decentralized, making them difficult to penetrate. They rely on a variety of 

interpersonal relationships working together to facilitate different aspects of the laundering cycle. 

According to law enforcement and open-source reporting, there appear to be a high number of CMLO 

members who originate from or have close ties to the Fujian Province in China.140

While CMLOs provide money laundering services for TCOs, their primary objective is to acquire and 

subsequently sell USD (and other foreign currencies) using IVTS schemes to Chinese nationals seeking to 

evade the Chinese government’s currency controls. 141 CMLOs operating in the United States increasingly 

need access to significant amounts of USD to satisfy the demand for IVTS services by Chinese nationals. 

This is how they make most of their profits, setting them apart from other professional MLOs. Since the 

use of large sums of cash in the United States is uncommon and raises flags, CMLOs regularly source 

the USD they need from TCOs operating throughout the United States. This has created a symbiotic 

relationship between the two with each possessing what the other needs - CMLOs have a supercharged 

demand for USD, while TCOs need their ill-gotten gains laundered. 

For example, CMLOs enable Mexican cartels to seamlessly exchange USD derived from the sale of 

narcotics for Mexican pesos.142 Once the CMLO retrieves the criminal cash in the United States, a 

138 Treasury, “National Money Laundering Risk Assessment”, (February 2022), see pp.23-24.

139 HSI, “HSI, Australian Federal Police and partners, announce takedown of multi-million dollar Chinese money laundering 

syndicate,” (October 26, 2023), https://www.ice.gov/news/releases/hsi-australian-federal-police-and-partners-announcetakedown-multi-million-dollar.

140 ProPublica, “Outlaw Alliance: How China and Chinese Mafias Overseas Protect Each Other’s Interests”, (July 12, 2023), https://

www.propublica.org/article/how-beijing-chinese-mafia-europe-protect-interests.

141 In 2017, the Chinese State Administration of Foreign Exchange capped foreign exchange transfers at $50,000. See ICE, 

Cornerstone Report Issue #48, “Chinese Money Laundering Organizations (CMLOs) - Use of Counterfeit Chinese Passports,” 

(January 2, 2024), https://content.govdelivery.com/bulletins/gd/USDHSICE-37fff16?wgt_ref=USDHSICE_WIDGET_217.

142 ICE, Cornerstone Report Issue #45, “Chinese Money Laundering,” (October 5, 2023), https://content.govdelivery.com/bulletins/

gd/USDHSICE-3714ed3?wgt_ref=USDHSICE_WIDGET_217.
30 2024 ◆ National Money Laundering Risk Assessment

comparable sum of Mexican pesos is then released – almost immediately and with nearly non-existent 

commission rates – to the cartel in Mexico using IVTS schemes (e.g., mirror transactions). Dirty dollars 

remain in the United States, where at least in part, they are broken down into smaller amounts and 

deposited into U.S. bank accounts opened by money mules, which sometimes involve international 

students. This method, known as “smurfing,” allows the cartels to avoid the risk and cost associated 

with attempting to smuggle bulk cash across our southern border. The CMLO then sells USD to Chinese 

nationals for a profit, who, in some instances, use the USDs to purchase real estate or even to pay college 

tuition expenses. 

Unlike other MLOs, which transfer proceeds into and out of the country, a significant amount of the 

money laundered by CMLOs stays in the United States. Traditionally, CMLOs purchase criminal proceeds 

in U.S. cities for a nominal fee, transfer the equivalent value of foreign currency to drug traffickers’ foreign 

bank accounts and then “sell” the drug proceeds at a substantially higher rate to Chinese nationals 

seeking to avoid China’s currency controls. These organizations also exploit China’s “one country, two 

systems” policy by using the more liberal banking system in Hong Kong to establish USD bank accounts 

to facilitate their schemes. These exchange transactions are not independent (e.g., one-for-one) and 

often involve multiple individuals using multiple currencies. In an example of a scheme involving both 

IVTS and TBML methods, the CMLOs will receive RMB from Chinese customers who get USD in exchange, 

and they sell the RMBs to Mexican customers who need it to buy goods. The RMB (equivalent to the 

amount retrieved in the United States) is then transferred to the account of a CMLO associate in China 

and then used to fund the purchase of goods for export to source countries such as Mexico. Those goods 

are sold in Mexico to complete the IVTS scheme. The use of “off-the-books”, or informal transactions, 

allows the CMLO to avoid U.S. reporting requirements and China’s currency controls while also hiding the 

nature and source of the illicit funds being transferred. 

SNAPSHOT: Schemes Involving Electronic Goods

A money laundering scheme used by CMLOs involves the procurement of high-value electronics 

(e.g., smart phones, tablets, etc.) using illicit proceeds derived from drug trafficking, fraud and 

other criminal activities. Often, these electronics are fraudulently obtained. In some instances, 

the CMLOs will purchase these goods using stolen or fraudulent gift cards. The smart phones and 

other high-value electronics are subsequently exported from the United States to Hong Kong, 

China, Dubai, and other overseas locations where they are resold for a substantial profit. In an 

OCDETF investigation, tens of millions of dollars’ worth of electronic devices were exported from 

the United States using this scheme. In another example, a registered owner of an electronics and 

restaurant supply business used their businesses to run a large-scale money laundering and money 

transmitting operation that involved the laundering of drug proceeds and proceeds from stolen 

or fraudulent gift cards.143 These schemes permit CMLOs to significantly profit from the criminal 

proceeds they purchase. 

143 DOJ, “Eight Indicted in Money Laundering Ring”, (July 29, 2022), https://www.justice.gov/usao-ma/pr/eight-indictedmoney-laundering-ring#:~:text=BOSTON percent20 percentE2 percent80 percent93 percent20Eight percent20individuals 

percent20have percent20been,used percent20stolen percent20and percent2For percent20fraudulent; Also see United States 

District Court (USDC), District of Massachusetts, U.S. v. ZANG, Case 1:22-cr-10185.
2024 ◆ National Money Laundering Risk Assessment 31

3. Special Focus: Russian Money Laundering and Sanctions Evasion

Professional money laundering linked to Russia is a significant threat to the national security of 

the United States because it conceals and facilitates illicit activity on the part of oligarchs and the 

government of Russia, enables the Kremlin’s damaging foreign policy goals, and undermines U.S. 

national interests.144 Russian efforts to evade sanctions present a similar threat; the act of circumventing 

or otherwise avoiding sanctions adversely impacts the United States’ ability to disrupt, deter, and 

prevent actions that undermine U.S. national security and the U.S. financial system.145 There have been 

several recent FinCEN and U.S. Department of Commerce’s Bureau of Industry and Security (BIS) alerts on 

Russian sanctions and export control evasion.146

Russian and Russia-linked actors, especially oligarchs, involved in money laundering and sanctions 

evasion activity maintain vast global networks of shell companies, bank accounts, trusts, and other 

means of hiding and moving funds abroad, including the United States.147 Notably, these vast networks 

intentionally span multiple jurisdictions and enable these bad actors to maintain control, obfuscate their 

ill-gotten gains and assist the Kremlin in its illicit financial activities abroad. 

Russian money laundering and sanctions violation activity may involve professional facilitators 

and enablers who leverage their position in the international financial system to help SDNs. Recent 

criminal indictments indicate that lawyers may be especially helpful to designated persons, given 

their professional stature as well as financial tools such as Interest on Lawyers’ Trust Accounts (IOLTAs) 

which can be misused to legitimize payments and draw scrutiny away from designated persons or other 

facilitators.148 Investment advisers, trust and company service providers (TCSPs), and other financial 

proxies and intermediaries may also assist sanctioned Russian actors in accessing their funds, including 

through the U.S. financial system.149 Finally, the Russian government has directed its intelligence services 

to set up complex transnational evasion networks abroad, leveraging front companies to funnel money 

while attempting to maintain a lawful appearance. Russian actors have sought to exploit and abuse 

144 Treasury, “NDAA Russia Illicit Finance Report”, (March 2023), https://home.treasury.gov/system/files/136/Treasury-NDAA-RuIFR-508.pdf.

145 Treasury, “The Treasury 2021 Sanctions Review”, (October 2021), https://home.treasury.gov/system/files/136/Treasury-2021-

sanctions-review.pdf.

146 FinCEN, “FinCEN Advises Increased Vigilance for Potential Russian Sanctions Evasion Attempts,” (March 7, 2022), https://www.

fincen.gov/sites/default/files/2022-03/FinCEN%20Alert%20Russian%20Sanctions%20Evasion%20FINAL%20508.pdf, FinCEN, 

“Supplemental Alert: FinCEN and the U.S. Department of Commerce’s Bureau of Industry and Security Urge Continued Vigilance 

for Potential Russian Export Control Evasion Attempts,” (May 19, 2023), https://www.fincen.gov/sites/default/files/shared/

FinCEN%20and%20BIS%20Joint%20Alert%20_FINAL_508C.pdf; FinCEN, “FinCEN Alert on Potential U.S. Commercial Real Estate 

Investments by Sanctioned Russian Elites, Oligarchs, and Their Proxies,” (January 25, 2023), https://fincen.gov/sites/default/

files/shared/FinCEN%20Alert%20Real%20Estate%20FINAL%20508_1-25-23%20FINAL%20FINAL.pdf.

147 FinCEN, “Trends in Bank Secrecy Act Data: Financial Activity by Russian Oligarchs in 2022”, https://www.fincen.gov/sites/default/

files/2022-12/Financial percent20Trend percent20Analysis_Russian percent20Oligarchs percent20FTA percent20_Final.pdf.

148 DOJ, “New York Attorney Pleads Guilty To Conspiring To Commit Money Laundering To Promote Sanctions Violations By 

Associate Of Sanctioned Russian Oligarch”, (April 25, 2023), https://www.justice.gov/usao-sdny/pr/new-york-attorney-pleadsguilty-conspiring-commit-money-laundering-promote-sanctions.

149 FinCEN Alert, FIN-2023-Alert002, FinCEN Alert on Potential U.S. Commercial Real Estate Investments by Sanctioned Russian Elites, 

Oligarchs, and Their Proxies, p.4 (Jan. 25, 2023). In addition, on September 19, 2023, the SEC announced charges against Concord 

Management LLC and its owner and principal, Michael Matlin, for operating as unregistered investment advisers to their only 

client—a wealthy former Russian official widely regarded as having political connections to the Russian Federation. SEC, Press 

Release 2023-186, SEC Charges New York Firm Concord Management and Owner with Acting as Unregistered Investment Advisers to 

Billionaire Former Russian Official (Sep. 19, 2023).
32 2024 ◆ National Money Laundering Risk Assessment

otherwise legitimate economic relationships in third countries such as Türkiye, Singapore, the United 

Arab Emirates, Armenia, Kyrgyzstan, Uzbekistan, PRC, and others to violate U.S. restrictions.

In May of 2022, OFAC identified accounting, trust and corporate formation, and management consulting 

as categories of services prohibited from sale or export from the United States to Russia, highlighting the 

role that TCSPs and similar companies play in assisting wealthy Russians and Russian companies with 

setting up shell companies and hiding their assets.150 In 2022 and 2023, FinCEN and the BIS issued two 

joint alerts for financial institutions on Russian sanctions evasion, providing key information on evasion 

red flags and illicit activity typologies, including Russia’s increasing use of traditional money laundering 

tactics such as the use of corporate vehicles, shell companies, new company formations, nominee 

directors, and non-routine foreign exchange transactions.151 Enhanced U.S. visibility into the financial 

networks of Russian proliferators, shell companies, and fronts has predicated new investigations and 

bolstered existing ones, resulting in detentions and seizures of unauthorized exports. In addition, the 

Russian Elites, Proxies, and Oligarchs (REPO) Task Force has assessed that financial institutions and other 

entities’ compliance with both sanctions and anti-money laundering regulations have helped identify 

and immobilize assets subject to sanctions.

Corruption152

Corruption involves the abuse of power for private gain by public officials exploiting positions of power 

and public trust and by private individuals or entities aiming to improperly secure influence, enrichment, 

or preferential treatment. Corrupt politically exposed persons (PEPs) 153 embezzle public funds, receive 

bribes and kickbacks, and misappropriate wealth. In contrast, corrupt private entities may improperly 

seek to control government decision-making in the form of improperly awarded concessions or 

contracts.154 PEPs should not be confused with the term “senior foreign political figure” as defined under 

the BSA private banking regulation, a subset of PEPs. PEPs may present a higher risk for foreign public 

corruption than other customers, due to their potential access to and influence over public assets.155 The 

term PEPs also refers to the immediate family members or close associates of individuals holding public 

functions, reflecting corrupt actors’ regular use of third-party individuals and “proxies” in laundering 

150 U.S. Department of the Treasury, “U.S. Treasury Takes Sweeping Action Against Russia’s War Efforts, (May 8, 2022), https://home.

treasury.gov/news/press-releases/jy0771. 

151 FinCEN, “FinCEN and the Bureau of Industry and Security (BIS) Issue Joint Notice and New Key Term for Reporting Evasion of 

U.S. Export Controls Globally,” (November 06, 2023), https://www.fincen.gov/news/news-releases/fincen-and-bureau-industryand-security-bis-issue-joint-notice-and-new-key-term; FinCEN, “FinCEN and the U.S. Department of Commerce’s Bureau 

of Industry and Security Urge Increased Vigilance for Potential Russian and Belarusian Export Control Evasion Attempts,” 

FIN-2022-Alert003, (June 28, 2022), https://www.fincen.gov/sites/default/files/2022-06/FinCEN percent20and percent20Bis 

percent20Joint percent20Alert percent20FINAL.pdf.

152 The U.S. Strategy on Countering Corruption (2021), National Strategy for Combating Terrorist and Other Illicit Financing (2022), 

and AML/CFT National Priorities identify countering corruption as a priority for the United States.

153 Foreign individuals who are or have been entrusted with a prominent public function, as well as their immediate family 

members and close associates, See “Joint Statement on Bank Secrecy Act Due Diligence Requirements for Customers Who 

May Be Considered Politically Exposed Persons”, (August 21, 2020), https://www.fincen.gov/sites/default/files/shared/PEP 

percent20Interagency percent20Statement_FINAL percent20508.pdf.

154 The White house, “United States Strategy on Countering Corruption,” (December 2021), p.6., https://www.whitehouse.gov/wpcontent/uploads/2021/12/United-States-Strategy-on-Countering-Corruption.pdf.

155 FFIEC, “Politically Exposed Persons,” (November 2021), https://www.ffiec.gov/press/PDF/Politically-Exposed-Persons.pdf.
2024 ◆ National Money Laundering Risk Assessment 33

illicit proceeds.156 Banks must apply a risk-based approach to customer due diligence (CDD) in developing 

the risk profiles of their customers, including PEPs. They are required to establish and maintain written 

procedures reasonably designed to identify and verify beneficial owners of legal entity customers.157

These activities generate illicit proceeds, often taking the form of bribes, kickbacks, embezzled or 

misappropriated assets, or funds received as part of improperly awarded concessions or contracts. 

These illicit proceeds may be laundered, stored, or moved through the U.S. financial system. Money 

laundering methods commonly associated with corruption and kleptocracy include the misuse of legal 

entities and offshore financial accounts; the purchase of real estate, luxury goods, and other highvalue assets (including yachts, aircraft, and art); the misuse of certain professions and sectors, such as 

investment advisers, lawyers, and trust and company service providers; and the reliance on MLOs.158 Law 

enforcement also reports an increasing number of corruption-related cases involving the use of digital 

assets, though the overall number of these cases remains small relative to corruption involving fiat 

currency.159

Corruption results in considerable costs to society depriving governments of essential resources, 

weakening the business environment, eroding good governance and the rule of law, inhibiting equity 

and economic growth, and exacerbating other threats like organized crime and drug trafficking.160

Consequently, in 2021 President Joseph Biden established the fight against corruption as a core U.S. 

national security interest.161

These money laundering risks relate to both domestic and foreign corruption. In the United States, some 

government officials at the local, state, tribal, and federal levels may engage in corrupt practices. Foreign 

actors also launder the proceeds of corruption through the movement or investment of funds in the U.S. 

economy and financial system. Given the size and stability of the U.S. financial system, the United States 

remains a significant money laundering destination for the proceeds of corruption. Further, U.S. efforts 

to combat corruption in the past few years have led to an increased focus and fuller understanding of the 

problem as illustrated in the many typology examples below. 

1. Foreign Corruption

Money laundering tied to foreign corruption primarily involves payments to foreign officials to obtain or 

retain business, as well as the use of the U.S. financial system to launder the proceeds of corruption. The 

156 FinCEN, “FinCEN Alert on Real Estate, Luxury Goods, and Other High-Value Assets Involving Russian Elites, Oligarchs, 

and their Family Members,” (March 16, 2022), https://www.fincen.gov/sites/default/files/2022-03/FinCEN percent20Alert 

percent20Russian percent20Elites percent20High percent20Value percent20Assets_508 percent20FINAL.pdf.

157 “Joint Statement on Bank Secrecy Act Due Diligence Requirements for Customers Who May Be Considered Politically Exposed 

Persons,” (August 21, 2020), https://www.fincen.gov/sites/default/files/shared/PEP%20Interagency%20Statement_FINAL%20508.pdf.

158 FinCEN, “Advisory on Kleptocracy and Foreign Public Corruption,” (April 2022), https://www.fincen.gov/sites/default/files/

advisory/2022-04-14/FinCEN percent20Advisory percent20Corruption percent20FINAL percent20508.pdf.

159 DOJ, “Bankman-Fried Charged in an Eight-Count Indictment with Fraud, Money Laundering, and Campaign Finance Offenses”, 

(December 13, 2022), https://www.justice.gov/usao-sdny/pr/united-states-attorney-announces-charges-against-ftx-foundersamuel-bankman-fried.

160 The White house, “United States Strategy on Countering Corruption,” (December 2021), p.6., https://www.whitehouse.gov/wpcontent/uploads/2021/12/United-States-Strategy-on-Countering-Corruption.pdf.

161 The White House, “Memorandum on Establishing the Fight Against Corruption as a Core United States National Security Interest,” 

(June 3, 2021), https://www.whitehouse.gov/briefing-room/presidential-actions/2021/06/03/memorandum-on-establishing-the-fightagainst-corruption-as-a-core-united-states-national-security-interest/. Corruption is a national AML/CFT priority.
34 2024 ◆ National Money Laundering Risk Assessment

United States is being used to hide the proceeds of foreign offenses given the size and stability of our financial 

sector. U.S. law enforcement regularly investigates and prosecutes illicit activities involving extortion, bribery, 

and misappropriation or embezzlement of public assets by or for the benefit of a public foreign official where 

the U.S. financial system and markets are misused to disguise or shelter illicit proceeds. 

As described in FinCEN’s 2022 Advisory on Kleptocracy and Foreign Public Corruption, corruption can 

occur at any level of government and commonly involves the use of shell companies and offshore 

financial accounts to move its proceeds; the purchase of real estate, luxury goods, and other high-value 

assets; long-term government contracts or procurement processes; transactions with state-owned 

companies, public institutions, or embassies; and exploitation of natural resources or commodities.162

Foreign corruption cases involve a range of predicate crimes and money laundering techniques. In April 

2023 a federal jury convicted Claudia Patricia Díaz Guillen, the former National Treasurer of Venezuela, 

and her husband, Adrian José Velásquez, for their roles in an international currency exchange scheme.

163 The scheme involved accepting more than $100 million in bribes, using BCS, offshore shell companies, 

wire transfers from Swiss bank accounts to accounts in Southern Florida, and purchasing high-value 

luxury goods in Florida.164 In another case in 2022, the DOJ filed a civil forfeiture complaint alleging that 

an Armenian businessperson purchased a high-value mansion in Los Angeles with bribes in excess of $20 

million for a former high-ranking Armenian public official and his family in exchange for favorable tax 

treatment.165 In 2023, a defendant pleaded guilty to laundering funds embezzled from the health office 

of the Embassy of Kuwait in Washington, DC. The scheme involved the creation of shell companies with 

names meant to mimic actual U.S. healthcare providers and the submission of more than $1.5 million in 

fraudulent invoices to the Embassy’s health office.166

2. Domestic Corruption

Domestic corruption cases most often involve bribery and subsequent efforts to launder or disguise 

bribes paid to, solicited by, or received by U.S. public officials. Other prosecutable offenses commonly 

associated with domestic corruption, such as the misappropriation or embezzlement of public assets, 

fraud (especially relating to contracting and procurement), election and campaign finance crimes, the 

solicitation or receiving of kickbacks, and tax evasion, also remain risks.167 These activities occur at the 

federal, state, local, and tribal levels, and have involved a range of individuals, including law enforcement 

162 FinCEN, “Advisory on Kleptocracy and Foreign Public Corruption,” (April 2022), https://www.fincen.gov/sites/default/files/

advisory/2022-04-14/FinCEN percent20Advisory percent20Corruption percent20FINAL percent20508.pdf.

163 DOJ, “Former Venezuelan National Treasurer and Husband Sentenced in Money Laundering and International Bribery Scheme,” 

(December 15, 2022), https://www.justice.gov/opa/pr/former-venezuelan-national-treasurer-and-her-husband-sentencedmoney-laundering-and.

164 See Southern District of Florida, USA vs. Raul Gorrin Belisario Claudia Patricia Diaz Guillen, andAdrian Jose Velasquez Figueroa, 

Case 18-cr-80160, superseding indictment.

165 DOJ, “Justice Department Seeks Forfeiture of Los Angeles Mega-Mansion Purchased with Proceeds of Armenian Corruption 

Scheme,” (May 5, 2022), https://www.justice.gov/opa/pr/justice-department-seeks-forfeiture-los-angeles-mega-mansionpurchased-proceeds-armenian.

166 DOJ, “Former Fugitive Pleads Guilty to Laundering Money Embezzled from Kuwaiti Embassy,” (May 16, 2023), https://www.

justice.gov/opa/pr/former-fugitive-pleads-guilty-laundering-money-embezzled-kuwaiti-embassy; DOJ, “Defendant Returned by 

Egypt to the United States to Face Charges for Alleged Scheme to Defraud the Kuwaiti Embassy,” (December 23, 2021), https://

www.justice.gov/opa/pr/defendant-returned-egypt-united-states-face-charges-alleged-scheme-defraud-kuwaiti-embassy.

167 DOJ, “Report to Congress on the Activities and Operations of the Public Integrity Section for 2021,” (2021), https://www.justice.

gov/criminal-pin/file/1548051/download; DOJ, “Former Puerto Rico Legislator Sentenced for Bribery and Kickback Scheme,” 

(September 7, 2022), https://www.justice.gov/opa/pr/former-puerto-rico-legislator-sentenced-bribery-and-kickback-scheme.
2024 ◆ National Money Laundering Risk Assessment 35

officers, political consultants and campaign employees, contractors, officials engaged in procurement, 

elected leaders, and members of the judiciary.168

Money laundering activity has been a key component of many domestic corruption cases. For example, 

a March 2022 case involved Alderman Ricardo Munoz, a former elected city official sentenced on federal 

wire fraud and money laundering charges for using money from a political fund to pay for personal 

expenses.169 While serving in office, Munoz used money from a political action committee to pay a 

relative’s college tuition and other personal expenses, and sought to conceal this fraud scheme by 

making materially false representations to the State elections board.170 In another 2022 case, a former 

elected State Representative and an associated staff member were charged with theft from programs 

receiving federal funds, engaging in bribery and kickbacks concerning programs receiving federal funds, 

honest services wire fraud, and conspiracy to commit money laundering.171 It is alleged that the two 

individuals sought State funds by using a fictitious name and submitting sham invoices to the State from 

companies the two individuals owned.172

3. Special Focus: Unlawful Campaign Finance

Over the past ten years, here have been numerous instances of money laundering occurring in and 

around domestic political campaigns for federal, state, and local office. When domestic and foreign 

actors carry out these activities, it undermines the integrity of democratic processes in the United States, 

erodes institutions, and may afford corrupt or illicit actors unfair political advantages.173 Domestic and 

foreign actors have engaged in money laundering to leverage campaign funds for personal use and to 

obfuscate campaign fundraising efforts (often to conceal the identity of donors or to obstruct campaign 

finance disclosures). These activities may be perpetrated by political candidates and their campaigns, 

foreign governments seeking strategic gain, or political supporters aiming to bypass campaign finance 

law, among others.

Campaign finance-related money laundering may involve a range of techniques, depending on the kind 

of illicit actors perpetrating the scheme and their respective political, financial, or strategic objectives. 

Recent cases and law enforcement reports suggest that campaign invoices, business and consulting 

contracts, donations to nonprofits, and standard business transactions are common methods through 

which illicit actors carry out campaign finance fraud. 

168 DOJ, “Military Contractors Convicted for $7 Million Procurement Fraud Scheme,” (March 29, 2023), https://www.justice.gov/

opa/pr/military-contractors-convicted-7-million-procurement-fraud-scheme; DOJ, “Former Judge Arrested for Bribery and 

Obstruction of Justice,” (January 5, 2023), DOJ, “Former Arkansas State Senator Sentenced for Bribery and Tax Fraud,” (February 

3, 2023), https://www.justice.gov/opa/pr/former-arkansas-state-senator-sentenced-bribery-and-tax-fraud; https://www.justice.

gov/opa/pr/former-judge-arrested-bribery-and-obstruction-justice.

169 USAO, “Former City of Chicago Alderman Sentenced to More Than a Year in Federal Prison for Using Political Funds To Pay 

Personal Expenses,” (March 17, 2022), https://www.justice.gov/usao-ndil/pr/former-city-chicago-alderman-sentenced-moreyear-federal-prison-using-political-funds.

170 Id.

171 DOJ, “Tennessee State Representative and Former Chief of Staff Charged with Bribery and Kickback Conspiracy,” (August 23, 

2022), https://www.justice.gov/opa/pr/tennessee-state-representative-and-former-chief-staff-charged-bribery-and-kickbackconspiracy.

172 Id.

173 The White House, “United States Strategy on Countering Corruption,” (December 2021), p.7, https://www.whitehouse.gov/wpcontent/uploads/2021/12/United-States-Strategy-on-Countering-Corruption.pdf.
36 2024 ◆ National Money Laundering Risk Assessment

In 2023, Jessie R. Benton was convicted for his role in funneling illegal foreign campaign contributions 

from a Russian national to a 2016 U.S. presidential campaign.174 The scheme entailed Benton’s political 

firm creating a fake invoice for consulting services, the Russian national wiring $100,000 to the firm, 

and Benton acting as a straw donor by contributing $25,000 to the campaign.175 The campaign then 

unwittingly filed reports with the Federal Election Commission inaccurately reporting the U.S. individual, 

instead of the Russian national, as the source of the funds.176

In July 2022, two U.S. citizens were charged with money laundering conspiracy, among other offenses, for 

a scheme in which they allegedly acted as “straw donors” for foreign nationals to unlawfully contribute 

to political campaigns.177 The two individuals allegedly received funds from foreign nationals and 

gave $600,000 to political campaigns in their own names in violation of Federal Election Commission 

regulations.178

Human Trafficking & Human Smuggling 

Human trafficking and human smuggling networks pose a serious criminal threat with devastating 

human consequences. 179 Human traffickers jeopardize the fundamental human right to personal 

freedom as criminals seek to profit from forced labor or sexual servitude. Human smugglers frequently 

place migrants in grave danger in the service of extreme profits. While human trafficking and human 

smuggling are distinct crimes, individuals who are smuggled are also vulnerable to becoming victims of 

human trafficking and other serious crimes. 

Both crimes generate large profits that may be laundered through the U.S. financial systems. Human 

trafficking and human smuggling criminal networks use a variety of mechanisms to move illicit proceeds 

generated by these two crimes, expanding their profits and threatening the integrity of the U.S. financial 

system. They employ purchases of real estate, wire transfers, credit cards, and bulk cash transfers, 

among others. Increasingly, virtual assets have facilitated both types of criminal activities.

1. Human Trafficking

Human trafficking is a financially motivated crime whereby traffickers exploit victims by compelling or 

coercing them to perform labor or services or engage in commercial sex. Human trafficking victims in the 

United States may be U.S. citizens, foreign nationals who have lawful immigration status, or individuals 

who are unlawfully present. Victims of human trafficking may likewise come from any socioeconomic 

group, though significant risk factors may include recent migration, substance use, mental health 

174 DOJ, “Political Consultant Convicted for Scheme Involving Foreign Campaign Contribution to 2016 Presidential Campaign,” 

(November 17, 2022), https://www.justice.gov/opa/pr/political-consultant-convicted-scheme-involving-illegal-foreigncampaign-contribution-2016.

175 Id.

176 Id. 

177 DOJ, “Oyster Bay Residents Charged with $27 Million Investment Fraud Scheme and Selling Foreign Nationals Access to 

Prominent U.S. Politicians,” (July 18, 2022), https://www.justice.gov/usao-edny/pr/oyster-bay-residents-charged-27-millioninvestment-fraud-scheme-and-selling-foreign.

178 Id. 

179 Human trafficking and human smuggling are identified as an AML/CFT National Priority. 
2024 ◆ National Money Laundering Risk Assessment 37

concerns, or involvement with the child welfare system or youth homelessness.180 Sex trafficking is often 

facilitated through online social media platforms.181

Beyond its enormous human costs, human trafficking is one of the most profitable crimes and predicate 

offenses for money laundering.182 While an underreported crime, between January 1, 2020 and August 

31, 2022, a total of 26,872 situations of human trafficking were reported to the U.S. National Human 

Trafficking Hotline involving 42,887 likely victims.183 An estimated 30 million people are subjected to 

human trafficking across the world.184 Estimates suggest that human trafficking generates more than 

$150 billion in global illicit profits annually.185

Financial activity from human trafficking can intersect with the regulated financial system at any 

point during the recruitment, transportation, and exploitation stages. Transactions related to human 

trafficking can include payments associated with the transport and housing of victims; the collection of 

proceeds generated by the exploitation of trafficking victims; and the movement of proceeds.186 TCOs 

may make financial investments to facilitate human trafficking-related activities, such as investing in real 

estate, bars, restaurants, or other businesses to conceal their trafficking-related activities.187 Companies 

that appear legitimate may be used to launder money to support human trafficking.

Illicit proceeds from human trafficking can be paid or transferred in cash, electronic funds transfers/

180 National Human Trafficking Hotline, “Human Trafficking: Who is Vulnerable?” https://humantraffickinghotline.org/en/humantrafficking#:~:text=Who percent20is percent20Vulnerable percent3F,a percent20runaway percent20or percent20homeless percent20youth. 

181 DOJ, “Kansas Man Convicted for Sex Trafficking in Oklahoma”, (August 3, 2023), https://www.justice.gov/usao-ndok/pr/kansasman-convicted-sex-trafficking-oklahoma; DOJ, “Jamestown Woman Pleads Guilty To Her Role In Sex Trafficking Conspiracy”, 

(August 17, 2023) https://www.justice.gov/usao-wdny/pr/jamestown-woman-pleads-guilty-her-role-sex-trafficking-conspiracy; 

DOJ, “Marion County Man Convicted of Human Trafficking,” (August 23, 2023), https://www.justice.gov/usao-edtx/pr/marioncounty-man-convicted-human-trafficking.

182 State, Treasury, “Report to Congress on An Analysis of Anti-Money Laundering Efforts Related to Human trafficking”, (October 7, 2020), 

https://www.state.gov/report-to-congress-on-an-analysis-of-anti-money-laundering-efforts-related-to-human-trafficking/.

183 Polaris, “The Typology of Modern Slavery”, (August 30, 2023), https://polarisproject.org/the-typology-of-modern-slavery/

184 DHS, “Countering Human Trafficking: A Year in Review”, (January 2023), https://www.dhs.gov/sites/default/

files/2023-05/23_0131_CCHT_year-in-review_revised-23_0509.pdf; Department of State, “About Human Trafficking,” https://

www.state.gov/humantrafficking-about-human-trafficking/#:~:text=With%20an%20estimated%2027.6%20million,them%20

for%20their%20own%20profit.

185 The White House, “FACT SHEET: The National Action Plan to Combat Human Trafficking (NAP)” (December 3, 2021), https://www.

whitehouse.gov/briefing-room/statements-releases/2021/12/03/fact-sheet-the-national-action-plan-to-combat-human-traffickingnap/#:~:text=December percent2003 percent2C percent202021-,FACT percent20SHEET percent3A percent20The percent20National 

percent20Action,to percent20Combat percent20Human percent20Trafficking percent20(NAP)&text=Globally percent2C percent20an 

percent20estimated percent2025 percent20million,billion percent20annually percent20in percent20illicit percent20profits. The actual 

value of proceeds from human trafficking is likely to be much higher. In 2014, an International Labour Office study found that forced 

labor generates approximately $150 billion in proceeds annually. Since that time, the number of persons understood to be victims of 

human trafficking has increased by nearly 50 percent. International Labour Office, 2014, Profits and Poverty: The Economics of Forced 

Labour, https://www.ilo.org/wcmsp5/groups/public/---ed_norm/---declaration/documents/publication/wcms_243391.pdf, page 13. 

186 FinCEN, “Supplemental Advisory on Identifying and Reporting Human Trafficking and Related Activity”, FIN2020-A008, (October 

15, 2020,) https://www.fincen.gov/sites/default/files/advisory/2020-10-15/Advisory percent20Human percent20Trafficking 

percent20508 percent20FINAL_0.pdf; FinCEN, “Advisory Guidance Recognizing Activity that May be Associated with Human 

Smuggling and Human Trafficking”, FIN2014-A008, (September 11, 2014), https://www.fincen.gov/sites/default/files/advisory/

FIN-2014-A008.pdf; FinCEN, “FinCEN Alert on Huma Smuggling along the Southwest Border of the United States”, FIN2023-

Alert001, (January 13, 2023), https://www.fincen.gov/sites/default/files/shared/FinCEN percent20Alert percent20Human 

percent20Smuggling percent20FINAL_508.pdf.

187 FinCEN, “Supplemental Advisory on Identifying and Reporting Human Trafficking and Related Activity”, FIN2020-A008, (October 

15, 2020,) https://www.fincen.gov/sites/default/files/advisory/2020-10-15/Advisory percent20Human percent20Trafficking 

percent20508 percent20FINAL_0.pdf. 
38 2024 ◆ National Money Laundering Risk Assessment

remittance systems, credit card transactions, payment apps, or virtual assets. 

In the United States, human trafficking occurs in a broad range of industries, including hospitality, 

agriculture, healthcare, manufacturing, commercial cleaning services, construction, peddling and 

begging, food service industries, beauty salon services, domestic work, fairs and carnivals, escort 

services, illicit massage, and health and beauty services.188

The DOJ regularly prosecutes money laundering with predicate human trafficking offenses.189 For 

example, a TCO conspired to make money by compelling hundreds of women from Thailand to engage 

in commercial sex acts in various cities across the United States. The DOJ pursued prosecutions 

against the TCO that have resulted in 37 convictions.190 Sumalee Intarathong pleaded guilty to her role 

as a visa broker for the TCO, which controlled victims until they could repay an exorbitant “bondage 

debt” of between $40,000 and $60,000.191 The TCO dealt primarily in cash and engaged in rampant and 

sophisticated money laundering to promote and conceal illegal profits. The TCO generated profits in 

the United States and then used funnel accounts, third-party money launderers, and BCS to transport 

proceeds. To evade detection, the trafficking organization paid flight attendants to keep quiet and, in 

some limited instances, to transport bulk cash in their own luggage. Transactions related to the human 

trafficking scheme in the United States were made using prepaid credit cards and virtual assets.192

The TCO moved tens of millions of dollars in illegal proceeds from the United States to Thailand and 

elsewhere.

In another case, Peter Griffin, a retired San Diego Police Department vice detective, owned a network 

of illicit massage businesses (IMBs) in Southern California and Arizona. Through the course of Griffin’s 

criminal operation, he established several bank accounts for his IMBs, which Griffin and his coconspirators regularly used to collect payments for the commercial sex services they instructed women 

to perform inside the businesses. Griffin then used these accounts to pay for online commercial sex 

advertisements and other business expenses. On three separate occasions, Griffin knowingly used the 

bank accounts associated with his illicit and illegal businesses to purchase a Cartier watch and a car and 

issued a cashier’s check payable to one of his codefendants. Griffin was sentenced on October 13, 2023, 

to 33 months in custody.193 

188 Polaris, “The Typology of Modern Slavery”, (August 30, 2023), https://polarisproject.org/the-typology-of-modern-slavery/.

189 See Sec. II.E of Attorney Generals' Annual Report to Congress on U.S. Government Activities to Combat Trafficking in Persons (FY2021), 

available at Attorney General’s Annual Report to Congress on U.S. Government Activities to Combat Trafficking in Persons, Fiscal 

Year 2021 (justice.gov).

190 DOJ, “Thai Woman Pleads Guilty to Her Role in International Sex Trafficking Conspiracy”, (November 29, 2022), https://www.

justice.gov/usao-mn/pr/thai-woman-pleads-guilty-her-role-international-sex-trafficking-conspiracy.

191 Id. 

192 FinCEN, “Supplemental Advisory on Identifying and Reporting Human Trafficking and Related Activity”, FIN2020-A008, (October 

15, 2020).

193 DOJ, “Former San Diego Police Officer and Three Others Plead Sentenced from Years-long Operation of Illicit Massage 

Businesses, (Oct. 13, 2023), https://www.justice.gov/usao-sdca/pr/former-san-diego-police-officer-and-three-others-sentencedcrimes-stemming-years-long.
2024 ◆ National Money Laundering Risk Assessment 39

2. Human Smuggling 

Human smugglers engage in bringing people, who have consented to their travel, across international 

borders through deliberate evasion of immigration laws, often for financial benefit. Human smuggling 

is an inherently transnational crime, with smuggling routes across the southwest border remaining the 

most popular for entry into the United States. In recent years, law enforcement has witnessed an increase 

in the number of women, children, and families seeking transportation by human smugglers.194 Human 

smuggling networks are lucrative, and Illicit financial networks of criminals who profit off vulnerable 

migrants can command smuggling fees ranging from $5,000 up to tens of thousands of dollars per 

migrant.195 Moving human beings as cargo pays billions of dollars for transnational criminal smuggling 

organizations and involves significant risk to the people involved.196 TCOs that control drug smuggling 

territory also profit from this illegal activity by charging smuggling organizations a fee or tax to pass 

through their territories. According to HSI, Human smuggling also represents a national security concern, 

as identified instances of known or suspected terrorists attempting to infiltrate the United States through 

illegal migration have occurred. 

In one recent criminal indictment, the DOJ alleged that a human smuggling organization had generated 

millions of dollars in proceeds.197 The defendant and co-conspirators allegedly employed various 

methods to conceal the nature, location, source, ownership, and control of the proceeds of the 

organization, including the use of funnel accounts; investing in property and luxury goods; amassing 

large amounts of cash to avoid bank reporting requirements; and moving illicit proceeds between 

accounts, among other methods.

In another case, Homeland Security Investigations (HSI) announced the arrest of six alleged human 

smugglers in a coordinated, multistate enforcement operation.198 In this case, the DOJ is prosecuting 

members of a TCO that allegedly used funnel accounts and directed electronic money transfers to avoid 

detection, including by making payments for funds derived from the TCO’s alien smuggling activity 

through peer-to-peer money transfer applications to coconspirators. Other members of the TCO are 

alleged to have been involved in moving money through funnel accounts and electronic money transfers 

on behalf of the organization. 

194 ICE, Features, “Human Smuggling equals grave danger, big money”, (Jan. 26, 2022), https://www.ice.gov/features/humansmuggling-danger.

195 ICE, “HSI San Diego, BP case results in migrant smuggler admitting to sexually assaulting a juvenile while being smuggled into 

the US,” (Nov. 6, 2023) https://www.ice.gov/news/releases/hsi-san-diego-bp-case-results-migrant-smuggler-admitting-sexuallyassaulting-juvenile; DOJ, “Four Defendants Extradited from Guatemala Sentenced for Roles in Deadly International Human 

Smuggling Conspiracy,” (Nov. 1, 2023) Office of Public Affairs | Four Defendants Extradited from Guatemala Sentenced for Roles 

in Deadly International Human Smuggling Conspiracy | United States Department of Justice. 

196 ICE, Features, “Human Smuggling equals grave danger, big money”, (Jan. 26, 2022), https://www.ice.gov/features/humansmuggling-danger.

197 DOJ, “Four Indicted for Money Laundering in Prolific Human Smuggling Network Takedown”, (July 28, 2023), https://www.

justice.gov/opa/pr/four-indicted-money-laundering-prolific-human-smuggling-network-takedown.

198 DOJ, “Ten Indicted and Six Arrested in Joint Task Force Alpha Investigation of the Lopez Crime Family Human Smuggling 

Organization Operating in Guatemala, Mexico, and the United States,” (June 15, 2023), https://www.justice.gov/usao-nm/pr/tenindicted-and-six-arrested-joint-task-force-alpha-investigation-lopez-crime-family.
40 2024 ◆ National Money Laundering Risk Assessment

Special Focus: Tax Crime

This section was included primarily due to the increase in State and federal payroll tax evasion and 

workers’ compensation insurance fraud in the U.S. residential and commercial real estate construction 

industries. Tax crime refers to any illicit activity related to Internal Revenue Code violations.199 The IRS 

projected the gross tax gap at $688 billion for tax year 2021 alone, which could result in approximately 

$7 trillion in lost tax revenue over the next decade. The IRS Criminal Investigation (IRS-CI) is the main 

LEA that focuses on tax crime. In FY22 the IRS-CI identified over $31 billion from tax and financial crimes, 

and the agency seized assets valued at approximately $7 billion in FY22.200 The IRS prevented the loss of 

an additional $4.6 billion by stopping the issuance of fraudulent refunds during the 2022 tax season.201

The direct loss of tax revenue resulting from tax crime deprives the U.S. government of proper funding 

for essential services and programs. For example, in January of 2022, an American chief executive officer 

(CEO) was sentenced to 60 months in prison for using a foreign trust and real estate transactions to evade 

over $20 million in income tax.202

Tax schemes have evolved into opaque arrangements, often giving the appearance that the perpetrator 

is not associated with earnings. Abusive tax schemes originally took the structure of fraudulent domestic 

and foreign trust arrangements. However, the taxpayers receive their funds through debit/credit cards 

or fictitious loans. These schemes often involve offshore banking and sometimes establish scam 

corporations or entities.203 

There has been a concerning increase in state and federal payroll tax evasion and workers’ compensation 

insurance fraud in the U.S. residential and commercial real estate construction industries. Illicit actors 

perpetrate these schemes through banks and check cashing businesses by exploiting shell construction 

companies and fraudulent documents to commit insurance fraud and pay their workers “off the books,” 

State and federal tax authorities lose hundreds of millions of dollars to these schemes and legitimate 

construction companies and their workers are put at a competitive disadvantage.204

Criminals launder illicit tax proceeds, using the same money laundering methods applicable to other 

proceeds-generating crimes, including the misuse of legal entities, trusts, and real estate to conceal the use 

of illicit tax funds. For example, a Florida developer defrauded investors out of more than $30 million while 

evading $2.5 million in U.S. income taxes and penalties in July 2023. To launder the proceeds of his scheme, 

the developer misused legal entities and purchased several real estate properties using discrete LLCs.205

199 U.S. Code: Title 26.

200 IRS, “2023 Annual Report”, (November 3, 2022), https://www.irs.gov/pub/irs-pdf/p3583.pdf.

201 TIGTA, “Results of the 2022 Filling Season”, (Mar. 30, 2023), https://www.tigta.gov/sites/default/files/reports/2023-

04/202340021fr.pdf.

202 DOJ, “CoFounder and Former CEO of Foreign Oil Company Sentenced to 60 Months in Prison for Failure to File Taxes Causing 

over $20 Million in Losses to U.S. Treasury”, (January 26 2022), https://www.justice.gov/usao-sdny/pr/co-founder-and-formerceo-foreign-oil-company-sentenced-60-months-prison-failure-file.

203 IRS, “Tax Fraud Alerts”, (August 2023), https://www.irs.gov/compliance/criminal-investigation/tax-fraud-alerts.

204 FinCEN, “FinCEN Notice Highlights Concerning Increase in Payroll Tax Evasion, Workers’ Compensation Fraud in the 

Construction Sector,” (August 2023), https://www.fincen.gov/news/news-releases/fincen-notice-highlights-concerningincrease-payroll-tax-evasion-workers.

205 DOJ, “Real Estate Developer Sentenced for Investment Fraud, Bank Fraud, Money Laundering, and Tax,” (July 31. 2023), https://

www.justice.gov/usao-ct/pr/real-estate-developer-sentenced-investment-fraud-bank-fraud-money-laundering-and-tax.
2024 ◆ National Money Laundering Risk Assessment 41

Tax refund fraud typologies have become more prevalent. In one case, King Isaac Umoren, a tax preparer, 

was sentenced for filing false tax returns, aggravated identity theft, wire fraud, money laundering, and 

impersonating an FBI agent. Umoren required clients to use a refund anticipation check program, which 

Umoren then used to take fees from clients’ tax refunds without their knowledge.206 In a different scheme, 

in March 2023, a federal grand jury unsealed an indictment charging seven individuals in a conspiracy to 

claim fraudulent tax refunds using the stolen identities of accountants and taxpayers by filing at least 371 

false tax returns claiming over $111 million in refunds. The conspirators posed as authorized agents of 

multiple taxpayers and allegedly used prepaid debit cards to receive the fraudulent refunds. They used 

the cards to launder the funds by purchasing money orders from local stores in amounts low enough 

to avoid reporting thresholds. The conspirators purchased designer clothing and used cars with the 

proceeds from the illicit activity.207

Update on Wildlife Trafficking and other Nature Crimes 

As an update to the 2022 NMLRA’s special focus section on wildlife trafficking, the Treasury is calling 

attention to the broader category of nature crime. Given its strong association with corruption and 

transnational organized crime (AML/CFT National Priorities), FinCEN indicates that wildlife trafficking 

affects the U.S. financial sector.208 The illicit proceeds generated in the U.S. or that pass through the U.S. 

financial system related to nature crimes are not as significant compared to the top threats described 

above. Still, the importance of the U.S. dollar and financial system to international trade and finance, 

these types of crimes pose a unique money laundering threat to the United States. 

A recent example of a money laundering scheme involving nature and other crimes involves Bhagavan 

“Doc” Antle, who pleaded guilty to money laundering and conspiracy to commit offenses against the 

United States. Antle owned and operated a South Carolina-based safari park and conducted financial 

transactions with cash he believed was obtained from transporting and harboring illegal aliens. Antle 

violated the Lacey Act by directing the sale or purchase of numerous animals that are protected under 

the Endangered Species Act.209 He used bulk cash payments to hide the transactions and falsified 

paperwork to show non-commercial transfers entirely within one state. In addition, Antle requested that 

payments for endangered species be made to his nonprofit so they could appear as “donations”.210

1. The Intersection of Nature Crimes with Other Threats

Foreign corruption: According to law enforcement sources, foreign corruption consistently plays 

a critical role for wildlife trafficking networks in facilitating poaching, smuggling, transportation, 

206 IRS, “Las Vegas tax preparer sentenced to prison for multiple fraud schemes,” (December 1, 2022), https://www.irs.gov/

compliance/criminal-investigation/las-vegas-tax-preparer-sentenced-to-prison-for-multiple-fraud-schemes.

207 DOJ, “Seven Charged in Sophisticated Stolen Identity Tax Refund Fraud Scheme that Sought Over $100 Million from the IRS”, 

(March 13, 2023), https://www.justice.gov/opa/pr/seven-charged-sophisticated-stolen-identity-tax-refund-fraud-schemesought-over-100-million.

208 FinCEN, Financial Threat Analysis, “Illicit Finance Threat Involving Wildlife Trafficking and Related Trends in Bank Secrecy Act Data,” 

(December 22, 2021), https://fincen.gov/sites/default/files/2021-12/Financial_Threat_Analysis_IWT_FINAL%20508_122021.pdf.

209 The Lacey Act prohibits trafficking of illegally taken wildlife, fish or plants, including animals protected under the Endangered 

Species Act.

210 DOJ, November 6, 2023, “Doc Antle, Owner of Myrtle Beach Safari, Pleads Guilty to Federal Wildlife Trafficking and Money 

Laundering Charges”, https://www.justice.gov/opa/pr/doc-antle-owner-myrtle-beach-safari-pleads-guilty-federal-wildlifetrafficking-and-money.
42 2024 ◆ National Money Laundering Risk Assessment

distribution, trade, and money laundering. In November 2022, the DOJ indicted a senior Cambodian 

Forestry official who allegedly conspired with other officials to smuggle wild-caught primates into the 

United States for biomedical research. This left U.S. pharmaceutical companies exposed to transacting 

with corrupt officials and their intermediaries. This case, which involved financial flows of nearly $20 

million, was a major initiative involving coordination among U.S. law enforcement agencies and U.S. 

financial institutions registered under section 314(b) of the USA PATRIOT Act.211 

Drug trafficking: According to law enforcement sources, there are instances of Mexican DTOs trading 

wildlife and wildlife parts to Chinese drug traffickers in exchange for precursor chemicals for fentanyl 

and methamphetamine that may be destined for the United States. In May 2023, Abdi Hussein Ahmed, a 

member of a wildlife trafficking ring, was sentenced to 48 months in prison for conspiring to traffic large 

quantities of rhinoceros horns (rhino horn) and elephant ivory and conspiring to distribute and possess 

with intent to distribute heroin. The value of the wildlife products involved in the case exceeded $7 

million. Ahmed and his co-conspirators received payments from foreign customers by international wire 

transfers, some of which were sent through U.S. financial institutions. 212

Transnational Criminal Organizations: On October 7, 2022, OFAC designated the Teo Boon Ching TCO,213

which has been involved in wildlife trafficking for two decades. The TCO focused its business model on 

exploiting high-value assets, such as ivory, rhino horn, and pangolins, and coordinating transport from 

Africa to customers in Asia, especially in China and Vietnam. Malaysian national Teo Boon Ching was 

arrested in Thailand and extradited to the United States. Ching pleaded guilty to conspiracy to commit 

wildlife trafficking, and was sentenced to 18 months in prison. Ching served as a specialized smuggler, 

transporting rhino horns from rhinoceros poaching operations located predominantly in Africa to the 

eventual customers who were primarily in Asia. Ching also claimed to be able to ship rhino horns to the 

United States.214 As outlined in the plea agreement, Ching charged a fee in RMB (rather than USD) for 

his trafficking services and operated through an “underground bank” to get around AML/CFT controls 

at certain banks. Ching also accepted USD in cash because he could convert it to RMB. Ching instructed 

rhino horn customers to structure payments into multiple Chinese bank accounts before he would 

release the rhino horn. Upon confirming the deposit of funds, Ching directed the delivery of the rhino 

horn to undercover law enforcement in Bangkok. 

211 DOJ, Environmental Crimes Bulletin November 2022 , “United States v. Omaliss Keo, et al., No. 1:22-CR-20340 (S. D. Fla.),” https://

www.justice.gov/enrd/blog/ecs-bulletin-december-2022#Keo.

212 DOJ, “Fifth Defendant Sentenced To 48 Months In Prison For Large-Scale Trafficking Of Rhinoceros Horns And Elephant 

Ivory And Heroin Conspiracy,” (May 11, 2023), https://www.justice.gov/usao-sdny/pr/fifth-defendant-sentenced-48-monthsprison-large-scale-trafficking-rhinoceros-horns#:~:text=Damian percent20Williams percent2C percent20the percent20United 

percent20States,species percent20 percentE2 percent80 percent94 percent20worth percent20millions percent20of 

percent20dollars.

213 Treasury, October 7, 2022, “Treasury Sanctions Wildlife Trafficking Organized Crime Group”, https://home.treasury.gov/news/

press-releases/jy1001.

214 DOJ, “U.S. Attorney Announces Extradition of Malaysian National For Large-Scale Trafficking Of Rhinoceros Horns,” (October 7, 

2022), https://www.justice.gov/usao-sdny/pr/us-attorney-announces-extradition-malaysian-national-large-scale-traffickingrhinoceros.
2024 ◆ National Money Laundering Risk Assessment 43

SECTION II. VULNERABILITIES AND RISKS

In the context of the 2024 NMLRA, a money laundering vulnerability is something that facilitates or 

creates the opportunity to launder money. Vulnerabilities may relate to a specific financial sector 

or product or a weakness in regulation, supervision, or enforcement. They may also reflect unique 

circumstances in which it may be difficult to distinguish legal and illegal activity. The methods that allow 

for the largest amount of money to be laundered quickly or with little risk of being caught present the 

greatest potential vulnerabilities. This section represents the residual risk of a particular sector or service. 

It takes into consideration any remaining risk after the effect of mitigating measures including regulation, 

supervision, and enforcement, among other things. 

Money launderers attempt to identify and exploit money laundering vulnerabilities, given the nature, 

location, and form of their illicit proceeds. Money laundering methods shift and evolve in response to 

opportunities and changes in financial services, regulation, and enforcement.

Cash

Criminals use cash-based money laundering strategies in significant part because cash offers anonymity. 

The commonly use U.S. currency due to its wide acceptance and stability. To combat this, the United 

States requires that large cash transactions be reported to the Treasury.215 However, according to federal 

agency reports, TCOs and other criminals take steps to avoid this reporting through the following 

strategies.

1. Bulk Cash Smuggling

The use of U.S. dollar banknotes (cash) remains a popular method to transport and launder illicit 

proceeds both within and outside of the United States. BCS involves moving physical currency across an 

international border, often to be deposited in another country’s financial institution.216 Unreported bulk 

currency may sometimes be the proceeds of illegal activity, such as financial fraud and money scams. 

BCS remains a favored means for TCOs to repatriate their illicit funds from or move funds into the United 

States to support their criminal operations. TCO networks on the Southwest border smuggle narcotics 

into the United States while illegally exporting currency from drug proceeds and firearms into Mexico. 

TCO networks also use the northern border to smuggle high-potency drugs and currency both into and 

out of the United States.

At the nation’s more than 300 ports of entry, U.S. Customs and Border Protection’s (CBP) Office of Field 

Operations (OFO) has a complex mission with broad law enforcement authorities tied to screening all 

foreign visitors, returning American citizens, and imported cargo that enters the United States. Along the 

215 For example, federal law requires a person to file IRS Form 8300 for cash transactions of $10,000 or more received in a trade or 

business, and financial institutions generally must report currency transactions of $10,000 or more made by, through, or to the 

institution. See 31 C.F.R. part 1010, subpart C.

216 The United States prohibits knowingly concealing more than $10,000 in currency or other monetary instruments and 

transporting or transferring or attempting to transport or transfer such currency or monetary instruments across a U.S. 

border with the intent to evade currency reporting requirements. 31 U.S.C. § 5332. In addition, 18 U.S.C. § 1956 prohibits the 

international transportation, transmission or transfer of funds (or attempted transportation, transmission or transfer of funds) 

that the person knows represent the proceeds of an unlawful activity and conducts the transportation, transmission or transfer 

to disguise circumstances of the unlawful activity or avoid state or federal transaction reporting requirements.
44 2024 ◆ National Money Laundering Risk Assessment

nation’s borders. From an inbound perspective, for calendar year (CY) 2023, there were a total of 1,480 

seizures of currency and monetary instruments totaling $18 million.217

Law enforcement has indicated that although there had been a decline in outbound BCS activity (and 

stockpiling) due to a decline in travel and trade related to the COVID pandemic, the activity has again 

reached pre-pandemic levels. 218 For CY 2023, there were 1,010 outbound currency and monetary seizures 

totaling approximately $53 million.219 The top sites for outbound bulk cash seizure sites were Detroit 

International Airport, Chicago O’Hare International Airport, and the Port of Fort Lauderdale. The top 

three recorded intended destination countries for bulk cash seized during 2023 were Mexico, Vietnam, 

and Haiti. 220 Historically, there has not been a specific budget allocation for outbound inspection. 

Although OFO policies do not require outbound inspections, officers at some land border crossings 

conduct inspections of personal vehicles and pedestrians departing the United States to prevent the 

illegal exportation of currency and other contraband, and there have been some significant currency 

seizures.221

Previous NMLRAs have focused mainly on cash couriers, those individuals directly responsible for moving 

the cash across international borders. Recent insights by law enforcement have shed further light on the 

role of “currency handlers,” who are thought to occupy positions with higher levels of responsibility and 

trust within criminal organizations than couriers and are more likely to be involved in the coordination 

and scheduling of BCS activities. Law enforcement sources have indicated that they suspect financial 

supply chain specialists employed by some TCOs send their trusted agents to the currency points of 

origin to coordinate shipments of bulk cash across the country and then return to the destination to 

oversee onward movement of those proceeds.

Identifying a currency handler can provide a window to the inner workings of the criminal networks they 

serve. According to discussions with U.S. law enforcement, over half of the identified currency handlers 

were U.S. citizens. Mexican citizens represented the largest block (approximately one third) of foreign 

currency handlers, followed by citizens from the Dominican Republic and Jamaica.

2. Cash Consolidation Cities

Every year, illicit cash proceeds from all crimes including illegal opioid sales travel on the U.S. highway 

system. In FY 2022, most cash seized from domestic cash couriers on U.S. highways originated in 

California, Colorado, Georgia, Florida, Ohio, Oklahoma, Texas, and Virginia. 

According to U.S. law enforcement personnel, there has been a shift in location where conversions in 

bill denominations (e.g., converting smaller denominations into $100 bills) take place. This conversion 

traditionally took place within the interior United States, but can now be found in border states such as 

California, Florida, and Texas. 

217 CBP, Currency & Other Monetary Instrument Seizures, (Data current as of November 6, 2023), https://www.cbp.gov/newsroom/

stats/currency-other-monetary-instrument-seizures.

218 See 2022 NMLRA, PP.31-32.

219 CBP, Currency & Other Monetary Instrument Seizures, (Data current as of November 6, 2023), https://www.cbp.gov/newsroom/

stats/currency-other-monetary-instrument-seizures.

220 HSI, BSCS statistics as of 9/8/2023.

221 DHS, Office of the Inspector General, “CBP Outbound Inspections Disrupt Transnational Criminal Organization Illicit Operations 

(REDACTED),” August 3, 2023, https://www.oig.dhs.gov/sites/default/files/assets/2023-08/OIG-23-39-Aug23-Redacted.pdf.
2024 ◆ National Money Laundering Risk Assessment 45

While most domestic bulk cash is destined for California, lesser (though still significant) amounts are 

destined for Arizona and Texas. Ohio, Virginia, Georgia, North Carolina, Florida, Missouri, and New York 

(from lowest to highest) were the nation’s top seven states of origin for cross-country bulk cash destined 

for the Southwest Border region. Once these proceeds reach their border destinations, criminals may 

smuggle them across the border or enter one of several money laundering schemes intended to unite 

illicit proceeds with the drug cartels that raised them.222

Case examples

•	 In May 2022, a California woman residing in Atlanta, Georgia, was charged with smuggling over $114,000 

of cash into Mexico from the United States. According to court documents, the defendant attempted 

to pass through a Border Patrol checkpoint as a taxi passenger. The vehicle was referred to secondary 

inspection, when the defendant denied the relevant custom form (i.e., made a negative declaration) for 

having more than $10,000. However, according to the charges, $114,294 was discovered in her purse.223

•	 In February 2022, a Mexican man was charged with smuggling $195,731 in cash into Mexico. The cash 

was hidden in the bed and center console of a pickup truck. According to the charges, the defendant 

attempted to exit the United States through the Juarez-Lincoln Port of Entry in Laredo as a solo driver in a 

pickup truck. There, he allegedly gave a negative declaration for possessing currency over $10,000.224

SNAPSHOT: Use of Private Aircraft

Law enforcement sources have noted an increased use of private aircraft to smuggle bulk cash. The 

use of aircraft is a more expeditious method to move currency into, through, and out of the United 

States over longer distances than by loading money into a vehicle or strapping it to a pedestrian. 

U.S.-registered aircraft are less likely to be inspected by state, local or federal agencies and can be 

identified by the “N” designated tail number on the tail of the aircraft. In many small airports along 

the Mexico-U.S. border, CBP does not maintain a 24-hour presence. This security gap allows TCOs 

and criminal elements to move currency derived from criminal endeavors into and out of the United 

States with greater ease than by cars or pedestrians.

Law enforcement sources note TCOs manipulate Federal Aviation Administration (FAA) reporting 

requirements to purchase, register, and export U.S. aircraft. TCO members will establish shell 

companies and then use LLCs to purchase and register aircraft, which allows the aircraft to be 

registered through a trust pursuant to FAA regulations.225 This enables TCO members to circumvent 

the regulatory requirement that a foreign company must be organized and doing business under 

the laws of the United States to register an aircraft and that the aircraft must be based and primarily 

used in the United States.226

222 Information provided by HSI, BCSC.

223 ICE, “California woman charged with smuggling over $114k inside taxi, following HSI, federal partner, probe,” (May 18, 

2022) https://www.ice.gov/news/releases/california-woman-charged-smuggling-over-114k-inside-taxi-following-hsifederal#:~:text=However percent2C percent20A percent20search percent20of percent20Zuniga percent27s,a percent20possible 

percent20 percent24250 percent2C000 percent20maximum percent20fine.

224 DOJ, “Visa holder caught smuggling nearly $200,000 to Mexico”, (February 23, 2022), https://www.justice.gov/usao-sdtx/pr/visaholder-caught-smuggling-nearly-200000-mexico.

225 See 14 CFR 47.7(c).

226 See 14 CFR 47.3(a)(3).
46 2024 ◆ National Money Laundering Risk Assessment

3. Cash-Intensive Businesses and Front Companies

Criminal actors continue to use cash intensive businesses (CIBs) as a laundering vehicle. Criminal 

organizations and individuals often attempt to set up a front company associated with a CIB to launder 

criminally derived proceeds. Criminal actors have long relied on these “fronts” which otherwise conduct 

legitimate business and have a physical location and natural cash flows to launder large volumes of 

cash. To introduce illicit funds, individuals mix legitimate business revenue with illicit proceeds using 

cash deposits and other conventional placement techniques. Furthermore, criminal actors can exploit 

seemingly reasonable business operations to facilitate bulk cash movements. 

LEAs see a wide array of CIBs utilized as front companies such as convenience stores, restaurants, and 

liquor stores.227 In recent years, laundering operations have continued to exploit automotive shops 

including dealers and repair shops as front companies for money laundering.228 An IRS/FinCEN Report of 

Cash Payments Over $10,000 in a Trade or Business (referred to as the “Form 8300”) is required to be filed 

if a person in a trade or business receives more than $10,000 in cash in a single transaction or in related 

transactions.229

Case examples

•	 A March 2022 indictment charged multiple codefendants with allegedly using an Oregon beauty 

salon as a front to launder proceeds for a DTO that dealt fentanyl, heroin, and counterfeit oxycodone 

pills throughout the Pacific Northwest.230 Agents seized 115,000 counterfeit Oxycodone pills that 

contained fentanyl and 57 pounds of heroin as part of their investigation. The salon owner allegedly 

opened several accounts at different banks for her salon entity. She then made numerous large cash 

deposits and purchases of cashier’s checks under the guise of “business transactions”. The defendant 

allegedly used her salon to avoid scrutiny regarding the size of cash-based transactions. After the 

owner made the deposits and purchased the cashier checks, they used the funds to buy several real 

estate properties. The salon owner tried to further disguise the source of these funds by claiming the 

real estate transactions were purchases of “rental properties.”231

•	 A March 2022 indictment charged the owners of a Sacramento area grocery store with operating 

a front business for a CJNG-supplied cocaine operation.232 Law enforcement was able to observe 

laundering by infiltrating the operation. Most laundering activity took place via money remittances 

and bulk cash smuggling. The laundering activity allegedly involved transporting $230,000 of bulk 

cash and exchanging it with a DTO associate. Court documents indicate this was one week of cocaine 

sales. Evidence within the criminal complaint notes the grocery store was allegedly used to store 

cash, disguise the source of illicit deposits, and support individual remittances to Mexico.233

227 FFIEC, Risks Associated with Money Laundering and Terrorist Financing, Cash-Intensive Business – Overview, https://bsaaml.

ffiec.gov/manual/RisksAssociatedWithMoneyLaunderingAndTerroristFinancing/26.

228 DOJ, “Milton Man Sentenced for Money Laundering: Owner of used car dealership laundered fraud proceeds through his 

business”, (August 5, 2022) https://www.justice.gov/usao-ma/pr/milton-man-sentenced-money-laundering#:~:text=BOSTON 

percent20 percentE2 percent80 percent93 percent20The percent20owner percent20of percent20a,two percent20years 

percent20of percent20supervised percent20release.

229 31 C.F.R. § 1010.330.

230 United States District Court District of Oregon, See case 3:22-cr-00045 (Feb. 09, 2022).

231 DOJ, “12 Members of Drug Trafficking Organization Indicted for Distributing Counterfeit Oxycodone Pills Containing Fentanyl, 

Laundering Proceeds”, Mar. 18, 2022, https://www.justice.gov/usao-or/pr/12-members-drug-trafficking-organization-indicteddistributing-counterfeit-oxycodone.

232 DOJ, “Two Sacramento Area Men Indicted for Cocaine Trafficking”, (Mar. 31, 2022), https://www.justice.gov/usao-edca/pr/twosacramento-area-men-indicted-cocaine-trafficking. 

233 United States District Court Eastern District of California, see case 2:22-cr-00064, (Mar. 14, 2022).
2024 ◆ National Money Laundering Risk Assessment 47

4. Funnel Accounts

Funnel accounts are bank accounts used to collect deposits from various locations. Multiple individuals 

deposit cash in a bank account available to other members of the criminal network in another part of the 

country. Criminal actors continue to use funnel accounts to circumvent Currency Transaction Report (CTR) 

thresholds and other BSA obligations to facilitate money laundering. Funnel accounts allow individuals 

to make multiple deposits utilizing separate accounts at numerous financial institutions to stay below 

regulatory threshold amounts. Criminal and money laundering organizations use geographic structures 

where money mules deposit cash across several accounts in one area while another member of the 

organization withdraws the funds in a consolidation region. Accounts being used to transfer or “funnel” 

cash are often used to make rapid transactions and withdrawals after depositing criminal proceeds.

Funnel accounts remain a key component of DTOs moving funds across the Mexican border. 

Organizations funnel cash through accounts in U.S. regional hubs and consolidate the funds by 

withdrawing them at branches closer to the border, commonly in California, Texas, and Arizona. They 

then employ BCS techniques to transport the cash over the border into Mexico. Recent and historical 

examples demonstrate that criminal actors often utilize funnel accounts in tandem with a front company 

to achieve widescale placement of illicit funds.

Case examples

•	 Pharmacy owners Arkadiy Khaimov and Peter Khaim, who made millions by submitting fraudulent claims for 

expensive medications during the pandemic, pleaded guilty to conspiracy to commit money laundering in 

November 2022. The owners used 16 different registered corporate entities to funnel $47 million of illicit funds 

through their associated bank accounts. The codefendants conspired with an unregistered MSB to trade cash 

in return for their fraudulent Medicare funds. The scheme then utilized nominee account signatories to act as 

mules, purchasing cashier checks with the illicit money as a form of deposit. These cashier’s checks and other 

cash deposits were then aggregated within accounts that the codefendants ultimately owned. This allowed 

the codefendants to purchase legitimate assets with the proceeds of their fraud scheme.234

•	 An Oklahoma City restaurant owner was charged with conspiracy to commit money laundering in a May 

2023 indictment for using funnel accounts as a vehicle to launder $25 million. A branch manager reported 

the defendant’s suspicious behavior after they allegedly attempted to open 14 separate accounts for their 

singular restaurant entity. The defendant moved to another bank after being denied the accounts, where 

they successfully open 14 accounts that resembled cash deposit funnel accounts. Court documents also 

detailed a separate financial institution closing the defendant’s accounts due to large deposits and rapid 

withdrawals.235

•	 A June 2023 indictment charged a Honduran national with money laundering in connection to their role 

as a high-level human smuggling coordinator. Court documents outlined the defendant allegedly showing 

associates how to open additional bank accounts to facilitate funneling activity. Investigators were also 

able to present a financial accounting ledger that explicitly showed smuggling fees and cash flows. Court 

documents also claim that the defendant’s organization had money mules deposit cash at several different 

banks in different regions within the United States. Following these geographically diverse deposits, the 

criminal actors allegedly withdrew millions of dollars in smuggling proceeds in the Phoenix, Arizona area.236

234 DOJ, “Two Pharmacy Owners Plead Guilty in COVID-19 Money Laundering and Health Care Fraud Case”, (November 16, 2022), 

https://www.justice.gov/opa/pr/two-pharmacy-owners-plead-guilty-covid-19-money-laundering-and-health-care-fraud-case.

235 Western District of Oklahoma, USA vs Lin et al, case 5:24-mj-276-STE (May 2, 2023), See https://www.pacermonitor.com/public/

case/49505889/USA_v_Lin_et_al.

236 DOJ, “Prolific Human Smuggler Extradited to the United States from Honduras”, (Jun. 23, 2023), https://www.justice.gov/usaoaz/pr/prolific-human-smuggler-extradited-united-states-honduras.
48 2024 ◆ National Money Laundering Risk Assessment

Financial Products and Services

1. Money Orders

Criminal actors continue to attempt to evade the controls in place on money orders to launder proceeds 

from narcotic and fraud schemes. A money order is a financial instrument that acts as a secure form of 

cash replacement. Because a money order is paid for in advance, unlike a personal check, a money order 

cannot be rejected for insufficient funds. Issuers or sellers of money orders are a type of MSB and thus 

subject to certain registration, recordkeeping, program, and reporting obligations under the BSA and 

its implementing regulations applicable to MSBs.237 Specifically, issuers or sellers of money orders are 

required to develop, implement, and maintain an AML program to obtain, verify and record customer 

identification for currency purchases of money orders totaling $3,000 or more,238 and file CTRs and 

SARs.239 Money orders are offered for a fee by MSBs such as Western Union and MoneyGram as well as the 

United States Postal Service (USPS).240

In 2023, FinCEN received 396,763 SARs related to transactions that utilized money orders.241 According to 

law enforcement sources, money order investigations can be challenging based on the minimal amount 

of information recorded during transactions. 

Laundering facilitated through the misuse of money orders often follows a similar typology. In many 

cases, criminals use prepaid debit cards or illicit cash to purchase bulk money orders. They then use 

these money orders to purchase material assets, such as cars, and export the vehicles or assets to a 

foreign country.242 Criminals may also deposit money orders into bank accounts where the funds can be 

further wire transferred to other bank accounts to further layer the illicit proceeds. Businesses that accept 

bulk money orders from customers as payment for goods or services are also vulnerable to abuse by 

criminals laundering illicit proceeds.

In contrast to recordkeeping requirements involving funds transfer services provided by banks, there 

is no explicit requirement for sellers of money orders to collect payee information. The issuer does not 

know the payee’s name until that payee negotiates the money order and the instrument subsequently 

clears the banking system. This situation means money order sellers may be unable to screen the name 

of the payee and, depending on the amount, the sellers may not be able to verify the payer’s name. The 

BSA recordkeeping obligation applicable to money orders only requires issuers and sellers of money 

orders to obtain, verify and record customer identification with the purchase of money orders for $3,000, 

or more in currency. However, sellers of money orders may request payee information to satisfy other 

BSA requirements, such as AML program and SAR filing obligations. Nonetheless, criminals circumvent 

237 31 C.F.R. Part 1022.

238 31 C.F.R. § 1022.210

239 31 CFR § 1010.310-1010.314 and 31 CFR § 1010.320.

240 DOJ, “Drug Conspiracy Leader Gets 262-Months Imprisonment for Distributing Methamphetamine in Southern Illinois,” 

(September 7, 2023), https://www.justice.gov/usao-sdil/pr/drug-conspiracy-leader-gets-262-months-imprisonmentdistributing-methamphetamine.

241 FinCEN, “Suspicious Activity Report Statistics (SAR Stats),” https://www.fincen.gov/reports/sar-stats.

242 DOJ, “Four Men Charged in a Superseding Indictment with Conspiring to Launder Funds from Various Fraud Schemes,” (Jul. 3, 

2023), https://www.justice.gov/opa/pr/four-men-charged-superseding-indictment-conspiring-launder-funds-various-fraudschemes.
2024 ◆ National Money Laundering Risk Assessment 49

this record keeping requirement by structuring their money order transactions below this requirement, 

as demonstrated in the following case examples:

Case examples

•	 In February 2022, the U.S. Court of Appeals for the Eleventh Circuit affirmed a defendant’s conviction 

in a marijuana distribution and money laundering conspiracy. After receiving drugs from California, 

the defendant helped distribute and launder money for more than 900 kilograms of marijuana by 

processing drug money through casinos and nail salons before converting the cash into money orders 

under the $3,000 record keeping threshold.243

•	 In January 2023, 24 defendants were charged with marijuana distribution, money laundering, 

firearms, and related offenses. They allegedly laundered proceeds from the sale of marijuana and 

edibles through a variety of means, including money transfers; the transportation and delivery of 

cash, including $179,710 in cash that authorities seized at the Albany International Airport; the 

purchase of cashier’s checks; real estate transactions; and cash and money order deposits into 

various bank accounts.244

2. Prepaid Cards

Prepaid cards (also referred to as prepaid debit cards, stored value cards, or prepaid access devices) are 

a type of prepaid access that enables pre-loading and in some cases, reloading of funds onto physical or 

digital cards. 

The use of prepaid cards is growing rapidly. The most recent Federal Reserve Payments Study found that, 

on average, the number of prepaid card transactions increased by 9.6 percent per year from 2018 to 2021, 

and the value of prepaid card transactions grew by 20.6 percent per year, compared with 12.7 percent for 

debit cards and 7.0 percent for credit cards.245 The total value of prepaid card payments was $610 billion 

in 2021, accounting for 6.5 percent of the value of all card payments. Globally, the prepaid card market 

was valued at $1.73 trillion in 2019 and is projected to reach $6.87 trillion by 2030.246

There are two systems under which prepaid cards operate: an “open” or “closed” loop system. Open loop 

(also called general purpose) prepaid cards are branded by a payment network (e.g., Visa, Mastercard, 

American Express, Discover) and can be used for purchases at any merchant that accepts cards on that 

network, as well as to access cash at ATMs that connect to the affiliated ATM network. Some open-loop 

prepaid cards may be reloaded with additional funds, allowing the cardholder or other person (such as an 

employer) to add value. Closed-loop prepaid cards generally can only be used at a specific merchant or a 

select group of merchants and cannot be used for cash access or transfer of funds. Examples of closed-loop 

cards include retail gift cards and mass transit cards.247 Providers and sellers of prepaid access are types of 

MSBs under FinCEN’s regulations unless they qualify for an applicable exemption.248 

243 United States v. Bui, No. 21-10356, 2022 WL 475002 (11th Cir. Feb. 16, 2022).

244 DOJ, “24 People Indicted for Cross-Country Marijuana Distribution and Money Laundering Conspiracies, Firearms Offenses, 

and Other Crimes,” (January 31, 2023), https://www.justice.gov/usao-ndny/pr/24-people-indicted-cross-country-marijuanadistribution-and-money-laundering.

245 Federal Reserve, The Federal Reserve Payments Study: 2022 Triennial Initial Data Release, Table 1, https://www.federalreserve.

gov/paymentsystems/fr-payments-study.htm. 

246 Allied research, Prepaid Card Market Research 2023, https://www.alliedmarketresearch.com/prepaid-card-market. 

247 FFIEC, BSA/AML Manual, https://bsaaml.ffiec.gov/manual/RisksAssociatedWithMoneyLaunderingAndTerroristFinancing/09. 

248 31 C.F.R. 1010.100(ff)(4) and (7).
50 2024 ◆ National Money Laundering Risk Assessment

Prepaid cards can also be used in some cases as a method of cross-border funds transfer, in which two or 

more prepaid cards are linked to the same account: funds loaded to a prepaid card in the United States, 

for instance, could be withdrawn from a second, linked card in another country.249 

Several features of prepaid cards make them popular for use by criminals as a tool for fraud and money 

laundering: they are easy to purchase and use; people can fund them, through a variety of methods; they 

typically do not require the cardholder to have an account and can often be used anonymously; and they 

are highly portable, providing an attractive alternative to bulk cash smuggling. In addition, individuals 

can use many open-loop prepaid cards globally, enabling money to move easily across borders. In some 

cases, criminals use false identification and fund initial loads onto prepaid cards with stolen credit 

or debit card credentials or may purchase multiple prepaid cards under aliases.250 Another common 

fraud scheme involves criminals calling victims and impersonating the government or a company. 

Through false and fraudulent claims, they will convince victims that they owe money and must pay it by 

purchasing gift cards or prepaid cards and providing the criminals with the card information. Both open 

and closed- loop prepaid cards have been used as an alternative to bulk cash smuggling.

Prepaid cards are used in all stages of money laundering. In the placement stage, criminals purchase 

prepaid cards in bulk using illegal funds, or they hire or convince others to purchase or transport the 

cards for them. In the layering stage, criminals can use prepaid cards to purchase merchandise or other 

prepaid cards, which they can sell for cash. According to law enforcement sources, a common money 

laundering scheme involves criminals using prepaid cards to purchase money orders. These, in turn, are 

used to purchase material goods, which can then be re-sold. In the integration stage, criminals may use 

prepaid cards to fund illicit and legitimate activities and transactions. 

Case examples

•	 In March 2023, Chaohui Chen and Wenyi Zheng were sentenced to 21 months and 36 months 

imprisonment, respectively, after pleading guilty to wire fraud. Under their wire fraud scheme and 

gift card conspiracy they deceived victims into purchasing prepaid Walmart gift cards and providing 

that information to the defendants for their personal gain. According to the plea agreement, 

a typical execution of the scheme involved unnamed third parties who would make false and 

fraudulent telephone calls, sometimes claiming to the victims they were part of the Social Security 

Administration. Using false pretenses, the callers would convince victims to purchase prepaid gift 

cards and provide to them with the 16-digit gift card numbers and unique pins for the gift cards, in 

return for a cashier’s check in the amount of the gift card purchased. Once in control of the gift cards, 

the defendants would redeem the gift cards at various stores by purchasing household items and 

additional prepaid gift cards, which they would convert and use for their personal gain, and neglect to 

return any of the money to the victims.251

•	 In June 2022, Yanio Montes De Oca and Atnetys Ferreira Milian were sentenced to 27 months and one 

year of probation for their respective roles in a conspiracy to commit money laundering. Between 

December 2015 and July 2019, De Oca laundered thousands of gift cards that were obtained using 

fraudulent debit and credit cards encoded with information stolen using gas station skimming 

devices. After obtaining the gift cards from co-conspirators, De Oca sold them and transferred the 

249 FFIEC, BSA/AML Manual, https://bsaaml.ffiec.gov/manual/RisksAssociatedWithMoneyLaunderingAndTerroristFinancing/09.

250 FFIEC BSA Manual, https://bsaaml.ffiec.gov/manual/RisksAssociatedWithMoneyLaunderingAndTerroristFinancing/09. 

251 DOJ, “Defendants Sentenced in a $217,200 Gift Card Conspiracy and Wire Fraud Scheme that Cheated Victims, Including the 

Elderly, Out of Thousands of Dollars,” (March 20, 2023) https://www.justice.gov/usao-ut/pr/defendants-sentenced-217200-giftcard-conspiracy-and-wire-fraud-scheme-cheated-victims. 
2024 ◆ National Money Laundering Risk Assessment 51

resulting amounts to bank accounts he controlled. De Oca would distribute some of the money to 

the other conspirators and retain the rest of the funds for himself. Ferreira Milian used multiple bank 

accounts that she controlled to launder money orders that had been purchased with fraudulent debit 

cards. The debit cards used stolen account numbers that had been skimmed at gas station pumps 

across the country. During the period of the conspiracy, Ferreira Milian deposited over 1,100 money 

orders, totaling over $691,000, into her accounts, and then withdrew most of the laundered funds in 

cash.252

•	 In February 2022, Malan Doumbia and Souleymane Diarra were convicted of nine counts including 

conspiracy to commit wire fraud, access device fraud, aggravated identity theft, and conspiracy to 

commit money laundering. This criminal activity was in connection with a scheme to purchase stolen 

credit card numbers from the dark web, using the accounts to purchase consumer products, and then 

re-selling the products for cash. The defendants worked with several associates to purchase stolen 

credit card numbers from black market websites located in Russia, Ukraine, and elsewhere overseas. 

After encoding these card numbers onto blank cards, they employed a network of runners to use 

the cards to purchase large quantities of gift cards and other items that could be quickly resold for 

cash. When the United States Secret Service searched the defendants’ homes, they found more than 

200,000 stolen credit card numbers.253 

3. Peer-to-Peer Payments

Over the last decade, peer-to-peer (P2P) payments have grown in popularity and become ubiquitous 

throughout the United States. P2P services – such as mobile applications Venmo, PayPal, Cash App, and 

Zelle – allow individuals to send and receive instant digital payments directly with another person, either 

in fiat currency or virtual currency. 

The P2P market has grown dramatically in recent years, helped along by a spike in adoption during 

the COVID-19 pandemic. P2P users are forecast to reach 168 million in 2024, with a total transaction 

value projected to exceed $1.2 trillion.254 According to a survey conducted by Fiserv in 2020, 79 percent 

of consumers say they have used a P2P service.255 However, the convenience and speed that make P2P 

platforms popular for legitimate purposes also make them attractive to scammers. In 2021, the Federal 

Trade Commission received nearly 70,000 complaints from consumers who sent money to fraudsters via 

payment apps or similar services, totaling $130 million in losses.256

Depending on the platform and form of currency, a consumer can initiate a P2P payment from their 

online bank account, prepaid card account, virtual asset wallet or through a mobile application. With 

respect to mobile applications, P2P apps are free to download, and payments are typically free when 

made using a linked checking account, debit card, or stored balance; some platforms also allow funding 

via credit card for a fee. P2P services operate as relatively closed environments where users can only 

252 DOJ, “Miami Residents Sentenced for Their Roles in a Money Laundering Conspiracy Connected to a Nationwide Gas Station 

Skimming Scheme”, (June 30, 2022) https://www.justice.gov/usao-ndny/pr/miami-residents-sentenced-their-roles-moneylaundering-conspiracy-connected-nationwide. 

253 DOJ, “Two Philadelphia Men Convicted of Running Credit Card Fraud Ring Using 200,000+ Stolen Accounts,” (February 28, 2022), 

https://www.justice.gov/usao-edpa/pr/two-philadelphia-men-convicted-running-credit-card-fraud-ring-using-200000-stolen.

254 CFPB, Person-to-Person (P2P) Payment Fraud Conversation, (November 2022), https://files.consumerfinance.gov/f/documents/

cfpb_person-to-person-p2p-payment-fraud-conversation_presentation_2022-11.pdf.

255 Fiserv, “Consumer Payments Executive Summary,” (February 2021), file:///C:/Users/SandersA/Downloads/EE_Consumer_

Payments_Executive_Summary_0221.pdf. 

256 Federal Trade Commission, “Consumer Sentinel Network Data Book 2021,” (February 2022), https://www.ftc.gov/system/files/

ftc_gov/pdf/CSN percent20Annual percent20Data percent20Book percent202021 percent20Final percent20PDF.pdf#page=12. 
52 2024 ◆ National Money Laundering Risk Assessment

send funds to another individual on the same platform. Because of this feature, bank account details can 

be kept private from individual users: all that is typically required from a user to send a payment is the 

recipient’s email address or phone number. When users receive a payment, they usually can maintain 

a balance in the app or transfer the funds to their bank accounts. While most P2P services in the United 

States only operate domestically, some, such as PayPal, offer cross-border payment options. P2P 

payment services are considered either banks or MSBs (depending on the platform) and thus subject to 

the reporting, recordkeeping, and AML program requirements under the BSA, and, if it classifies as an 

MSB, must register with FinCEN.257

P2P services have come to play a sizable role in various types of fraud and scams. These include 

unauthorized electronic fund transfers, seller scams, buyer scams, and money mule scams, among 

others.258 In unauthorized electronic fund transfers, scammers often impersonate a bank, fraud 

department, or merchant and ask the victim to confirm information such as account name and 

password. Unauthorized electronic fund transfers can also result from a hacked account, stolen phone, 

or phishing scheme. In a seller scam, scammers impersonate legitimate sellers or businesses and request 

a P2P payment for a good or service from the victim. Once the victims sends the payment, the scammer 

disappears and the victim never receives what they paid for.259 In money mule scams, scammers send 

money to a victim, sometimes by check, and ask the victim to send some of it to someone else. Often, 

these victims are instructed to make these payments via P2P services. Typically, the check is fake, and the 

victims are on the hook for the funds they sent out (and potentially legally liable for helping a scammer 

move stolen money).260 In another version of money mule scams, a scammer will “accidentally” send a 

person funds on a P2P platform and request that they send the money back. The original funds are stolen 

funds that the P2P service will eventually flag as fraud, and the victim is held responsible for the funds 

they sent back to the scammer.261

Case examples

In June 2021, an indictment was unsealed charging 60 members of a San Diego-based methamphetamine 

trafficking organization with ties to the Sinaloa Cartel with money laundering, drug trafficking, and firearm 

offenses. The network obtained thousands of kilograms of methamphetamine from the Sinaloa Cartel in 

Mexico to smuggle across the international border concealed in hidden compartments in passenger cars 

and motorcycles. The network then, at the order of the Sinaloa Cartel, distributed the methamphetamine 

to dozens of sub-distributors located across 12 states and at least two other countries.The members of the 

DTO returned tens of thousands of dollars in narcotics proceeds to the network’s leaders via shipments of 

bulk cash, structured cash deposits into bank accounts, and money transfers through MoneyGram, Western 

257 31 C.F.R. Part 1022.

258 Capital One, “Peer-to-peer payment scams & fraud: How to protect yourself,” (November 2, 2022), https://www.capitalone.com/

bank/money-management/financial-tips/what-is-p2p-fraud/. 

259 American Bankers Association, “Peer to Peer Payment Scams,” https://www.aba.com/advocacy/community-programs/

consumer-resources/protect-your-money/peer-to-peer-payment-scams#:~:text=Scammers percent20posing percent20as 

percent20a percent20legitimate,paid percent20for percent20and percent20they percent20disappear.

260 FTC, “What’s a money mule scam?” (March 4, 2020), https://consumer.ftc.gov/consumer-alerts/2020/03/whats-money-mule-scam. 

261 American Bankers Association, “Peer to Peer Payment Scams,” https://www.aba.com/advocacy/community-programs/

consumer-resources/protect-your-money/peer-to-peer-payment-scams#:~:text=Scammers percent20posing percent20as 

percent20a percent20legitimate,paid percent20for percent20and percent20they percent20disappear.
2024 ◆ National Money Laundering Risk Assessment 53

Union, PayPal, Zelle, Venmo, and Cash App.262

In July 2022, Linda Ann Been pleaded guilty to conspiracy, wire fraud, conspiracy to commit wire fraud, 

and conspiracy to commit money laundering for her role in heading a retail theft organization that 

caused more than $10 million in losses to retailers. Fifteen others involved in the organization also 

pleaded guilty. According to state and federal court documents, Been led a ring of “boosters” that netted 

$4.5 million from selling stolen merchandise to “fencing organizations,” which then sold the stolen 

products through e-commerce sites. Been provided her boosters with a detailed list of items to steal and 

the pricing she would pay for each. Been further instructed her ring on boosting techniques. Been and 

her team of boosters stole products from retailers in Oklahoma, Kansas, Texas, Missouri, Arkansas, and 

Colorado. Been would pay boosters’ expenses when they traveled outside the state. Been would further 

pay boosters’ bond when arrested so they could continue boosting. Been and her team normally made 

financial payments for stolen products through PayPal, Venmo, and Cash App.263

Legal Entities and Arrangements

As reported in previous risk assessments, illicit actors deliberately misuse legal entities to facilitate 

money laundering schemes, fraud, sanctions evasion, tax evasion, and drug trafficking, among other 

types of offenses. These actors rely on the anonymity and perceived legitimacy afforded to legal entities, 

including limited liability companies and other corporate structures, to disguise illicit financial activity 

and criminal beneficial owners. Recent cases highlight the misuse of legal entities as a significant, 

ongoing vulnerability in the U.S. financial system; for example, illicit actors have used complex schemes 

involving shell companies to commit COVID-19 relief fraud and to procure dual-use U.S. technology to 

advance Russian aggression in Ukraine. These schemes often feature layers of corporate entities, trusts, 

and nominee arrangements, and can involve both domestic and foreign natural or legal persons. 

1. Legal Entities

In addition to the use of shell companies, criminals also rely on shelf and front companies to obfuscate 

illicit financial activity. Shelf companies are ready-to-use legal entities that were incorporated in the past 

and put on the ‘shelf’ to age, which may give them the appearance of being ‘established.’ Unlike shell 

and shelf companies that typically have no employees, operations, or even a physical location other than 

a registered agent, front companies generate real economic activity and are used to commingle illicit 

proceeds with earnings from legitimate business operations. In a recent case, front companies were used 

as part of a scheme to raise capital and acquire goods for North Korea in violation of U.S. sanctions. 

Case examples

•	 In September 2023, a Russian citizen and Hong Kong resident, was charged with participating in 

an illicit procurement scheme that provided military grade microelectronics to end users in Russia. 

According to the complaint, the defendant and two co-conspirators used shell companies based in 

Hong Kong and other deceptive means to conceal from U.S. Government agencies and U.S. 

262 DEA, “Sixty Defendants Charged in Nationwide Takedown of Sinaloa Cartel Methamphetamine Network”, (June 29, 2021) https://

www.dea.gov/press-releases/2021/06/29/takedown-sinaloa-cartel. 

263 FBI, “Woman Pleads Guilty for Leading a Retail Theft Organization that Netted $4.5 Million”, (July 14, 2022), https://www.justice.

gov/usao-ndok/pr/woman-pleads-guilty-leading-retail-theft-organization-netted-45-million. 
54 2024 ◆ National Money Laundering Risk Assessment

distributors that the OLED micro-displays that they purchased were destined for Russia. In total, 

between about May 2022 and August 2023, the defendant’s shell companies allegedly funneled a 

total of more than $1.6 million to the United States in support of the procurement network’s efforts to 

smuggle the OLED microdisplays to Russia.264

•	 In September 2022, the DOJ announced federal criminal charges against 47 defendants for their 

alleged roles in a $250 million fraud scheme that exploited a federally funded child nutrition program 

in Minnesota during the COVID-19 pandemic. The defendants are alleged to have defrauded the 

Federal Child Nutrition Program, exploiting changes in the program intended to ensure underserved 

children received adequate nutrition during the COVID-19 pandemic. The defendants are alleged 

to have created dozens of shell companies to receive and launder the proceeds of their fraudulent 

scheme.265

•	 In May 2022, brothers Luis Enrique Martinelli Linares and Ricardo Enrique Martinelli Linares, both 

dual citizens of Panama and Italy, pleaded guilty to conspiracy to commit money laundering and 

admitted to agreeing with others to establish offshore bank accounts in the names of shell companies 

to receive and disguise over $28 million in bribe proceeds from Odebrecht S.A., a Brazil-based 

global construction conglomerate, for the benefit of a close relative, a high-ranking public official in 

Panama. Both were sentenced to 36 months in prison and ordered to forfeit more than $18.8 million, 

pay a $250,000 fine, and serve two years’ supervised release.266

2. Beneficial Ownership Information

Lack of transparency in legal entity ownership structures has continued to be a challenge for U.S. law 

enforcement agencies, requiring time and resource-intensive processes to obtain beneficial ownership 

information (BOI). This issue also remains a key vulnerability globally. A 2022 FATF study on the state 

of global effectiveness and compliance with the FATF standards revealed that only half of jurisdictions, 

on average, have the necessary laws and regulations to understand, assess the risks of, and verify 

the beneficial owners or controllers of legal persons and arrangements. Furthermore, only 9 percent 

of countries are meeting the overall effectiveness requirements concerning beneficial ownership 

transparency.267 To strengthen the standard on beneficial ownership transparency for legal persons, in 

March 2022, FATF adopted significant amendments to Recommendation 24.268 These amendments seek 

to enhance the quality of BOI collected by governments, facilitate efficient access to BOI by competent 

authorities (including through registries or an alternative mechanism), and improve international 

264 DOJ, “Russian International Money Launderer Arrested for Illicitly Procuring Large Quantities of U.S.-Manufactured Dual-Use 

Military Grade Microelectronics for Russian Elites”, (September 18, 2023), https://www.justice.gov/opa/pr/russian-internationalmoney-launderer-arrested-illicitly-procuring-large-quantities-us.

265 DOJ, “U.S. Attorney Announces Federal Charges Against 47 Defendants in $250 Million Feeding Our Future Fraud Scheme”, 

(September 20, 2022), https://www.justice.gov/opa/pr/us-attorney-announces-federal-charges-against-47-defendants-250-

million-feeding-our-future.

266 DOJ, May 20, 2022, Panama Intermediaries Each Sentenced to 36 Months in Prison for International Bribery and Money 

Laundering Scheme, https://www.justice.gov/opa/pr/panama-intermediaries-each-sentenced-36-months-prison-internationalbribery-and-money.

267 FATF “Report on the State of Effectiveness and Compliance with the FATF Standards”, (April 2022), https://www.fatf-gafi.org/en/

publications/Fatfgeneral/Effectiveness-compliance-standards.html. 

268 FATF “Public Statement on Revisions to R.24”, (March 4, 2022), https://www.fatf-gafi.org/en/publications/

Fatfrecommendations/R24-statement-march-2022.html.
2024 ◆ National Money Laundering Risk Assessment 55

cooperation. The amendments also include a new requirement for national authorities to collect BOI in 

the course of public procurement as a means to combat corruption.269 

In the United States, criminals have historically been able to take advantage of the lack of uniform laws 

and regulations pertaining to the disclosure of BOI to law enforcement. FinCEN’s 2016 CDD Rule, which 

became applicable in May 2018 and requires certain financial institutions, such as banks and brokerdealers, to identify and verify the identities of the beneficial owners of most legal entity customers at 

account opening, has helped mitigate this vulnerability to an extent. However, the lack of timely access 

to high-quality BOI and BOI disclosure requirements at the time of a legal entity’s creation or registration 

has continued to hamper law enforcement investigations, which is why the Treasury continues to 

prioritize the implementation of the Corporate Transparency Act (CTA).

Enacted as part of the Anti-Money Laundering Act of 2020 (AML Act),270 the CTA requires certain U.S. 

and foreign companies to disclose BOI to FinCEN. It also requires FinCEN to build a secure, nonpublic database of this information and disclose to authorized government authorities and financial 

institutions, subject to safeguards and controls. In September 2022, FinCEN issued a final BOI Reporting 

Rule to implement the reporting requirements of the CTA.271 The rule describes who must file a 

BOI report, what information must be reported, and when a report is due. This rule represents the 

culmination of years of bipartisan efforts by Congress, the Treasury, national security agencies, law 

enforcement, and other stakeholders to bolster the United States’ corporate transparency framework 

and address the most significant gap in the U.S. AML/CFT regime that the FATF identified in the 2016 U.S. 

Mutual Evaluation. 

FinCEN began accepting BOI on January 1, 2024, the effective date of the final BOI Reporting Rule. In 

parallel, in December 2023, FinCEN issued a final BOI Access Rule to establish who may request and 

receive BOI, how recipients may use it, and how they must secure it.272 This rule becomes effective on 

February 20, 2024. As required by the CTA, FinCEN will also revise the CDD Rule to conform with the CTA. 

However, until these revisions are finalized, existing requirements for covered financial institutions to 

collect BOI under the CDD Rule remain unchanged presenting a lingering information gap. 

Looking ahead, while the full implementation of the CTA will help facilitate law enforcement 

investigations and make it more difficult for illicit actors to hide behind anonymous shell companies 

created in the United States or foreign entities registered to do business in the United States, there is a 

risk that illicit actors will seek to exploit certain types of entities that are exempt under the CTA or shift 

their activities to corporate structures that are not covered by the CTA (e.g., trusts that do not qualify as 

reporting companies under the final BOI Reporting Rule).

269 In March 2023, FATF also adopted revisions to Recommendation 25 on beneficial ownership transparency of legal 

arrangements, including trusts. Also in March, FATF adopted revised guidance to assist countries in implementing the changes 

to Recommendation 24; work on developing guidance associated with revised Recommendation 25 is ongoing and is expected 

to be finalized in 2024. 

270 Public Law No. 116-283 (Jan. 1, 2021).

271 FinCEN, Beneficial Ownership Information Reporting Requirements, 87 FR 59498, (Sept. 30, 2022), https://www.federalregister.

gov/documents/2022/09/30/2022-21020/beneficial-ownership-information-reporting-requirements.

272 FinCEN, Beneficial Ownership Information Access and Safeguards, 88 FR 88732, (Dec. 21, 2022), https://www.federalregister.gov/

documents/2023/12/22/2023-27973/beneficial-ownership-information-access-and-safeguards. 
56 2024 ◆ National Money Laundering Risk Assessment

3. Trusts

In the United States, as in many countries, trusts are private legal arrangements commonly used by 

individuals and legal entities (known as grantors/settlors) to place assets in custody and to provide the 

benefit of those assets273 or to disburse assets on behalf of designated individuals or entities (known as 

beneficiaries), such as upon the death of the individual conveying assets to the trust (also known as the 

grantor/settlor). Trusts have long been a cornerstone of estate and tax planning, and many individuals 

choose to use trusts for legitimate reasons, including protecting the privacy of estate management 

decisions; safeguarding the interests of beneficiaries who are not of age or otherwise not capable of 

making sound financial decisions; and, in the case of inheritance, avoiding the requirements of probate 

and, under some circumstances, enjoying certain tax benefits.

The FATF has previously identified trusts and other similar legal arrangements as vulnerable to money 

laundering and has worked to strengthen its Recommendation 25 to impose requirements to obtain 

information on the beneficial ownership of trusts.274 Trusts, in the aggregate, are susceptible to misuse 

primarily for fraud and tax evasion. This illicit activity may occur through the unethical and illegal 

conduct of the trustee themselves, for instance, engaging in fraud or embezzlement against the wishes 

and interests of the settlor and beneficiaries. Additionally, trusts may be utilized by the grantor/settlor 

to hide and move illicit proceeds of crime, in which case the trustee may be fulfilling their fiduciary 

obligations without knowledge that the assets were illegally obtained. The IRS has also cited a number of 

tax-related abuses of trusts, including false claims related to instruments that are advertised as trusts but 

do not meet the legal definition of trust.

In reviewing the risks associated with trusts used to launder funds in the United States, it is important to 

distinguish between the risks of U.S. trusts and foreign trusts with a U.S. nexus. While law enforcement 

does see criminal actor abuse of trusts, particularly for those trusts settled in what LEAs call “notorious 

privacy states” like South Dakota, Wyoming, Delaware, Alaska, and Nevada, the risk is higher for those 

trusts settled outside of the United States (or settled overseas and then converted into U.S. trusts).275

At present, based on available information and consultations with subject matter experts, the Treasury 

continues to assess that while they pose risk and there have been instances of abuse, U.S. trusts may 

not be systemically used for money laundering. Certain factors contribute to the apparent current lack 

of systematic misuse of trusts for money laundering or sanctions evasion. For illicit finance purposes, 

creating a trust is complex and time consuming and involves too many co-conspirators or knowledgeable 

parties as compared to creating a shell company, which any individual (non-professional) can do for 

a nominal fee. Additionally, U.S. law enforcement has judicial and administrative recourse to find 

information for U.S. trusts created by a U.S. settlor or for a U.S. beneficiary. Based on discussion with law 

enforcement and case review, these factors may make trusts less attractive than, or not as easy to use as, 

other methods to launder funds or obfuscate the ownership or control of assets (such as the misuse of 

shell companies). However, this is a preliminary baseline assessment, and we acknowledge some current 

data limitations. 

273 For example, the interest on principal invested, or rental income from property held in trust. 

274 See FATF Recommendation 25 and its interpretative note, available at https://www.fatf-gafi.org/en/publications/

Fatfrecommendations/Fatf-recommendations.html, that was amended at the February 2023 Plenary (described further in this 

document), see https://www.fatf-gafi.org/en/publications/Fatfgeneral/outcomes-fatf-plenary-february-2023.html.

275 ICE, Cornerstone September 2023 Issue #44, “Money Laundering via Trusts,” https://content.govdelivery.com/bulletins/gd/

USDHSICE-36cc596?wgt_ref=USDHSICE_WIDGET_217.
2024 ◆ National Money Laundering Risk Assessment 57

In contrast to U.S. trusts, trusts settled in foreign jurisdictions that establish sufficient links276 to the U.S. 

financial system present a higher risk for money laundering and sanctions evasion because the nonU.S. status of grantors, settlors, trustees, or beneficiaries may limit law enforcement access to beneficial 

ownership and other information about those arrangements. 277 A review of cases indicates a higher 

degree of risk arising from trusts being used to custody assets derived from foreign corruption, especially 

to obtain U.S. real estate or investments. 

Except for certain trusts that are taxed as business entities, the federal government does not require 

trusts formed in the United States to register or otherwise disclose their creation. However, trusts 

must disclose themselves when applying for a tax identification number or filing annual income tax 

or information returns. Law enforcement access to this type of information is limited without a court 

order. The federal government also does not any comprehensive AML/CFT obligations or regulations on 

trustees except for financial institutions that offer trust services (including commercial banks and trust 

companies). 

Case examples

•	 On June 30, 2022, OFAC issued a Notification of Blocked Property to Heritage Trust, a Delawarebased trust in which OFAC-designated Russian oligarch Suleiman Abusaidovich Kerimov holds a 

property interest. Heritage Trust was formed in July 2017 for the purpose of holding and managing 

Kerimov’s U.S.-based assets. Kerimov used a complex series of legal structures and front persons 

to obscure his interest in Heritage Trust, the funds of which first entered the U.S. financial system 

through two foreign Kerimov-controlled entities prior to imposing sanctions against him. The funds 

were subsequently invested in large public and private U.S. companies and managed by a series of 

U.S. investment firms and facilitators. Kerimov and his proxies used various layers of U.S. and nonU.S. shell companies to hold formal titles to assets and to conduct transactions in a manner that 

concealed his interest.278

•	 On August 31, 2022, the DOJ announced the return of approximately $686,000 in forfeited criminal 

proceeds to the Republic of Peru linked to the corruption and bribery of former Peruvian President 

Alejandro Celestino Toledo Manrique (Toledo) by Odebrecht S.A. (Odebrecht), a Brazil-based 

construction conglomerate. In the civil forfeiture matter and a related case, the United States alleged 

that Toledo, while holding public office as President of Peru, solicited millions in bribe payments 

from Odebrecht in connection with government contracts awarded for construction of the PeruBrazil Southern Interoceanic Highway, a Peruvian government infrastructure project. Odebrecht 

276 In February 2023, the FATF amended Recommendation 25 to require jurisdictions to conduct risk assessments for, inter 

alia, “3.(c) types of foreign legal arrangements that have sufficient links with their country.” The FATF leaves it to countries 

to determine what is considered a “sufficient link.” The Interpretative Note provides examples of what a sufficiency test may 

include, including when a trustee has “significant and ongoing business relations with financial institutions or DNFBPs, has 

significant real estate/other local investment, or is a tax resident, in the country.” (see https://www.fatf-gafi.org/content/dam/

fatf-gafi/recommendations/FATF percent20Recommendations percent202012.pdf.coredownload.inline.pdf.) 

277 Non-U.S. settlors who settle trusts in the United States raise particular issues in collecting data about them. One of the issues 

is that such settlors create a mismatch between U.S. trust residence rules which treat the trust as foreign and the rules of their 

home jurisdiction/another jurisdiction where the same trust may be viewed as a foreign trust as well (because it is established 

under U.S. law). By virtue of the trust being non-resident in both jurisdictions, the overall tax and information reporting stance 

is diminished.

278 Treasury, “Treasury Sanctions Global Russian Military Supply Chain, Kremlin-linked Networks, and Elites with Western Fortunes,” 

(November 14, 2022), https://home.treasury.gov/news/press-releases/jy1102#:~:text=In percent20June percent202022 

percent2C percent20OFAC percent20issued,valued percent20at percent20over percent20 percent241 percent20billion.
58 2024 ◆ National Money Laundering Risk Assessment

subsequently made bribery payments to Toledo through accounts maintained by Toledo’s coconspirators. Ultimately, Toledo and his family used approximately $1.2 million of the bribery 

payments to purchase real estate in Maryland in 2007 through a scheme designed to hide Toledo’s 

ownership of the funds and their connection to Odebrecht. The forfeited assets represent the 

proceeds from the sale of the Maryland real estate, which were further laundered through a trust and 

bank account controlled by Toledo. After acquiring a Maryland residential property, obtained through 

legal entities, Toledo had the title transferred to the Havenell Trust, an irrevocable trust with the trust 

documents prepared by a law firm. Toledo and a relative were initially listed as the trustees and the 

beneficiaries before amending the trust to successively make a real estate agent and then an attorney 

as the trustees. The trust later sold the property in question and placed the sale proceeds into a 

bank account. Toledo later used the Havenell Trust as the final destination for additional proceeds of 

corruption transferred through offshore shell companies. Toledo also used the Havenell Trust account 

to transfer money to an attorney escrow account belonging to a cooperating witness, which was then 

transferred to different accounts controlled by Toledo or his associates.279

Virtual Assets280

Since the publication of the 2022 NMLRA, the virtual asset ecosystem has been in flux. The market 

value of virtual assets have fallen considerably since their height in the fall of 2021, with many virtual 

assets losing value through early 2023 but rebounding in the fall of 2023. Despite several large virtual 

asset-related firms declaring bankruptcy, hundreds of virtual asset service providers (VASPs) continue 

to operate in the United States. Traditional financial institutions continue to consider virtual assetrelated products and services, including offering to custody virtual assets, banking VASPs, and using the 

technology underpinning virtual assets to experiment with tokenizing existing traditional financial assets. 

In the United States, VASPs have AML/CFT obligations if they fall under the BSA definition of a financial 

institution, which covers banks, broker-dealers, mutual funds, MSBs, futures commission merchants 

(FCMs), introducing brokers, and other forms of financial institutions.281 Many VASPs in the United States 

are considered MSBs, but depending on the activities in which the VASP engages, they may be considered 

FCMs or securities intermediaries such as broker-dealers.282 Foreign-located VASPs that operate wholly or 

in substantial part in the United States are considered MSBs, unless an applicable exemption applies, and 

must comply with applicable BSA requirements. Each of these types of financial institutions has AML/CFT 

obligations, including requirements to establish and implement an effective AML Program283 and 

279 DOJ, “Justice Department Will Return Approximately $686,000 in Forfeited Corruption Proceeds to the Republic of Peru,” (August 31, 

2022), https://www.justice.gov/opa/pr/justice-department-will-return-approximately-686000-forfeited-corruption-proceeds-republic.

280 This report uses the terms “virtual asset” and “VASP (virtual asset service provider),” terms not contained explicitly in U.S. law 

or regulation, to align with the terminology defined by the FATF. Virtual assets, as used in this report, include non-sovereignadministered digital assets such as convertible virtual currencies [CVCs], like bitcoin and stablecoins. For consistency, this 

terminology is also used in case examples, but this is intended only to facilitate an understanding of illicit finance risk and does 

not alter any existing legal obligations. This, however, does not cover central bank digital currencies, which are representations 

of fiat currency.

281 31 U.S.C. § 5312(a)(2); 31 C.F.R. § 1010.100(t).

282 FinCEN, “Leaders of CFTC, FinCEN, and SEC Issue Joint Statement on Activities Involving Digital Assets,” (Oct. 11, 2019), https://

www.fincen.gov/sites/default/files/2019-10/CVC percent20Joint percent20Policy percent20Statement_508 percent20FINAL_0.pdf.

283 See 31 C.F.R. § 1020.210 (banks); 31 C.F.R. § 1021.210 (casinos and card clubs); 31 C.F.R. § 1022.210 (MSBs); 31 C.F.R. § 1023.210 

(brokers or dealers in securities); 31 C.F.R. § 1024.210 (mutual funds); 31 C.F.R. § 1026.210 (futures commission merchants and 

introducing brokers in commodities). 
2024 ◆ National Money Laundering Risk Assessment 59

recordkeeping and reporting requirements, including SAR filing obligations.284 FinCEN, OFAC, SEC, 

and the Commodities Futures Trading Commission (CFTC) have issued statements and guidance on 

regulatory requirements for VASPs.285

Further, VASPs that are U.S. persons, like all other U.S. persons, wherever located, are required to 

comply with economic sanctions programs administered and enforced by OFAC. At the same time, nonU.S. persons may also have OFAC sanctions compliance obligations in some circumstances. Sanctions 

compliance obligations are the same regardless of whether a transaction is denominated in virtual assets 

or traditional fiat currency.286

While the use of virtual assets for money laundering continues to remain far below that of fiat currency 

and more conventional methods that do not involve virtual assets, U.S. law enforcement agencies have 

observed virtual assets being misused for ransomware, scams, drug trafficking, human trafficking, and 

other illicit activities.

1. Inconsistent Compliance with Domestic Obligations

In the United States, there are cases in which VASPs fail to comply with their AML/CFT and sanctions 

obligations. When covered VASPs fail to register with the appropriate regulator, fail to establish and 

maintain sufficient AML/CFT controls, or do not comply with sanctions obligations, criminals may more 

easily exploit their services for nefarious purposes, including circumventing United States and United 

Nations sanctions. For example, some VASPs currently do not implement adequate AML/CFT controls or 

other processes to identify customers, allowing placement, layering, and integration of illicit proceeds to 

occur instantaneously and pseudonymously without collecting appropriate identifying information. 

In some cases, such VASPs may claim not to be subject to U.S. jurisdiction despite doing business wholly 

or in substantial part in the United States. In some instances, VASPs have directed U.S.-based users to use 

virtual private networks or other methods such as the creation of shell companies to obscure that they 

are based in the United States.287 VASPs have also marketed themselves as requiring little to no customer 

284 See 31 C.F.R. § 1020.320 (banks); 31 C.F.R. § 1021.320 (casinos and card clubs); 31 C.F.R. § 1022.320 (MSBs), 31 C.F.R. § 1023.320 

(brokers or dealers in securities), 31 C.F.R. § 1024.320 (mutual funds), and 31 C.F.R. § 1026.320 (futures commission merchants 

and introducing brokers in commodities).  A suspicious transaction must be reported if it is conducted or attempted by, at, or 

through the financial institution and the amount involved exceeds a certain threshold. 

285 See, e.g., SEC, “Strategic Hub for Innovation and Financial Technology,” https://www.sec.gov/finhub; SEC, Crypto Assets, https://

www.investor.gov/additional-resources/spotlight/crypto-assets; FinCEN, “FinCEN Guidance,” (May 9, 2019), https://www.fincen.

gov/sites/default/files/2019-05/FinCEN percent20Guidance percent20CVC percent20FINAL percent20508.pdf; SEC, “Leaders 

of CFTC, FinCEN, and SEC Issue Joint Statement on Activities Involving Digital Assets,” (October 11, 2019), https://www.sec.

gov/news/public-statement/cftc-fincen-secjointstatementdigitalassets; Treasury, “Sanctions Compliance Guidance for the 

Virtual Currency Industry,” (October 2021), https://ofac.treasury.gov/media/913571/download?inline; OFAC, “Frequently Asked 

Questions: Questions on Virtual Currency,” (May 9, 2019), https://home.treasury.gov/policy-issues/financialsanctions/faqs/, 

FinCEN, “FinCEN Guidance”, https://www.fincen.gov/sites/default/files/2019-05/FinCEN percent20Guidance percent20CVC 

percent20FINAL percent20508.pdf; FinCEN, “Application of FinCEN’s Regulations to Persons Administering, Exchanging, or Using 

Virtual Currencies,” (March 18, 2013), https://www.fincen.gov/sites/default/files/administrative_ruling/FIN-2014-R002.pdf.

286 Treasury, “Sanctions Compliance Guidance for the Virtual Currency Industry,” (October 2021), https://ofac.treasury.gov/media/913571/

download?inline; See e.g., OFAC, “Frequently Asked Questions,” (March 19, 2018), https://ofac.treasury.gov/faqs/topic/1626; OFAC, 

“Frequently Asked Questions: 646,” (October 15, 2021), https://ofac.treasury.gov/faqs/646; OFAC, “Frequently Asked Questions: 1021,” 

(March 11, 2022), https://ofac.treasury.gov/faqs/1021.

287 FinCEN, “In the Matter of: Binance Holdings Limited, Binance (Services) Holdings Limited, Binance Holdings (IE) Limited, d/b/a 

Binance and Binance.com, Number 2023-04, Consent Order Imposing Civil Money Penalty,” (November 21, 2023), 

https://fincen.gov/sites/default/files/enforcement_action/2023-11-21/FinCEN_Consent_Order_2023_04_Final508.pdf. 
60 2024 ◆ National Money Laundering Risk Assessment

information from users prior to transactions, in violation of U.S. AML/CFT requirements.288 However, 

even among VASPs that do take steps to register or obtain a license with U.S. regulators, some VASPs 

may be licensed or registered incorrectly and, therefore, not meeting the full AML/CFT obligations for 

the services that they are providing. For example, a VASP registered as an MSB may also be operating as 

an unlicensed FCM or broker dealer, in which case they would be required to implement measures as an 

FCM, like a customer identification program, that do not apply to MSBs. More recently, many purportedly 

DeFi services (see Special Focus Section on DeFi) and some virtual asset peer-to-peer platforms claim 

that they are not subject to BSA requirements, purporting to enable automated transactions without 

the need for an account or custodial relationship. These entities may, however, be regulated financial 

institutions depending on specific facts and circumstances surrounding their financial activities.289 

There have also been instances in which VASPs subject to BSA obligations based on their financial activities 

have failed to meet AML program requirements under the BSA and its implementing regulations. For 

example, based on services the VASP provides, the VASP may be required to implement an AML program, 

with internal controls that are commensurate with the risks posed by their customers, the nature and 

volume of the financial services they provide, and the jurisdictions in which they provide services. 

Some VASPs have scaled quickly without adequately assessing and mitigating potential regulatory 

risks associated with providing new or additional services, including offering anonymity-enhancing 

cryptocurrencies (AECs) and expanding into new geographic markets.290 Law enforcement and regulators 

have observed VASPs offering services to so-called nested VASPs, (i.e., smaller VASPs that offer services to 

their customers through accounts and sub-accounts held at larger VASPs to benefit from the liquidity and 

convenience the larger market players provide). In such instances, VASPs are expected to ensure that their 

AML Program has appropriate policies, procedures, and internal controls to identify “nested” activity and 

comply with applicable BSA requirements which will vary based on the services the VASP offers.291

Law enforcement has also observed the misuse of virtual asset kiosks, which are often considered MSBs 

for BSA purposes, to launder illicit proceeds. Some perpetrators of scams or fraud may direct victims 

to use virtual asset kiosks to purchase virtual assets with fiat currency and send virtual assets to the 

perpetrator, sometimes by sharing Quick Response codes that auto-populate the perpetrator’s virtual 

asset wallet address.292 Some kiosk owners have failed to comply with AML/CFT obligations or disabled 

features designed to support compliance, enabling misuse by illicit actors.293

288 DOJ, “Justice Department Seizes and Forfeits Approximately $500,000 from North Korean Ransomware Actors and their 

Conspirators”, (July 19, 2022), https://www.justice.gov/opa/pr/justice-department-seizes-and-forfeits-approximately-500000-

north-korean-ransomware-actors. 

289 CFTC, “Statement of CFTC Division of Enforcement Director Ian McGinley on the Ooki DAO Litigation Victory” (June 9, 2023), https://

www.cftc.gov/PressRoom/PressReleases/8715-23#:~:text=June percent2009 percent2C percent202023&text=Critically percent2C 

percent20in percent20a percent20precedent percent2Dsetting,violate percent20the percent20law percent20as percent20charged; 

CFTC, CFTC Orders Event-Based Binary Options Markets Operator to Pay $1.4 Million Penalty, (January 3, 2022), https:// www.cftc.

gov/PressRoom/PressReleases/8478-22; SEC, SEC Charges Decentralized Finance Lender and Top Executives for Raising $30 Million 

Through Fraudulent Offerings, (August 6, 2021), https://www.sec.gov/news/press-release/2021-145. 

290 FinCEN, “Consent Order Imposing Civil Money Penalty, In the Matter of Bittrex, Inc.,” (Number 2022-03), https://www.fincen.gov/

sites/default/files/enforcement_action/2023-04-04/Bittrex_Consent_Order_10.11.2022.pdf.

291 See Footnotes 338 and 339.

292 IC3, “The FBI Warns of Fraudulent Schemes Leveraging Cryptocurrency ATMs and QR Codes to Facilitate Payment” (November 

04, 2021), https://www.ic3.gov/Media/Y2021/PSA211104.

293 DOJ, “Ian Freeman Sentenced to 8 Years in Prison for Operating a Bitcoin Money Laundering Scheme” (October 2, 2023), https://

www.justice.gov/usao-nh/pr/ian-freeman-sentenced-8-years-prison-operating-bitcoin-money-laundering-scheme.
2024 ◆ National Money Laundering Risk Assessment 61

Case examples: 

•	 Binance: In November 2023, Binance Holdings Limited and its affiliates, which operate the world’s 

largest VASP, Binance.com, entered into the largest resolutions in the Treasury’s history with FinCEN 

(including a penalty of $3.4 billion) and OFAC (including a penalty of nearly $1 billion), as well as 

resolutions of parallel investigations by the DOJ and the CFTC. As part of these resolutions, Binance 

pleaded guilty and paid penalties totaling over $4.3 billion, to resolve the Justice Department’s 

investigation into violations related the BSA, failure to register as a money transmitting business, and 

the International Emergency Economic Powers Act.294

•	 Binance’s founder and CEO also pleaded guilty to BSA violations and resigned from Binance.295 After 

launching in 2017, Binance quickly became the largest VASP in the world, with the greatest share 

of its customers coming from the United States. As a result of serving U.S. customers, Binance was 

required to register with FinCEN as an MSB and to establish, implement and maintain an effective 

AML program. Due in part to Binance’s failure to implement an effective AML program, including 

(among other things) failing to perform KYC on a large number of its users, illicit actors used Binance’s 

exchange in various ways. Furthermore, Binance failed to file SARs on their suspicious transactions, 

including those related to terrorist financing, ransomware, child sexual abuse materials, as well as 

darknet markets, scams, and other illicit activity. As part of the resolution with FinCEN, Binance has 

also agreed to retain an independent compliance monitor for three years and remediate and enhance 

its AML and sanctions compliance programs. Binance separately has also reached agreements with 

the CFTC, FinCEN, and OFAC, and the Justice Department will credit approximately $1.8 billion toward 

those resolutions. Under its settlement with FinCEN, Binance also agreed to significant compliance 

undertakings, including a groundbreaking five-year monitorship, an independent review of its AML 

program, and a SAR lookback review. 

•	 Bittrex: In October 2022, OFAC and FinCEN announced that Bittrex, a VASP, had entered into separate 

settlements of over $24 million and $29 million, respectively.296 Bittrex failed to prevent persons 

located in sanctioned jurisdictions, namely the Crimea region of Ukraine, Cuba, Iran, Sudan, and 

Syria, from using its platform to transact approximately $263 million in virtual assets between 

March 2014 and December 2017. Additionally, from February 2014 to December 2018, Bittrex failed 

to maintain an effective AML program as required under the BSA by maintaining an inadequate 

transaction monitoring system on its platform, to address the risks associated with its products 

appropriately, and failing to file any SARs over a three-year period, including on transactions 

involving sanctioned jurisdictions. Bittrex’s inadequate AML compliance program and transaction 

monitoring left its platform open to abuse by bad actors, including money launderers, terrorist 

financiers, ransomware attackers, and sanctions evaders.

294 Treasury, “U.S. Treasury Announces Largest Settlements in History with World’s Largest Virtual Currency Exchange Binance for 

Violations of U.S. Anti-Money Laundering and Sanctions Laws,” (November 21, 2023), https://home.treasury.gov/news/pressreleases/jy1925; DOJ, “Binance and CEO Plead Guilty to Federal Charges in $4B Resolution” (November 21, 2023), https://www.

justice.gov/opa/pr/binance-and-ceo-plead-guilty-federal-charges-4b-resolution.

295 DOJ, “Binance and CEO Plead Guilty to Federal Charges in $4B Resolution,” (November 21, 2023), https://www.justice.gov/opa/

pr/binance-and-ceo-plead-guilty-federal-charges-4b-resolution.

296 Treasury, “Treasury Announces Two Enforcement Actions for Over $24M and $29M Against Virtual Currency Exchange Bittrex, 

Inc.,” (October 11, 2022), https://home.treasury.gov/news/press-releases/jy1006. 
62 2024 ◆ National Money Laundering Risk Assessment

2. Inconsistent Implementation of International AML/CFT Obligations

As highlighted in previous NMLRAs, uneven and often inadequate regulation and international 

supervision allows VASPs and illicit actors to engage in regulatory arbitrage. This risk can expose the 

U.S. financial system to VASPs with deficient or nonexistent AML/CFT controls operating abroad. VASPs 

operating in the U.S. that constitute financial institutions under the BSA are generally subject to the BSA 

and its implementing regulations, including foreign-located VASPs obligations that operate wholly or in 

substantial part in the United States. This issue is of particular concern with VASPs given the ability to 

transfer virtual assets across borders nearly instantaneously compared to other financial transfers, the 

fact that many VASPs operate or have architecture in several jurisdictions, and the breadth of gaps in 

implementing international AML/CFT standards set forth by the FATF. Four years ago, the FATF clarified 

how its global standards on AML/CFT apply to virtual assets and VASPs. However, a recent FATF report 

based on a voluntary survey of jurisdictions found that jurisdictions continue to struggle with fundamental 

elements of the FATF standards. It also found that one-third of countries have not yet completed an 

illicit finance risk assessment for virtual assets and over 40 jurisdictions had not decided if and how 

to regulate the virtual asset sector for AML/CFT purposes. Even jurisdictions that have decided on and 

begun implementing an approach often lack sufficient supervision and monitoring systems to effectively 

conduct supervision and sanction non-compliant VASPs, when applicable.297 The uneven implementation 

of effective AML/CFT requirements can allow VASPs to concentrate their operations in jurisdictions with 

minimal or nonexistent AML/CFT requirements, weak supervision of VASPs, or both.298 Other VASPs 

have adopted a distributed architecture where they register in one country, have personnel in a second 

country, maintain data on servers located in a third country, and offer services in several countries with 

different legal and regulatory approaches to virtual assets. This approach can complicate supervision and 

enforcement, which often require considerable cooperation amongst competent authorities. 

3. Obfuscation Tools and Methods

Criminals commonly use obfuscation tools and methods to introduce challenges for investigators 

attempting to trace illicit funds. These tools include mixers (see snapshot) and mixing-enabled wallets, as 

well as AECs, which reduce the transparency of virtual financial flows through anonymizing features. For 

example, the virtual asset Monero obfuscates transaction information using cryptographic technologies, 

such as (1) ring signatures, which are used to hide the identity of the transaction originator; (2) ring 

confidential transactions, which obfuscate the amount of the transaction; and (3) stealth addresses, 

which hide the identity of the beneficiary.299 Other methods may include laundering as a service, which is 

available in some darknet markets. 

Additional methods, such as chain hopping, may frustrate the ability to trace financial transactions 

quickly or for service providers to detect if incoming funds are tied to illicit activity. Actors can chain-hop 

by exchanging virtual assets on one blockchain for virtual assets on another. Chain hopping can pose 

challenges to tracing if actors use specific assets or blockchains that are more difficult to trace given 

297 FATF, “Virtual Assets: Targeted Update on Implementation of the FATF Standards on Virtual Assets and Virtual Asset Service 

Providers,” (June 27, 2023), https://www.fatf-gafi.org/en/publications/Fatfrecommendations/targeted-update-virtual-assetsvasps-2023.html.

298 Treasury, “Action Plan to Address Illicit Financing Risks of Digital Assets,” September 22, 2022, https://home.treasury.gov/

system/files/136/Digital-Asset-Action-Plan.pdf.

299 See Treasury, National Money Laundering Risk Assessment, February 2022.
2024 ◆ National Money Laundering Risk Assessment 63

current limits on blockchain analysis or if the transactions are done quickly. Criminals are constantly 

evolving techniques to obfuscate illicit proceeds and are learning how to use these techniques effectively. 

The pace of change can present challenges for competent authorities. 

Virtual asset transactions often occur on public blockchains, which means that anyone with internet 

access can view the pseudonymous transaction data in a public ledger for the blockchain. Public ledgers 

can support investigations in tracing the movement of illicit proceeds and, paired with other pieces of 

information, law enforcement can sometimes identify transaction participants. However, the ability to 

use public blockchain data can be limited by the effective execution or use of the techniques and services 

described above. 

Case examples

•	 In February 2022, two individuals were arrested for an alleged conspiracy to launder virtual assets 

stolen during a 2016 hack, presently valued at approximately $4.5 billion.300 Over the last five years, 

approximately 25,000 of those stolen bitcoin were allegedly transferred out of the defendant’s 

wallet via a complicated money laundering process that ended with some of the stolen funds being 

deposited into financial accounts controlled by both defendants.

•	 A criminal complaint filed by DOJ alleges that the defendants employed numerous sophisticated 

laundering techniques, including converting bitcoin to other forms of virtual assets, including 

anonymity-enhanced cryptocurrencies, via chain hopping and depositing the stolen funds into 

accounts at a variety of VASPs and darknet markets and then withdrawing the funds. In August 2023, 

one defendant, Ilya Lichtenstein, pleaded guilty to money laundering conspiracy, which carries a 

maximum penalty of 20 years in prison, and the other defendant, Heather Morgan, pleaded guilty to 

one count of money laundering conspiracy and one count of conspiracy to defraud the United States, 

each of which carries a maximum penalty of five years.301

4. Mixing

Criminals can use virtual asset mixing to functionally obfuscate the source, destination, or amount 

involved in a transaction.302 Mixing can accomplish this through various mechanisms, including pooling 

or aggregating virtual assets from multiple individuals, wallets, or accounts into a single transaction or 

transactions. Mixing is frequently used by cybercriminals connected to the DPRK, money launderers, 

ransomware actors, participants in illicit darknet markets, among others. Mixing services may be 

advertised as a way to evade AML/CFT requirements and rarely, if ever, include the willingness to provide 

upon request to regulators or law enforcement the resulting transactional chain or information collected 

as part of the transaction.303 

300 DOJ, “Two Arrested for Alleged Conspiracy to Launder $4.5 Billion in Stolen Cryptocurrency,” (February 8, 2022), https://www.

justice.gov/opa/pr/two-arrested-alleged-conspiracy-launder-45-billion-stolen-cryptocurrency.

301 DOJ, “Bitfinex Hacker and Wife Plead Guilty to Money Laundering Conspiracy Involving Billions in Cryptocurrency,” (August 3, 

2023), https://www.justice.gov/opa/pr/bitfinex-hacker-and-wife-plead-guilty-money-laundering-conspiracy-involving-billions.

302 Treasury, “Illicit Finance Risk Assessment of Decentralized Finance” (April 2023), https://home.treasury.gov/system/files/136/

DeFi-Risk-Full-Review.pdf.

303 Treasury, “U.S. Treasury Issues First-Ever Sanctions on a Virtual Currency Mixer, Targets DPRK Cyber Threats,” (May 6, 2022), 

https://home.treasury.gov/news/press-releases/jy0768; FinCEN, “First Bitcoin “Mixer” Penalized by FinCEN for Violating AntiMoney Laundering Laws,” (October 19, 2020), https://www.fincen.gov/news/news-releases/first-bitcoinmixer-penalized-fincenviolating-anti-money-laundering-laws.
64 2024 ◆ National Money Laundering Risk Assessment

Because mixing provides foreign illicit actors with enhanced anonymity that allows them to launder 

their illicit proceeds, in October 2023 FinCEN announced a notice of proposed rule making (NPRM) that 

identifies international CVC mixing as a class of transactions of primary money laundering concern 

pursuant to section 311 of the USA PATRIOT Act. FinCEN’s proposal would require covered financial 

institutions to implement certain recordkeeping and reporting requirements on transactions that the 

covered financial institutions know, suspect, or have reason to suspect it involves CVC mixing within or 

involving jurisdictions outside the United States.304

Case examples

•	 In March 2023, the DOJ announced a coordinated action against ChipMixer, a virtual asset “mixing” 

service responsible for laundering more than $3 billion worth of virtual assets.305 The operation 

involved U.S. federal law enforcement’s court-authorized seizure of two domains that directed users 

to the ChipMixer service and one Github account, as well as the German Federal Criminal Police’s 

seizure of the ChipMixer back-end servers and more than $46 million in cryptocurrency. As alleged 

in the complaint, ChipMixer processed hundreds of millions of dollars’ worth of bitcoin connected 

to or associated with ransomware strains, stolen funds, customers of Hydra Market, and Russian 

intelligence services. ChipMixer also served U.S. customers but failed to register with FinCEN 

and employed technology to conceal the operating location of servers to avoid law enforcement 

detection. In addition to the coordinated action, an individual was charged with money laundering, 

operating an unlicensed money transmitting business, and identity theft, connected to the operation 

of ChipMixer.

•	 In August 2023, the DOJ unsealed an indictment charging a Russian and U.S. national of creating, 

operating, and promoting Tornado Cash, a virtual asset mixer that facilitated more than $1 billion in 

money laundering transactions, and laundered hundreds of millions of dollars for the Lazarus Group, 

the sanctioned DPRK cybercrime organization.306 According to the indictment, Tornado Cash service 

advertised to customers that it provided untraceable and anonymous financial transactions. Storm 

and Semenov allegedly chose not to implement know-your customer or anti-money laundering 

programs as required by law. Even after the Treasury designated Tornado Cash in August 2022, the 

operators allegedly helped the Lazarus Group to transfer criminal proceeds from a virtual asset wallet 

that OFAC had designated as blocked property. The operators are each charged with one count of 

conspiracy to commit money laundering, one count of conspiracy to operate an unlicensed money 

transmitting business, and one count of conspiracy to violate the International Economic Emergency 

Powers Act. OFAC also sanctioned Semenov for his role in providing material support to Tornado Cash 

and to the Lazarus Group.307

304 FinCEN, “FinCEN Proposes New Regulation to Enhance Transparency in Convertible Virtual Currency Mixing and Combat 

Terrorist Financing”, (October 19, 2023), https://www.fincen.gov/news/news-releases/fincen-proposes-new-regulationenhance-transparency-convertible-virtual-currency.

305 DOJ, “Justice Department Investigation Leads to Takedown of Darknet Cryptocurrency Mixer that Processed Over $3 Billion of 

Unlawful Transactions” (March 15, 2023), https://www.justice.gov/opa/pr/justice-department-investigation-leads-takedowndarknet-cryptocurrency-mixer-processed-over-3.

306 DOJ, “Tornado Cash Founders Charged with Money Laundering and Sanctions Violations”, (August 23, 2023), https://

www.justice.gov/opa/pr/tornado-cash-founders-charged-money-laundering-and-sanctions-violations#:~:text=According 

percent20to percent20the percent20indictment percent2C percent20unsealed,laundering percent20transactions percent2C 

percent20and percent20laundered percent20hundreds.

307 Treasury, “Treasury Designates Roman Semenov, Co-Founder of Sanctioned Virtual Currency Mixer Tornado Cash”, (August 23, 

2023), https://home.treasury.gov/news/press-releases/jy1702.
2024 ◆ National Money Laundering Risk Assessment 65

5. Disintermediation

Many virtual assets can be self-custodied and transferred without the involvement of an intermediary 

financial institution, which can be referred to as disintermediation. For example, funds transfers 

between two users of unhosted wallets may not involve a regulated financial institution. The absence 

of a regulated financial institution, subject to AML/CFT obligations can limit authorities’ collection of 

and access to information. It can also reduce the effectiveness of preventive measures by other financial 

institutions with exposure to disintermediated transactions or users involved in such transactions. Such 

instances present a vulnerability, although these transactions may occur on public blockchains providing 

some transparency. 

6. Special Focus: Decentralized Finance (DeFi)

In April 2022, the Treasury published an illicit finance risk assessment on DeFi. 308 The DeFi risk 

assessment identified that illicit actors, including ransomware cybercriminals, thieves, scammers, 

and DPRK cyber actors, are using DeFi services transferring and laundering their illicit proceeds. To 

accomplish this, illicit actors are exploiting vulnerabilities in the U.S. and foreign AML/CFT regulatory, 

supervisory, and enforcement regimes as well as the technology underpinning DeFi services. As 

explained in the risk assessment, a DeFi service that constitutes a financial institution as defined by the 

BSA, regardless of whether the service is centralized or decentralized, is required to comply with BSA 

requirements, including AML/CFT obligations. Despite this, many existing DeFi services covered by the 

BSA fail to comply with AML/CFT obligations, a vulnerability that illicit actors exploit. 

For example, in June 2023, a federal judge ruled in favor of the CFTC, entering a default judgment 

order that requires Ooki DAO, a DAO, to pay a civil monetary penalty of over $643,000.309 The CFTC 

had charged Ooki DAO in an administrative order against Ooki DAO’s predecessor LLC (bZeroX), which 

had transferred control of the software to a DAO, and its founders. The bZx Protocol purported to 

offer users the ability to engage in transactions in a decentralized environment supported by smart 

contracts - i.e., without third-party intermediaries taking custody of user assets.310 However, the court 

held that the Ooki DAO is a “person” under the Commodity Exchange Act and thus can be held liable 

for violating the law. The administrative order and this enforcement action charged that bZeroX 

(and then the Ooki DAO) unlawfully offered leveraged and margined retail commodity transactions 

outside of a registered exchange, unlawfully acted as an FCM, and unlawfully failed to comply with BSA 

obligations applicable to FCMs.

308 Treasury, “Illicit Finance Risk Assessment of Decentralized Finance” (April 2023), https://home.treasury.gov/system/files/136/

DeFi-Risk-Full-Review.pdf. See also IOSCO, “Final Report with Policy Recommendations for Decentralized Finance (DeFi),” 

(December 2023), https://www.iosco.org/library/pubdocs/pdf/IOSCOPD754.pdf.

309 CFTC, “Statement of CFTC Division of Enforcement Director Ian McGinley on the Ooki DAO Litigation Victory” (June 9, 2023), 

https://www.cftc.gov/PressRoom/PressReleases/8715-23#:~:text=June percent2009 percent2C percent202023&text=Critically 

percent2C percent20in percent20a percent20precedent percent2Dsetting,violate percent20the percent20law percent20as 

percent20charged.

310 CFTC, “CFTC Imposes $250,000 Penalty Against bZeroX, LLC and Its Founders and Charges Successor Ooki DAO for Offering 

Illegal, Off-Exchange Digital-Asset Trading, Registration Violations, and Failing to Comply with Bank Secrecy Act,” (September 22, 

2022), https://www.cftc.gov/PressRoom/PressReleases/8590-22.
66 2024 ◆ National Money Laundering Risk Assessment

AML/CFT Compliance Deficiencies

Financial institutions and entities in the United States are subject to the provisions of the BSA and play an 

important role in preventing and detecting illicit activity that threatens the integrity of the U.S. financial 

system. Many of these financial institutions and entities implement effective AML/CFT programs and 

controls to guard against their misuse. However, some have demonstrated significant AML/CFT failings. 

1. Banks

Over the past 10 years there has been a decline in the number of banks operating in the United States. 

Recent data indicates that there were approximately 4,672311 Federal Deposit Insurance Corporation 

(FDIC)-insured commercial banks and savings institutions in existence as of the first quarter of 2023, 

compared to 7,019 from the first quarter of 2013.312 This decline appears to be primarily driven by the 

consolidation and merger of existing financial institutions. A shift in traditional banking activities, and an 

increase in financial technology (i.e., “FinTech”) companies partnering with banks, a trend referred to as 

“banking-as-a-service” has also impacted the financial services landscape.313 

Recent actions taken by the FinCEN and Federal Financial Institutions Regulatory Agencies (FFIRAs),314

indicate that some banks still struggle to implement corrective actions for issues identified in examinations 

within the necessary time frames including implementing an adequate system of AML/CFT internal controls 

or filing SARs in a timely manner. This struggle is especially true for banks lacking a federal functional 

regulator, which only became subject to comprehensive federal BSA requirements in 2021. 

New technologies employed by financial institutions have advanced financial crimes compliance but also 

exposed banks to risks. In 2022, the Office of the Comptroller of the Currency (OCC) cautioned that use of 

new technologies or entry into new markets may cause familiar risks to manifest in different ways or may 

necessitate new techniques to identify, measure, monitor, and control them appropriately.315 

Recent activity shows that the emergence of virtual asset-focused firms may pose unique vulnerabilities 

as these entities evolve into financial institutions (e.g., banks) as defined under the BSA and seek to 

resource themselves sufficiently to deal with their risk exposure and regulatory requirements. Other 

enforcement actions indicate that some banks have failed to follow the procedures to identify their 

customers in a timely manner and are not properly utilizing technological solutions to mitigate customer 

risk. More recently, in 2023, the OCC noted an increase in financial crime and AML/CFT risks in traditional 

banking products and services that align with this assessment.316

311 FDIC, “QUARTERLY BANKING PROFILE: FIRST QUARTER 2023, (2023, Vol.17, #2) (https://www.fdic.gov/analysis/quarterly-bankingprofile/fdic-quarterly/2023-vol17-2/fdic-v17n2-1q2023.pdf.

312 FDIC, QUARTERLY BANKING PROFILE: THIRD QUARTER 2022, (2022, Vol.16, #2) https://www.fdic.gov/analysis/quarterly-bankingprofile/fdic-quarterly/2022-vol16-2/fdic-v16n2-1q2022.pdf.

313 FRB, Governor Michelle W. Bowman, “The Consequences of Fewer Banks in the U.S. Banking System”, (April 14, 2023) https://

www.federalreserve.gov/newsevents/speech/bowman20230414a.htm.

314 As defined in 12 U.S.C. 3302(1).

315 OCC, “Semiannual Risk Perspective”, (Fall 2022), https://www.occ.treas.gov/publications-and-resources/publications/

semiannual-risk-perspective/files/pub-semiannual-risk-perspective-fall-2022.pdf.

316 OCC, “OCC Report Identifies Key Risks Facing Federal Banking System”, (Spring 2023), https://www.occ.treas.gov/publicationsand-resources/publications/semiannual-risk-perspective/files/semiannual-risk-perspective-spring-2023.html.
2024 ◆ National Money Laundering Risk Assessment 67

Further, OFAC’s sanctions in response to Russia’s invasion of the Ukraine in February 2022 are complex 

and evolving, requiring financial institution management to assess the applicability and impact of 

sanctions on their institutions and customers, including the impact of sanctions imposed by both the 

United States and other countries on foreign branches, overseas offices, and subsidiaries.317

Case examples

•	 In October 2023, the Federal Reserve Board (FRB) fined Metropolitan Commercial Bank (MCB), of 

New York, New York, approximately $14.5 million for violations of customer identification rules 

and deficient third-party risk management practices relating to the bank’s issuance of reloadable 

prepaid card accounts.318 In 2020, MCB opened prepaid card accounts for illicit actors using stolen 

identities who subsequently used the accounts to collect more than $300 million in illegally obtained 

state unemployment insurance benefits. By opening prepaid card accounts through a third-party 

program manager without having adequate procedures for verifying each applicant’s true identity, 

MCB violated customer identification rules set forth in the BSA and its implementing regulations. The 

Board required MCB to improve its customer identification, customer due diligence, and third-party 

risk management programs.

•	 In September 2023, FinCEN issued a consent order imposing a civil money penalty of $15,000,000 

on Bancrédito International Bank and Trust Corporation, an International Banking Entity operating 

in Puerto Rico for willfully violating the BSA between October 2015 and May 2022, by failing to 

timely report suspicious transactions to FinCEN; failing to establish a due diligence program for 

correspondent accounts established, maintained, administered, or managed in the United States for 

foreign financial institutions; and failing to implement and maintain an AML program.319 Bancrédito 

did not comply with SAR reporting obligations, failing to file SARs for years and ignoring violations 

cited by its primary regulator, the Puerto Rico Office of the Commissioner of Financial Institutions. 

These transactions included suspicious activity by a Bancrédito executive and suspicious activity 

involving customers in the high-risk jurisdiction of Venezuela, including customers linked to foreign 

bribery and money laundering.

•	 In September 2023, FinCEN assessed a concurrent civil money penalty of $15 million against Shinhan 

Bank America (SHBA)for willfully violating the BSA from April 2016 through March 2021, including 

failure to implement and maintain an effective AML program that was reasonably designed to guard 

against money laundering and failing to timely report several hundred transactions to FinCEN 

involving suspicious financial activity by its customers processed by, at, or through the bank.320 As a 

result, tens of millions of dollars in suspicious transactions were not reported to FinCEN in a timely 

manner, including transactions connected to tax evasion, money laundering, and other financial 

crimes. The FDIC issued a concurrent civil money penalty of $5 million against SHBA for violations of 

the BSA and its implementing AML regulations and for failure to comply with the requirements of an 

FDIC-issued consent order dated June 12, 2017.321 The New York Department of Financial Services 

also assessed a civil penalty of $10 million for AML-related violations.

317 OCC, “SEMIANNUAL RISK PERSPECTIVE”, (Spring 2022), https://www.occ.treas.gov/publications-and-resources/publications/

semiannual-risk-perspective/files/pub-semiannual-risk-perspective-spring-2022.pdf.

318 The New York Department of Financial Services also took a joint action against Metropolitan. See FRB, “In the Matter of METROPOLITAN 

COMMERCIAL BANK New York, New York”, https://www.federalreserve.gov/newsevents/pressreleases/files/enf20231019a1.pdf. 

319 FinCEN, “FinCEN Announces $15 Million Civil Money Penalty against Bancrédito International Bank and Trust Corporation for 

Violations of the Bank Secrecy Act”, (September 15, 2023), https://www.fincen.gov/news/news-releases/fincen-announces-15-

million-civil-money-penalty-against-bancredito-international.

320 FinCEN, CONSENT ORDER IMPOSING CIVIL MONEY PENALTY, “IN THE MATTER OF Shinhan Bank America New York, NY: Number 

2023-03”, https://www.fincen.gov/sites/default/files/enforcement_action/2023-09-29/SHBA_9-28_FINAL_508.pdf.

321 FDIC, “In the Matter of SHINHAN BANK AMERICA NEW YORK, NEW YORK”, https://www.fdic.gov/news/press-releases/2023/pr23080a.pdf.
68 2024 ◆ National Money Laundering Risk Assessment

•	 In April 2023, FinCEN assessed a $1.5 million civil money penalty on South Dakota-chartered The 

Kingdom Trust Company (Kingdom Trust) for violations of the BSA and its implementing regulations. 

As part of the consent order, Kingdom Trust admitted that it willfully failed to accurately and timely 

report hundreds of transactions to FinCEN involving suspicious activity by its customers, including 

transactions with connections to a trade-based money laundering scheme and multiple securities 

fraud schemes that were the subject of both criminal and civil actions. These failures stemmed 

from Kingdom Trust’s severely underdeveloped and ad-hoc process for identifying and reporting 

suspicious activity.322

•	 In January 2023, the FRB issued a civil money penalty on Popular Bank $2.3 million for processing 

six Paycheck Protection Program (PPP) loans despite “having detected that the loan applications 

contained significant indications of potential fraud.”323 Specifically, in addition to the processing 

and funding of the loans, the Bank failed to timely report the potential fraud which demonstrated 

“ineffective controls and procedures that resulted in violations of the Bank’s internal BSA protocols”.324

•	 In December 2022, Danske Bank pleaded guilty and agreed to forfeit $2 billion to resolve the United 

States’ investigation into Danske Bank’s fraud on U.S. banks related to the Bank’s concealment 

of the state of its AML/CFT controls. According to court documents, Danske Bank defrauded U.S. 

banks regarding subsidiary Danske Bank Estonia’s customers and anti-money laundering controls 

to facilitate access to the U.S. financial system for Danske Bank Estonia’s high-risk customers, who 

resided outside of Estonia – including in Russia.325 Specifically, between 2008 and 2016, Danske 

Bank Estonia – which Danske Bank acquired through an acquisition of Finland-based Sampo Bank 

in 2007 326-- processed $160 billion through U.S. banks on behalf of its high-risk customer base that 

resided outside of Estonia. By at least February 2014, as a result of internal audits, information from 

regulators, and an internal whistleblower, Danske Bank knew that some high-risk customers were 

engaged in highly suspicious and potentially criminal transactions, including transactions through 

U.S. banks. Danske Bank also knew that Danske Bank Estonia’s anti-money laundering program 

and procedures did not meet Danske Bank’s standards and were not appropriate to meet the risks 

associated with the high-risk customers. Instead of providing the U.S. banks that processed Danske 

Bank’s transactions with truthful information, Danske Bank lied about the state of Danske Bank 

Estonia’s AML compliance program, their transaction monitoring capabilities, and information 

regarding Danske Bank Estonia’s customers and their risk profiles. Danske Bank did this allegedly to 

continue to gain access to the U.S. financial system.327

•	 In October 2022, OFAC issued a Finding of Violation to Nodus International Bank, an international 

financial entity in Puerto Rico, for violations of the Venezuelan Sanctions Regulations and the 

Reporting, Penalties, and Procedures Regulations. According to OFAC documentation, upon 

322 FinCEN, “FinCEN Assesses $1.5 Million Civil Money Penalty against Kingdom Trust Company for Violations of the Bank Secrecy 

Act”, (April 26, 2023), https://www.fincen.gov/news/news-releases/fincen-assesses-15-million-civil-money-penalty-againstkingdom-trust-company.

323 FRB, “Federal Reserve Board announces it has fined Popular Bank $2.3 million for processing six PPP loans despite having 

detected that the loan applications contained significant indications of potential fraud,” (January 24, 2023), https://www.

federalreserve.gov/newsevents/pressreleases/enforcement20230124a.htm.

324 FRB, Order of Assessment of Civil Money Penalty, “In the Matter of Popular Bank, New York, New York”, (January 20, 2023), 

https://www.federalreserve.gov/newsevents/pressreleases/files/enf20230124a1.pdf.

325 DOJ, “Danske Bank Pleads Guilty to Fraud on U.S. Banks in Multi-Billion Dollar Scheme to Access the U.S. Financial System”, (December 

13, 2022) https://www.justice.gov/opa/pr/danske-bank-pleads-guilty-fraud-us-banks-multi-billion-dollar-scheme-access-us-financial.

326 DOJ, SDNY, USA v. Danske Bank, https://www.justice.gov/d9/press-releases/attachments/2022/12/13/danske_

information_508_compliant_0.pdf.

327 DOJ, “Danske Bank Pleads Guilty to Fraud on U.S. Banks in Multi-Billion Dollar Scheme to Access the U.S. Financial System”, (December 

13, 2022), https://www.justice.gov/opa/pr/danske-bank-pleads-guilty-fraud-us-banks-multi-billion-dollar-scheme-access-us-financial.
2024 ◆ National Money Laundering Risk Assessment 69

determining that a designated individual held an interest in certain securities, Nodus sought to 

redeem the designated person’s securities and place the proceeds into a blocked account, a process 

that would require a license from OFAC. Nodus compliance personnel relayed this to senior Nodus 

bank officials, but Nodus processed the securities redemption without a license. Separately, 

the designated individual also held other accounts and financial products at Nodus, which were 

blocked upon learning of the individual’s designation. However, due to human error Nodus allowed 

an automatic debit from one of the blocked accounts to credit the designated person’s blocked 

credit card account – the balance of which was written off by Nodus. Additionally, during the OFAC 

investigation, Nodus informed OFAC that the Bank lacked access to all records or communications 

related to the handling of the designated person’s blocked property. The Bank also submitted several 

inconsistent Annual Reports of Blocked Property to OFAC.328

•	 In September 2022, the OCC assessed a $6 million civil money penalty against Sterling Bank 

and Trust, FSB, Southfield, Michigan. According to the consent order, in addition to prudential 

deficiencies, the Bank failed to implement an adequate system of AML/CFT internal controls and 

failed to file SARs in a timely manner.329

•	 In July 2022, OFAC announced that it reached an agreement with American Express National Bank 

(Amex), a subsidiary of the American Express Company that provides charge and credit card products 

and travel-related services to consumers and businesses, to settle the potential civil liability for 214 

apparent violations of OFAC’s Kingpin sanctions. According to OFAC documentation, Amex processed 

transactions for an account whose supplemental card holder was designated. A combination of 

human error and sanctions compliance program deficiencies enabled the account to process 

$155,189.42 worth of transactions.330

•	 In July 2022, OFAC issued a Finding of Violation to MidFirst Bank (MidFirst) for violations of the 

Destruction Proliferators Sanctions Regulations (WMDPSR). According to OFAC documentation, 

MidFirst maintained accounts for and processed 34 payments on behalf of two individuals 

added to OFAC’s SDN List for 14 days post-designation. The violations stemmed from the Bank’s 

misunderstanding of the frequency of its vendor’s screening of new names added to the SDN List 

against its existing customer base; the vendor only engaged in screening of MidFirst’s entire existing 

customer base once a month instead of daily.331

•	 In June 2022, the FDIC issued a consent order regarding Oxford University Bank of Oxford, 

Mississippi.332 The order required the bank, among other things, to: (1) assess AML/CFT department 

staffing; (2) appoint a BSA officer; (3) develop, adopt, and implement appropriate CDD procedures; 

(4) develop and establish a system of internal controls; (5) establish and maintain an independent 

testing program for compliance with the BSA and its implementing rules and regulations; (6) develop 

an effective training program and revise the Bank’s AML/CFT Risk Assessment; and (7) develop, adopt, 

and implement revised procedures and processes for monitoring and reporting suspicious activity.

328 OFAC, “OFAC Issues a Finding of Violation to Nodus International Bank, Inc. for Violations of the Venezuelan Sanctions Regulations 

and the Reporting, Penalties and Procedures Regulations” (October 18, 2022), https://ofac.treasury.gov/media/928941/

download?inline#:~:text=The%20RPPR%20violations%20reflected%20Nodus’s,of%20a%20civil%20monetary%20penalty.

329 OCC, Consent Order, “In the Matter of: Sterling Bank and Trust, FSB Southfield, Michigan”, https://www.occ.gov/static/

enforcement-actions/ea2022-039.pdf.

330 OFAC, “OFAC Settles with American Express National Bank for $430,500 Related to Apparent Violations of Foreign Narcotics 

Kingpin Sanctions Regulations” (July 15, 2022), https://ofac.treasury.gov/media/924406/download?inline.

331 OFAC, “OFAC Issues Finding of Violation to MidFirst Bank”, (July 21, 2022) https://ofac.treasury.gov/media/924506/

download?inline. 

332 FDIC, Consent Order, “In the Matter of OXFORD UNIVERSITY BANK, OXFORD, MISSISSIPPI.”
70 2024 ◆ National Money Laundering Risk Assessment

In April 2022, the OCC issued a consent order to Anchorage Digital Bank of Sioux Falls, South Dakota. 

The order found that Anchorage Digital Bank – a bank specializing in virtual assets – “failed to adopt and 

implement a compliance program that adequately covers the required AML/CFT program elements.” The 

specific deficiencies that the Bank did not adopt and implement included: internal controls for customer 

due diligence and procedures for monitoring suspicious activity; appointment of BSA officer and staff; 

and training.” 333

2. Money Services Businesses

The term “money services business” is defined by regulation334 as any of the following categories of 

business: (1) dealers in foreign exchange; (2) check cashers; (3) issuers or sellers of traveler’s checks or 

money orders; (4) providers of prepaid access; (5) money transmitters; (6) U.S. Postal Service; or (7) sellers 

of prepaid access.335 MSBs are non-bank financial institutions often used by customers who may have 

difficulty obtaining financial services at banks as well as those that send remittance payments abroad 

to family members in a cost-effective manner. Notably, the United States is the world’s largest source of 

remittances, having sent approximately $72.1 billion abroad in 2021.336

There are approximately 26,472 registered MSBs in the United States,337 as of December 15, 2023. MSBs, 

which are commonly used in the U.S. are continuously innovating, leveraging mobile and internet-based 

options to ensure convenient payment of funds across the world. Hundreds of MSBs offer services in 

virtual assets, and many VASPs in the United States are registered as MSBs.

IRS Small Business/Self Employed (SB/SE) is the entity delegated by FinCEN to examine MSBs compliance 

with obligations under the BSA. There has been no change to the previously reported decrease in principal 

exams by IRS SB/SE and the current examiner force is still half of what it was in 2010. In investigations in 

which IRS-CI is involved, 18 USC 1960 is often cited regarding unlicensed MSBs, specifically as a predicate 

offense in virtual currency cases involving money laundering charges. (see Virtual Asset Vulnerabilities for 

cases involving MSBs and other financial institutions offering virtual asset services). 

In 2022, depository institutions submitted almost 3,580 SARs, citing potential unlicensed MSB activity.338

Almost half of the SARs (49 percent) were filed in California, New York, Ohio, Texas, North Carolina, and 

Virginia collectively.339 Many institutions identified grocery or convenience stores, gas stations, or liquor 

stores as potentially operating illegally as money transmitters, check cashers, or dealers in foreign 

exchange.340 Additionally, individuals may misuse their personal or business bank accounts to transmit 

funds for customers on a commercial scale, thus operating as unregistered MSBs. 

333 OCC, Consent Order, “In the Matter of: Anchorage Digital Bank, National Association Sioux Falls, South Dakota”, https://www.

occ.gov/static/enforcement-actions/ea2022-010.pdf.

334 31 C.F.R. § 1010.100(ff). See also https://www.fincen.gov/am-i-msb.

335 See previous sections for vulnerabilities unique to check, money orders, and providers and sellers of prepaid access. 

336 CRS, Remittances: Background and Issues for the 118th Congress, (May 10, 2023), https://sgp.fas.org/crs/misc/R43217.

pdf; https://www.worldbank.org/en/news/press-release/2023/12/18/remittance-flows-grow-2023-slower-pace-migrationdevelopment-brief.

337 FinCEN, MSB Registrant Search, https://www.fincen.gov/msb-state-selector.

338 FinCEN, Depository Institution, Exhibit 5, Line 102, https://www.fincen.gov/reports/sar-stats/sar-filings-industry.

339 FinCEN, Depository Institution, Exhibit 3, Lines 15-20, https://www.fincen.gov/reports/sar-stats/sar-filings-industry.

340 GAO, “VIRTUAL CURRENCIES: Additional Information Could Improve Federal Agency Efforts to Counter Human and Drug 

Trafficking” (December 2021), https://www.gao.gov/assets/gao-22-105462.pdf.
2024 ◆ National Money Laundering Risk Assessment 71

Unregistered and unlicensed MSBs can include hawalas and other forms of IVTS. There is no practical 

or functional distinction between a hawala and any other money transmitter. While it is theoretically 

possible for IVTS to operate wholly outside the banking system, it is not often the case. Instead, law 

enforcement investigations indicate IVTS often use an account at a bank to clear and settle transactions 

internationally. The following are case examples of AML/CFT compliance failures and unregistered or 

unlicensed MSBs.

Case Examples

•	 In September 2023, Ryan Salame, the co-CEO of FTX’s Bahamian affiliate (FTX Digital Markets Ltd.), 

pleaded guilty to a conspiracy to make unlawful political contributions and defraud the Federal 

Election Commission and a conspiracy to operate an unlicensed money transmitting business.341

Between 2019 and 2021, Salame along with other co-conspirators, owned and operated an 

unlicensed money-transmitting business to transmit customer deposits of virtual assets and 

traditional currencies on and off the FTX exchange. Salame opened a fraudulent bank account by 

using false and misleading statements on the bank’s due diligence questionnaire. Ultimately, Salame 

agreed to forfeit more than $1.5 billion to authorities.342

•	 In June 2023, a Paraguayan man admitted his role in facilitating an international money laundering 

conspiracy; he pled guilty to one count of operating an unlicensed money-transmitting business. 

According to court documentation, the individual was the owner and operator of a money exchange 

business in the Republic of Paraguay, which was not licensed or registered to operate as a moneytransmitting business under the laws of the United States or the state of New Jersey. The individual’s 

associates traveled to New Jersey and Florida and accepted approximately $800,000 in U.S. currency 

from purported drug traffickers and caused those funds to be transmitted through the individual’s 

money exchange business. Using the unlicensed business, the individual caused those funds to be 

transmitted through accounts located in multiple countries and ultimately caused the funds to be 

transferred back to an account maintained by the purported drug traffickers. To disguise the illicit 

source of funds, the individual and his associates coordinated to generate fraudulent invoices that 

stated legitimate business reasons for the transfers of the laundered funds. Unbeknownst to the 

individual and one of his associates, the currency they accepted was actually from two undercover 

FBI agents as part of an undercover investigation of the money laundering network.343 

•	 In June 2023, in Massachusetts, a man was charged with money laundering in connection with 

an alleged unlicensed money transmitting business. The business was allegedly responsible for 

converting more than $1 million in cash to bitcoin - largely on behalf of scammers and drug dealers. 

The defendant used his vending machine business and encrypted messaging apps to secretly 

communicate with customers.344 

•	 In May 2023, in Florida, the president, chief executive officer, and founder of Aurae Lifestyle and 

Club Swann was charged with illegally operating an unlicensed money-transmitting business. The 

defendant provided fiat and virtual asset financial services to customers through his different lines of 

341 DOJ, “Statement Of U.S. Attorney Damian Williams On The Guilty Plea Of Ryan Salame, Former CEO Of FTX”, (September 7, 

2023), https://www.justice.gov/usao-sdny/pr/statement-us-attorney-damian-williams-guilty-plea-ryan-salame-former-ceo-ftx. 

342 Reuters, “Former Bankman-Fried lieutenant Salame pleads guilty to illegal campaign contributions,” ( September 8, 2023), 

https://www.reuters.com/legal/ex-ftx-executive-salame-due-us-court-expected-guilty-plea-2023-09-07/.

343 DOJ, “Paraguayan National Admits Unlicensed Money Transmitting in Connection with International Money Laundering 

Investigation”, (June 23, 2022), https://www.justice.gov/usao-nj/pr/paraguayan-national-admits-unlicensed-moneytransmitting-connection-international-money.

344 DOJ, “Danvers Man Arrested for Money Laundering and Operating Unlicensed Money Transmitting Business”, (June 12, 2023), 

https://www.justice.gov/usao-ma/pr/danvers-man-arrested-money-laundering-and-operating-unlicensed-money-transmitting. 
72 2024 ◆ National Money Laundering Risk Assessment

business. The conspiracy charge carries a fine up to $250,000.345

In May 2023, an individual was indicted in the Northern District of Georgia on one count of operating 

an unlicensed money transmitting business and 39 accounts of money laundering. According to the 

indictment and other information presented in court, the individual allegedly registered eight companies 

in Georgia, that were used to transmit over $150 million in a series of 1,300 transactions. The companies 

were purportedly headquartered in Buford, Georgia, and Dacula, Georgia but the companies did not 

generate typical business expenses or maintain employees. The money was used, in part, to purchase 

more than $65 million in overseas gold bullion. The individual, a Russian citizen who resides in North 

Georgia, allegedly transferred millions overseas from multiple bank accounts in Georgia. 346

In April 2023, four defendants were indicted for wire fraud, mail fraud, money laundering, transacting 

in criminal proceeds, tax evasion, and conducting an unlawful money transmitting business. The 

defendants used online romance scams and apartment rental scams to collect money from over 100 

victims, which totaled about $4.5 million in illicit funds. Afterward, one of the defendants used an 

international hawala system to transfer the illicit funds from his U.S. bank accounts to overseas accounts 

in Nigeria and Turkey.347

In July 2022, Ping Express U.S. LLC (Ping) – a money transfer company – pleaded guilty to failure to 

maintain an effective anti-money laundering program. According to court documents, Ping failed to 

file a single report over a three-year period, despite its requirement to report suspicious transactions to 

regulators. Ping also admitted that it conducted money transmission business in states in which it was 

not licensed to do so; the company claimed to have software that could detect and deter transmissions 

initiated in “unlicensed” states, but the software did not function. Additionally, the company transmitted 

more than $167 million overseas, including $160 million to Nigeria, of which it admitted it failed to seek 

sufficient details about the sources or purposes of the funds involved in the transactions or the customers 

initiating the transmissions. According to the HSI investigation, some of the funds Ping transmitted were 

illegally derived.348 

3. Securities Broker-Dealers and Mutual Funds

Broker-dealers and mutual funds have AML/CFT obligations under the BSA and their implementing 

regulations. In its 2024 Examination Priorities, the SEC reiterated that it will continue to focus on AML/

CFT programs to review whether broker-dealers and certain registered investment companies are: (1) 

appropriately tailoring their AML program to their business model and associated AML risks; (2) conducting 

independent testing; (3) establishing an adequate customer identification program, including for beneficial 

owners of legal entity customers; and (4) meeting their SAR filing obligations.349 The SEC also noted that 

it will review policies and procedures to oversee applicable financial intermediaries during examinations 

345 IRS, “Businessman charged with conspiring to own unlicensed money transmitting business”, (May 25, 2023), https://www.irs.gov/

compliance/criminal-investigation/businessman-charged-with-conspiring-to-own-unlicensed-money-transmitting-business.

346 DOJ, “Russian charged with money laundering and illegally transmitting more than $150 million”, (May 1, 2023), https://www.

justice.gov/usao-ndga/pr/russian-charged-money-laundering-and-illegally-transmitting-more-150-million.

347 IRS, “Four people indicted for roles in romance and internet frauds, illegal money transmitting” (April 13, 2023), https://www.irs.

gov/compliance/criminal-investigation/four-people-indicted-for-roles-in-romance-and-internet-frauds-illegal-money-transmitting.

348 DOJ, “Money Transfer Company Ping Pleads Guilty to Failure to Combat Money Laundering”, (July 7, 2022), https://www.justice.

gov/usao-ndtx/pr/money-transfer-company-ping-pleads-guilty-failure-combat-money-laundering.

349 SEC, “FISCAL YEAR 2024 EXAMINATION PRIORITIES”, https://www.sec.gov/files/2024-exam-priorities.pdf.
2024 ◆ National Money Laundering Risk Assessment 73

of certain registered investment companies. Additionally, the 2023 Examination Priorities highlighted the 

elevated risk for broker-dealers and certain registered investment companies due to the current geopolitical 

environment and the increased imposition of OFAC and international sanctions.350 

The Financial Industry Regulatory Authority (FINRA), a self-regulatory organization responsible for 

examining broker-dealers in the United States, notes a variety of emerging money laundering risk areas: 

manipulative trading in small cap initial public offerings (IPOs); sanctions evasion; and automated 

customer account transfer service (ACATS Fraud).351 Overall, recent enforcement actions by regulatory 

authorities indicate that broker-dealers and certain registered investment companies demonstrated 

failures linked to a lack of SAR filings, independent testing, or establishment and implementation of an 

AML program, among other issues. 

Case examples

•	 In September 2023, the SEC announced charges against registered investment adviser DWS 

Investment Management Americas Inc. (DIMA or DWS), a subsidiary of Deutsche Bank AG, for its 

failure to develop a mutual fund AML/CFT program. The SEC’s order found that DIMA caused mutual 

funds it advised to fail to develop and implement a reasonably designed AML program to comply 

with the BSA and applicable FinCEN regulations. The order also found that DIMA caused such mutual 

funds’ failure to adopt and implement policies and procedures reasonably designed to detect 

activities indicative of money laundering and to conduct AML/CFT training specific to the mutual 

funds’ business.352

•	 In July 2023, the SEC announced charges against Merrill Lynch, Pierce, Fenner & Smith (Merrill Lynch), 

and its parent company BAC North America Holding Co. (BACNAH) for failing to file hundreds of SARs 

from 2009 to late 2019. According to the SEC’s order, BACNAH assumed responsibility for Merrill Lynch’s 

SAR policies and procedures and for filing their SARs. Over the course of a decade, BACNAH improperly 

used a $25,000 threshold instead of the required $5,000 threshold for reporting suspicious transactions 

or attempted transactions where a suspect may have been seeking to use Merrill Lynch to facilitate 

criminal activity. As a result, BACNAH caused Merrill Lynch to fail to file hundreds of required SARs.353

•	 In March 2023, the SEC announced settled charges against Utah-based brokerage firm Cambria 

Capital, LLC, for failing to file SARs on numerous transactions. The SEC’s order finds that from March 

2017 through May 2019, Cambria failed to file SARs on suspicious activity that raised red flags 

identified in the firm’s anti-money laundering policies and procedures. According to the SEC’s order, 

most of the suspicious activity was associated with the liquidation of microcap securities, including 

the deposit of physical certificates; the liquidation of large quantities of microcap securities; and 

the immediate wire out of liquidation proceeds from customer accounts. In addition, the order also 

finds that in many of these transactions, the pattern of liquidations often occurred in combination 

with other red flags noted in Cambria’s policies and procedures, such as unusually large deposits; 

suspicious wire activity; or multiple accounts simultaneously trading in the same microcap security.354

350 SEC, “FISCAL YEAR 2023 EXAMINATION PRIORITIES”, https://www.sec.gov/files/2023-exam-priorities.pdf.

351 FINRA, “Regulatory Obligations and Related Considerations”, https://www.finra.org/rules-guidance/guidance/reports/2023-

finras-examination-and-risk-monitoring-program/aml.

352 See SEC, “Deutsche Bank Subsidiary DWS to Pay $25 Million for Anti-Money Laundering Violations and Misstatements Regarding 

ESG Investments” (Sept. 25, 2023), https://www.sec.gov/news/press-release/2023-194.

353 SEC, “SEC Charges Merrill Lynch and Parent Company for Failing to File Suspicious Activity Reports”, (July 11, 2023), https://

www.sec.gov/news/press-release/2023-128.

354 SEC, “SEC Charges Broker-Dealer with Failing to Report Suspicious Transactions”, (March 2, 2023), https://www.sec.gov/enforce/34-97020-s.
74 2024 ◆ National Money Laundering Risk Assessment

•	 In May 2022, the SEC announced charges against Wells Fargo Advisors for failing to file at least 34 

SARs in a timely manner between 2017 and October 2021. According to the SEC’s order, due to 

Wells Fargo Advisors’ deficient implementation and failure to test a new version of its internal AML 

transaction monitoring and alert system adopted in January 2019, the system failed to reconcile the 

different country codes used to monitor foreign wire transfers. As a result, Wells Fargo Advisors did 

not timely file at least 25 SARs related to suspicious transactions in its customers’ brokerage accounts 

involving wire transfers to or from foreign countries that it determined to be at high or moderate risk 

for money laundering, terrorist financing, or other illegal money movements. The order also found 

that beginning in April 2017, Wells Fargo Advisors failed to timely file at least nine additional SARs due 

to a failure to appropriately process wire transfer data into its AML transaction monitoring system in 

certain other situations.355 

4. Complicit Professionals 

As indicated in other sections of this report and previous NMLRAs, money laundering can be perpetrated 

by complicit insiders who abuse their positions of trust and access across professions and corporate 

structures to engage or facilitate illicit financial activity. Criminals continue to seek out complicit 

professionals, including those in the financial services sector. This is an acute problem because such 

complicit financial services professionals may undermine an institution’s AML/CFT compliance program. 

Case examples

•	 In January 2024, Peter McVey, who served as vice president and director of treasury services for a 

Missouri bank, pleaded guilty to failing to maintain an appropriate anti-money laundering program 

under the BSA. According to court documents, between April 2014 and July 2022, McVey assisted 

high-risk bank customers engaged in deceptive sweepstakes and short-term online loan activities 

in evading the bank’s AML/CFT controls. Specifically, McVey worked with other bank officials and 

customers to submit fraudulent CTR exemption forms to FinCEN and knowingly accepted forged bank 

forms from customers that permitted them to exceed applicable limits on daily transaction values. 

McVey also admitted that he did not follow KYC or SAR requirements.356

•	 In October 2023, a New Jersey-based employee of an international financial institution was arrested 

for accepting bribes to facilitate millions of dollars of money laundering.357 According to documents 

filed in this case and statements made in court, in early 2022, the employee exploited his position as 

a bank employee to facilitate money laundering activities in exchange for bribes. The employee used 

his position and inside access to open bank accounts in the names of shell companies with nominee 

owners. Those accounts were then used to launder narcotics proceeds, including to Colombia. The 

employee allegedly assisted the money laundering efforts by giving those who bribed him online 

access to the accounts, along with dozens of debit cards for the accounts that were later used to 

withdraw cash from ATMs in Colombia. The employee allegedly received thousands of dollars in 

bribes for each account he opened. The investigation has revealed that millions of dollars were 

laundered to Colombia through accounts opened by the employee since early 2022.

355 SEC, “SEC Charges Wells Fargo Advisors with Anti-Money Laundering Related Violations”, (May 20, 2022), https://www.sec.gov/

news/press-release/2022-85.

356 DOJ, “Former Banking Executive Pleads Guilty to Evading Anti-Money Laundering Regulations,” (January 17, 2024), https://www.

justice.gov/opa/pr/former-banking-executive-pleads-guilty-evading-anti-money-laundering-regulations.

357 DOJ, “Bank Insider Charged with Accepting Bribes to Facilitate Millions of Dollars of Money Laundering” (October 30, 2023), 

https://www.justice.gov/usao-nj/pr/bank-insider-charged-accepting-bribes-facilitate-millions-dollars-money-laundering.
2024 ◆ National Money Laundering Risk Assessment 75

•	 In March 2023, Stephen Roland Reyna, a former bank branch manager, was ordered to federal prison 

for helping a drug trafficking ring launder money through his bank. Reyna was the manager of a bank 

branch in Harlingen, Texas. While serving in that position and utilizing his position and knowledge 

of the banking industry, he assisted a drug trafficking organization in laundering $410,000 in drug 

sale proceeds. The organization would transport multi-kilogram cocaine loads from the Rio Grande 

Valley to northern states. Upon successful delivery, thousands of dollars in drug proceeds would 

then be dispersed through multiple bank accounts in the northern states. Reyna would coordinate 

with multiple co-conspirators in the Rio Grande Valley to launder the funds through their bank 

accounts. Reyna ensured the proceeds were successfully withdrawn from his branch in Harlingen. Coconspirators would frequently pay Reyna in cash right after he helped them get their drug proceeds 

out of the bank.358

Luxury and High-Value Goods

Purchases of high-value assets, such as real estate, precious metals, stones, jewels, art, automobiles and 

other types of vehicles are another strategy that criminals and TCOs use. By holding the value of their 

proceeds in a moveable commodity that later can be sold elsewhere, traffickers can convert the proceeds 

to currency in a different country. As noted above, CMLOs and other criminal organizations are known to 

export high-value goods purchased with criminal proceeds from the United States where they resell the 

goods for a profit. Sales documentation can provide a veil of legitimacy should a financial institution seek 

to understand the source of a client’s funds.

1. Real Estate

The U.S. real estate market is one of the largest and most valuable real estate markets in the world and 

is attractive to both domestic and international buyers. In 2023, the U.S. residential market is estimated 

to be valued at $47 trillion,359 and numerous U.S. cities including New York, Los Angeles, San Francisco, 

Dallas, Washington D.C., and Boston are amongst the top ten leading commercial real estate market hubs 

in the world.360 The relative stability of the U.S. real estate market and its historic reputation as a reliable 

store of long-term value has traditionally attracted both legitimate interest and those looking to find a 

reliable mechanism to launder money. Money laundering through real estate can negatively affect home 

prices, particularly since illicit actors seeking to integrate illicit funds may be willing to over or under 

pay for a property. According to a Commission in British Columbia, Canada, this activity can distort the 

market and disadvantage legitimate buyers and sellers.361

The financed portion of the U.S. real estate market is well-regulated and banks and non-bank lenders 

that issue residential and commercial mortgages and housing-related government-sponsored 

358 DOJ, “Local banker sent to prison for money laundering conspiracy”, (March 8, 2023), https://www.justice.gov/usao-sdtx/pr/

local-banker-sent-prison-money-laundering-conspiracy.

359 RedFin, “U.S. Housing Market Recovers the Nearly $3 Trillion It Lost, Hitting Record $47 Trillion in Total Value,” (Updated on 

August 31st, 2023), https://www.redfin.com/news/housing-market-value-hits-record-high-2023/.

360 Mordor Intelligence, U.S. Residential Real Estate Market Size & Share Analysis - Growth Trends & Forecasts (2023 - 2028), 

https://www.mordorintelligence.com/industry-reports/residential-real-estate-market-in-usa., 16 U.S. Metros Are in Top 30 

Largest Commercial Markets Globally in 2020; NYC is the Number One CRE Market, April 2021, https://www.nar.realtor/blogs/

economists-outlook/16-u-s-metros-are-in-top-30-largest-commercial-markets-globally-in-2020-nyc-is-the-number-one-cre.

361 See The Honourable Austin F. Cullen, Commission of Inquiry into Money Laundering in British Columbia, (June 3, 2022), https://

cullencommission.ca/files/reports/CullenCommission-FinalReport-Full.pdf.
76 2024 ◆ National Money Laundering Risk Assessment

enterprises, must establish AML/CFT programs and file SARs.362 However, an estimated 20 to 30 percent 

of residential real estate purchases in the United States are non-financed and not fully subject to 

comprehensive AML/CFT requirements.363 Since 2002, “persons involved in real estate closings and 

settlements” have received a temporary exemption from compliance as a financial institution from 

FinCEN and are exempt from instituting and maintaining comprehensive AML/CFT programs.364 Because 

of the key role real estate professionals play in closings and settlements, this is a critical vulnerability, 

and real estate professionals have been found to act as both witting and unwitting participants in 

money laundering schemes. Currently, under FinCEN’s Real Estate Geographic Targeting Order (GTO),365

in effect since 2016, title insurance companies involved in the non-financed purchase of residential real 

estate by a legal entity in select jurisdictions are required to report the legal entity’s beneficial ownership 

information. FinCEN has utilized this tool to gather information about vulnerabilities in the non-financed 

market, and the Real Estate GTOs currently cover 69 counties.366 However, GTOs are time-limited and 

location-specific and remain a temporary solution to information gaps. In December 2021, the Treasury 

issued an advance notice of proposed rulemaking (ANPRM) to solicit public feedback on how to address 

the risks associated with this sector. Building on this information and public feedback, FinCEN has an 

NPRM in OMB review that will continue the process of addressing money laundering vulnerabilities in the 

residential real estate sector.

Predicate offenses for money laundering through real estate continue to involve domestic and 

transnational activity, including narcotics trafficking, corruption, human trafficking, fraud, and sanctions 

evasion.367 Illicit actors often make non-financed purchases using legal vehicles or arrangements 

designed to obfuscate the purchaser’s identity and source of funds to integrate ill-gotten proceeds into 

the formal economy. 

Additional factors that make the U.S. real estate market vulnerable to money laundering include the 

ease through which illicit actors can anonymize their identity or the source of their funds through legal 

entities, legal arrangements, and pooled accounts like IOLTAs. Money laundering typologies include the 

use of nominees and gatekeepers368 to facilitate transfers without revealing the identity of the true owner 

362 31 USC § 5318 (g),(h).

363 “Anti-Money Laundering Regulations for Real Estate Transactions,” Federal Register (December 8, 2021), https://www.

federalregister.gov/documents/2021/12/08/2021-26549/anti-money-laundering-regulations-for-real-estate-transactions. See also 

FinCEN, “Statement of FinCEN Acting Director Himamauli Das before the House Committee on Financial Services,” (April 7, 2023).

364 67 FR 21110: FinCEN Interim final rule ‘Anti-Money Laundering Programs for Financial Institutions’; 31 CFR §1010.205(b)(v)

365 FinCEN, “FAQ: Geographic Targeting Orders Involving Certain Real Estate Transactions”, (April 21, 2023), https://www.fincen.gov/

sites/default/files/shared/508_FAQ_April2023REGTO.pdf.

366 FinCEN, “FinCEN Renews and Expands Real Estate Geographic Targeting Orders”, (October 20, 2023), https://www.fincen.gov/

news/news-releases/fincen-renews-and-expands-real-estate-geographic-targeting-orders-2.

367 CRS, Money Laundering in the real estate sector, (January 4, 2022), https://sgp.fas.org/crs/misc/IF11967.pdf.

368 The term “gatekeepers” refers to financial facilitators that have the “ability to furnish access (knowingly or unwittingly) to the 

various functions that might help the criminal with funds to move or conceal”. See FATF Report on Money Laundering Typologies 

2000-2001, February 1, 2001, available at http://www.fatf-gafi.org/dataoecd/29/36/34038090.pdf. The Treasury Department has 

used the term gatekeeper in prior risk assessments and public remarks. See, e.g., Remarks by Assistant Secretary for Terrorist 

Financing and Financial Crimes Elizabeth Rosenberg at The Brookings Institution, September 7, 2022, available at https://home.

treasury.gov/news/press-releases/jy0938 (observing that the 2022 National Money Laundering Risk Assessment examined 

concerns around “financial facilitators – sometimes known as gatekeepers – that move...dirty money along”). The term’s 

application to illicit finance was coined at the 1999 meeting of the G-8 Finance Ministers. See Ministerial Conference of the G-8 

Countries on Combating Transnational Organized Crime (October 19-20, 1999), Communique, available at http://www.justice.

gov/criminal/cybercrime/g82004/99MoscowCommunique.pdf. 
2024 ◆ National Money Laundering Risk Assessment 77

or source of funds for the property, the use of all-cash payments to avoid the AML/CFT scrutiny that 

comes with financing, the use of loan-back mortgage schemes to reintegrate illicit proceeds into the licit 

economy, over or under paying for real estate, and the successive transfer of real estate at a higher value 

or between legal entities and arrangements or natural persons, sometimes for no consideration.369

As highlighted in FinCEN’s January 2023 alert on “Potential U.S. Commercial Real Estate Investments by 

Sanctioned Russian Elites, Oligarchs and their Proxies,” the commercial real estate sector is also exposed 

to risk, as it is common to use purpose-built legal entities, indirect ownership chains, multiple types of 

ownership and financing options, and the presence of multiple parties to each commercial real estate 

transfer, each of which can obscure an owner’s identity and source of funds.370

Further, the anonymity of ownership in the residential and commercial real estate markets presents 

both a money laundering and a national security risk because it can help facilitate sanctions evasion, 

corruption, and even espionage. A 2016 GAO report found that ownership information for 1406, or 

one-third of high-security General Services Administration (GSA)-leased commercial real estate spaces 

was unavailable. The report found that some of these spaces were rented by foreign companies based 

in Canada, China, Israel, Japan, and South Korea, all countries that may have an interest in obtaining 

information about U.S. government-owned facilities. Beginning in 2018, a series of actions culminating 

with the passage of the Secure Federal Leases from Espionage and Suspicious Entanglements Act of 2020 

requires collecting foreign ownership information, including beneficial ownership information of foreignowned high-security commercial real estate leased by the GSA.371

Case examples

•	 In April 2023, Robert Wise, a New York-based attorney, pleaded guilty to paying on behalf of 

sanctioned Russian oligarch, Viktor Vekselberg, nearly four million dollars to help him maintain his 

ownership of six properties in the United States. The properties in question were (i) two apartments 

on Park Avenue in New York, New York, (ii) an estate in Southampton, New York, (iii) two apartments 

on Fisher Island, Florida, and (iv) a penthouse apartment also on Fisher Island, Florida. The properties 

were all acquired using a series of shell companies prior to Vekselberg’s OFAC designation. Before 

his designation, accounts associated with Vekselberg sent 90 wire payments totaling $18.5 million 

to Wise’s IOLTA. After Vekselberg’s designation as an SDN, Wise’s IOLTA started to receive payments 

from an account in the Bahamas held in the name of a shell company, Smile Holding Ltd., that was 

controlled by Vekselberg’s longtime associate, Vladimir Voronchenko and from another Russian bank 

account held by a Russian national related to Voronchenko. Between approximately June 2018 and 

March 2022, Wise’s IOLTA received around 25 wire transfers totaling $3.8 million. Wise used these 

funds to maintain and service Vekselberg’s properties knowing that he was violating ongoing U.S. 

sanctions.372

369 Lakshmi Kumar, Kaisa de Bel, Global Financial Integrity, August 2021, Acres of Money Laundering, https://34n8bd.p3cdn1.

secureserver.net/wp-content/uploads/2021/08/Acres-of-Money-Laundering-Final-Version-2021.pdf?time=1698916839.

370 FinCEN, “Potential U.S. Commercial Real Estate Investments by Sanctioned Russian Elites, Oligarchs and their Proxies”, (January 

25, 2023), https://www.fincen.gov/sites/default/files/shared/FinCEN%20Alert%20Real%20Estate%20FINAL%20508_1-25-23%20

FINAL%20FINAL.pdf. 

371 Secure Federal Leases from Espionage and Suspicious Entanglements Act, Public Law 116–276, 134 Stat. 3362 (2020) (the 

“Secure Federal LEASEs Act”).

372 DOJ, “New York Attorney Pleads Guilty to Conspiring to Commit Money Laundering to Promote Sanctions Violations by 

Associate of Sanctioned Russian Oligarch,” (April 25, 2023), https://www.justice.gov/opa/pr/new-york-attorney-pleads-guiltyconspiring-commit-money-laundering-promote-sanctions. 
78 2024 ◆ National Money Laundering Risk Assessment

•	 In January 2023, a Miami federal grand jury indicted a Venezuelan Supreme Court justice for 

conspiring to launder bribes he received in exchange for using his position to resolve civil and 

criminal cases in Venezuela to favor bribe payers. It is alleged that the justice received more than $10 

million in bribes, typically from Venezuelan contractors who had received contracts from Venezuelan 

government-owned entities. The individual allegedly used the bribe proceeds to purchase or 

renovate real estate around the world, including a villa in Tuscany, Italy, for 2.4 million euros, a luxury 

villa in La Romana, Dominican Republic, for $1.5 million; a building in Las Mercedes in Caracas, 

Venezuela, for $1.3 million, and an apartment in Miami for $1.3 million. He also used the bribe 

proceeds for cars, luxury goods, expensive travel, and musical entertainment.373

•	 In December 2022, a Russian intelligence agent designated by OFAC was charged with conspiracy to 

violate the International Emergency Economic Powers Act, bank fraud conspiracy, money laundering 

conspiracy, and four counts of money laundering in connection with the purchase and maintenance 

of two condominiums in Beverly Hills, California. As alleged in the indictment, beginning in 2013, 

the individual and a co-conspirator devised a scheme to purchase and maintain two luxury 

condominiums in Beverly Hills while concealing his interest in the transactions from U.S. financial 

institutions. Specifically, the individual used the services of a corporate nominee, a multi-tiered 

structure of California-based shell companies, and numerous U.S. bank and brokerage accounts. 

Using this framework, the individual wired approximately $3.92 million to the nominee from overseas 

accounts in Latvia and Switzerland belonging to companies registered in the British Virgin Islands. 

The suspect then used the money to pay $3.2 million in cash for real estate in the name of a corporate 

entity set up by the nominee, with the individual having no visible affiliation with the purchase. The 

remaining $800,000 was invested in a brokerage account maintained by the nominee and used to pay 

expenses for the condominiums.374

•	 In November 2022, an individual in Delaware was sentenced to 45 years in prison for conspiracy to 

commit money laundering, conspiracy to distribute cocaine, and various other drug and money 

laundering offenses. According to court records and evidence presented at trial, between 2009 

and 2017, the individual and his wife laundered over a million dollars in drug proceeds through 

the purchase of real estate in Delaware and Pennsylvania using their company, Zemi Property 

Management. They deposited drug money into several different bank accounts – and asked their 

friends and family members to do the same – and then used those funds to buy cashier’s checks that 

funded the property purchases.375

2. Precious Metals, Stones, and Jewels

The precious metals, stones, and jewels (PMSJs) industry in the United States presents varying money 

laundering risks.376 Persons involved include large-scale mining interests, artisanal and small-scale 

mining, traders, refiners, manufacturers, designers, retailers, and secondary markets such as auction 

373 DOJ, “Former President of Venezuelan Supreme Court Indicted on Charges of Accepting Bribes to Resolve Court Cases,” 

(January 26, 2023), https://www.justice.gov/usao-sdfl/pr/former-president-venezuelan-supreme-court-indicted-chargesaccepting-bribes-resolve. 

374 DOJ, “Russian Intelligence Agent Charged with Fraud and Money Laundering in Connection with Purchase and Use of Luxury 

Beverly Hills Real Estate,” https://www.justice.gov/usao-edny/pr/russian-intelligence-agent-charged-fraud-and-moneylaundering-connection-purchase-and.

375 DOJ, Delaware Man Sentenced to 45 years in Federal Prison for Trafficking over 150 Kilograms of Cocaine and Laundering 

the Proceeds, (November 23, 2022), https://www.justice.gov/usao-de/pr/delaware-man-sentenced-45-years-federal-prisontrafficking-over-150-kilograms-cocaine-and.

376 U.S. Bureau of Statistics, Occupational Employment and Wage Statistics, (May 2022), https://www.bls.gov/oes/current/

oes519071.htm. 
2024 ◆ National Money Laundering Risk Assessment 79

houses and pawnshops.377 “Dealers” of PMSJs - or a person who both buys and sells covered goods - are 

required to develop and implement AML/CFT programs reasonably designed to prevent the dealer from 

being leveraged to facilitate money laundering and terrorist financing if they meet a $50,000 annual 

threshold for both the purchase and sale of PMSJs in the preceding calendar or tax years, with some 

exceptions for those who sell primarily to the U.S. public.378 While PMSJ dealers are subject to some BSA 

reporting requirements, vulnerabilities for bad actors seeking to launder their illicit proceeds remain.379

PMSJs are an attractive money laundering vehicle due to their high value, high value to low mass ratio, 

stable pricing, anonymity, and exchangeability for other commodities. Moreover, the PMSJ industry is 

a cash-intensive trade, allowing bad actors to disguise their involvement.380 PMSJ pipelines, such as the 

cutting and polishing of diamonds or the refinement of gold, are extensive, increasing opportunities for 

money laundering at different stages. Criminals may view PMSJs as a useful laundering tool allowing them 

to conceal illicit wealth without increased scrutiny, because the underlying commodity is legal. From a 

smuggling perspective, PMSJs can be transported across borders by couriers on their person, hidden in 

other items, or melted down into ordinary objects, making it difficult for law enforcement and customs 

personnel to detect the criminal activity.381 Once the PMSJs enter the United States, criminals sell the items 

to refineries or trade the items through illicit shell or front companies using falsified documents.

Case Examples

•	 In June 2023, Eduard Ghiocel and Floarea Ghiocel pleaded guilty to laundering $1.4 million in 

proceeds from robberies, scams, and fraudulent employment claims.382 Among other actions, the pair 

stole jewelry from elderly communities in San Diego and pawned the items in jewelry stores in San 

Francisco. The Ghiocels wired the cash via an MSB to Romania in addition to shipping gold bars, gold 

coins, and luxury vehicles bought with the stolen proceeds to Romania. These efforts were in support 

of an international crime ring that targeted elderly victims.

•	 In April 2023, nine individuals were federally charged with conspiring to defraud the United States, 

evade U.S. sanctions laws, and money laundering. The conspirators used a web of business entities 

to obtain valuable artwork from U.S. artists and to secure U.S.-based diamond grading services for 

the benefit of Nazem Ahmad, who the U.S. sanctioned for being a financier for Hizballah. Ahmad was 

involved in the international trade of diamonds, real estate development, and the global art market. 

The defendants used U.S.-based Diamond Grading Company-1 to affect the sale prices of diamonds, 

377 FinCEN, FAQs: Interim Final Rule - Anti-Money Laundering Programs for Dealers in Precious Metals, Stones, or Jewels, (May 3, 

2005), https://www.fincen.gov/resources/statutes-regulations/guidance/frequently-asked-questions-0. 

378 Federal Register, Financial Crimes Enforcement Network; Anti-Money Laundering Programs for Dealers in Precious Metals, 

Stones, or Jewels, (June 9, 2005), https://www.federalregister.gov/documents/2005/06/09/05-11431/financial-crimesenforcement-network-anti-money-laundering-programs-for-dealers-in-precious-metals.

379 FATF, Money laundering and terrorist financing through trade in diamonds, (October 2013), https://www.fatf-gafi.org/content/

dam/fatf-gafi/reports/ML-TF-through-trade-in-diamonds.pdf.coredownload.pdf.https://www.fatf-gafi.org/en/publications/

Methodsandtrends/Ml-tf-through-trade-in-diamonds.html.

380 UN CTED, “Concerns over the Use of Proceeds from the Exploitation, Trade, and Trafficking of Natural Resources for the 

Purposes of Terrorism Financing”, (June 2022), https://www.un.org/securitycouncil/ctc/sites/www.un.org.securitycouncil.ctc/

files/files/documents/2022/Jun/cted_cft_trends_alert_june_2022.pdf.

381 CBP, Black Gold Seized by CBP Officers in Florida,” (October 8, 2021), https://www.cbp.gov/newsroom/local-media-release/

black-gold-seized-cbp-officers-florida.

382 DOJ, Romanian Citizens Plead Guilty to Laundering $1.4 Million in Proceeds from Jewelry Thefts and Covid Fraud, (June 20, 2023), 

https://www.justice.gov/usao-sdca/pr/romanian-citizens-plead-guilty-laundering-14-million-proceeds-jewelry-thefts-and-covid. 
80 2024 ◆ National Money Laundering Risk Assessment

increasing the profit made from the diamonds. By using a network of corporate entities and 

individuals to hide Ahmad’s involvement, the group attempted to evade U.S. sanctions.383

•	 In May 2022, a Russian national was indicted for operating an unlicensed money transmitting 

business and money laundering.384 The individual used the U.S. banking system to transmit more 

than $150 million. This money was used, in part, to purchase more than $65 million in overseas 

gold bullion. The individual purchased the gold bullion in two ways. First, he transferred money 

from his business bank accounts to the Singapore Precious Metals Exchange. Second, money was 

transferred to the Scottsdale Mint in Arizona then to the Singapore Precious Metals Exchange.385

These transactions are linked to the assets of “Russian oligarchs with potential ties to the Russian 

government,” indicating the accused individual acted as a potential facilitator for sanctions evasion 

related to the Russian invasion of Ukraine.

3. Update on Art

As demonstrated in the Treasury’s detailed study conducted in 2022,386 the art market is susceptible 

to abuse. During the reporting period there was little change in its risk profile. The high-dollar values 

of single transactions, the ease of transportability of works of art (including across borders), the longstanding culture of privacy in the market, and the increasing use of art as an investment or financial asset 

all contribute to making high-value art vulnerable to money laundering. Further, LEAs can face challenges 

investigating money laundering through art due to the subjectivity of the pricing of artworks, the crossborder nature of the market, and having less art market expertise across competent authorities.

Case Examples

•	 In April 2023, nine individuals were indicted for conspiring to defraud the United States and foreign 

governments, evade U.S. sanctions and customs laws, and launder money by securing goods 

and services for the benefit of one of the defendants, a sanctioned individual. According to court 

documents, the co-conspirators relied on a complex web of entities and individuals to obtain 

valuable artwork from U.S. artists and art galleries while hiding the involvement of the sanctioned 

individual. The network’s acquisition and sale of high-value artwork served as tools for sanctions 

evasion and “layering,” or disconnecting proceeds from the activities that generated them.387

383 DOJ, OFAC-Designated Hizballah Financier and Eight Associates Charged with Multiple Crimes Arising Out of Scheme to Evade 

Terrorism-Related Sanctions,” (April 18, 2023), https://www.justice.gov/usao-edny/pr/ofac-designated-hizballah-financier-andeight-associates-charged-multiple-crimes.

384 DOJ, Russian Charged with Money Laundering and Illegally Transmitting More than $150 Million,” (May 1, 2023), https://www.

justice.gov/usao-ndga/pr/russian-charged-money-laundering-and-illegally-transmitting-more-150-million. 

385 U.S. District Court for the Northern District of Georgia, United States v. Feliks Medvedev, Criminal Indictment," Case 

1:22-cr-00184-TWT-CMS, (May 17, 2022), https://storage.courtlistener.com/recap/gov.uscourts.gand.303502/gov.uscourts.

gand.303502.1.0.pdf. 

386 Treasury, Study of the Facilitation of Money Laundering and Terror Finance Through the Trade in Works of Art, (February 2022), https://

home.treasury.gov/system/files/136/Treasury_Study_WoA.pdf.

387 Treasury, Treasury Disrupts International Money Laundering and Sanctions Evasion Network Supporting Hizballah Financier, (April 18, 

2023), https://home.treasury.gov/news/press-releases/jy1422.
2024 ◆ National Money Laundering Risk Assessment 81

4. Automobiles

The purchase of high-end vehicles with proceeds of crime, particularly drug proceeds, has been a longstanding money laundering typology. The use of car dealerships, vehicle auctions and international 

car shipping companies has also been used to launder and transmit the proceeds of romance scams, 

pandemic unemployment fraud, and other fraudulent schemes.388

Case examples

•	 In November 2022, Daniel Fruits was sentenced to six years in federal prison after pleading guilty to 

wire fraud and money laundering. According to court documents, Fruits, who was hired to manage 

and run a Greenwood, Indiana-based trucking company, defrauded his employer out of more than 

$14 million over a 4.5-year period. From January 2015 through June 2019, a Kentucky-based legal 

entity invested over $14 million into the trucking company. Fruits used those embezzled funds 

to purchase real estate; several vehicles, including two Ferraris and a Corvette; farm equipment 

including a horse trailer; a show horse; expensive jewelry, including multiple Rolex watches; firearms; 

private jet flights; and high-end escort services.389

•	 In May 2022, Stephen Mudd, Jr. was convicted and sentenced for conspiring to commit money 

laundering by assisting in the unlawful purchase of automobiles with criminal proceeds and was 

sentenced for a financial crime involving the use of a nominee to purchase automobiles to conceal 

the source of the funds used. While working as a car salesman, Mudd helped falsify employment 

and bank account information to facilitate the purchase of automobiles with criminal proceeds—

with either the proceeds providing a cash down payment or the means of monthly payments on an 

automobile loan from a financial institution. Mudd knew that lenders would not extend financing 

without proof of a legitimate source of income.390

•	 In March 2022, James Pinson, the owner of a used car dealership, was convicted of three counts 

of wire fraud, six counts of mail fraud, one count of aggravated identity theft, and two counts of 

conspiring to commit money laundering. Evidence at trial revealed that to carry out his scheme, 

Pinson bought pick-up trucks at wholesale prices at auction, obtained hundreds of copies of 

Kentucky and West Virginia residents’ driver’s licenses, fraudulently titled the trucks in the name of 

those residents, and fraudulently induced the auto manufacturer to repurchase the trucks at 150 

percent of their retail value. The auto manufacturer issued 350 checks in the names of individual false 

owners between 2013 and 2015. Pinson forged signatures on all 350 checks and deposited them into 

his bank account.391

388 Any person in a trade or business who receives more than $10,000 in cash in a single transaction or in related transactions must 

file a Form 8300. By law, in this context, a "person" is an individual, company, corporation, partnership, association, trust or 

estate. See IRS Form 8300 and Reporting Cash Payments of Over $10,000, https://www.irs.gov/businesses/small-businessesself-employed/form-8300-and-reporting-cash-payments-of-over-10000.

389 IRS, Greenwood man sentenced to six years in federal prison for embezzling $14 million from his former employer to fund his 

lavish lifestyle available at IRS-CI, (November 29, 2022), https://www.irs.gov/compliance/criminal-investigation/greenwoodman-sentenced-to-six-years-in-federal-prison-for-embezzling-14-million-from-his-former-employer-to-fund-his-lavish-lifestyle.

390 IRS, Four men convicted of federal financial crimes involving money laundering, structuring, wire fraud, and bank fraud, 

(June21, 2022), https://www.justice.gov/usao-wdky/pr/four-men-convicted-federal-financial-crimes-involving-moneylaundering-structuring-wire.

391 DOJ. Two Men Sentenced to Prison for Roles in $4.3 Million Fraud and Money Laundering Scheme, (March 3, 2022), https://www.

justice.gov/usao-sdwv/pr/two-men-sentenced-prison-roles-43-million-fraud-and-money-laundering-scheme#:~:text=Money 

percent20Laundering percent20Scheme-,Two percent20Men percent20Sentenced percent20to percent20Prison percent20for 

percent20Roles percent20in,Fraud percent20and percent20Money percent20Laundering percent20Scheme&text=CHARLESTON 

percent2C percent20W.Va.,a percent20Toyota percent20Customer percent20Support percent20Program.
82 2024 ◆ National Money Laundering Risk Assessment

Casinos and Gaming

The recent growth of gaming activity at brick-and-mortar casinos and online gaming platforms has 

raised the risk profile for U.S. casinos and gaming activity in the United States. Casinos and card clubs 

are considered financial institutions subject to BSA requirements if they are licensed to do business as a 

casino or card club (by the relevant state, tribal, or territorial authority) and have gross annual gaming 

revenues in excess of $1,000,000.392 The gaming industry has expanded considerably in recent years 

with increases in commercial revenue and an influx of new market participants, such as online gaming 

platforms (see Special Focus Section on Online Gaming below). 

The sophistication and resourcing of regulatory and supervisory regimes for casinos and card clubs vary 

considerably across federal, state, tribal, and territorial levels. This variation may create opportunities 

for jurisdictional arbitrage in the casino sector. The risk profiles of casinos and card clubs also vary 

considerably, owing to their differences in size, volume of cash flow, location, customers and clientele, 

and range of games and services offered, among other factors. There are also continuing challenges 

with AML/CFT supervision of some gaming operators - including online platforms, firms offering “games 

of skill” (as opposed to “games of chance”), and third-party operators that may engage in casino-like 

activities but that are not necessarily subject to BSA obligations because they are not licensed as casinos. 

The casino and gaming industry has expanded considerably in recent years with increases in commercial 

revenue and an influx of new market participants, such as online gaming platforms. There are roughly 

1,500 casinos and card clubs in the United States and commercial revenue from casino gaming and 

sports betting reached a record $60 billion in 2022.393 Casino and gaming activity is increasingly dispersed 

across the United States as a growing number of state, tribal, and territorial jurisdictions legalize and 

operationalize gaming activity, including online and sports betting. The jurisdictions with the largest 

commercial casino markets by revenue are Las Vegas (Nevada) and Atlantic City (New Jersey).394 Casinos 

and card clubs in these regions are also among the most highly regulated and file among the most SARs 

in the country.395

Those BSA requirements include AML program obligations, including written procedures, internal 

controls, training of personnel, a designated compliance officer, and independent testing, among other 

requirements.396 Both casinos and card clubs are also subject to obligations relating to general and 

gaming-specific SAR and CTR filing as well as recordkeeping, and, other requirements.397 In addition to 

federal AML/CFT reporting obligations under the BSA, some states, such as Nevada, require additional 

state-level reporting by casinos and gaming operators. FinCEN supervises casinos and card clubs and 

delegated examination authority belongs to the IRS SB/SE.

392 IRS-CI, ITG FAQ #1 Answer-When are casinos considered to be financial institutions subject to requirements of the Bank Secrecy 

Act (Title 31)?, https://www.irs.gov/government-entities/indian-tribal-governments/itg-faq-1-answer-when-are-casinosconsidered-to-be-financial-institutions-subject-to-requirements-of-the-bank-secrecy-act-title-31.

393 American Gaming Association, “State of The States 2023”, (May 2023), https://www.americangaming.org/wp-content/

uploads/2023/05/AGA-State-of-the-States-2023.pdf. 

394 American Gaming Association, “State of The States 2023”, (May 2023), https://www.americangaming.org/wp-content/

uploads/2023/05/AGA-State-of-the-States-2023.pdf. 

395 FinCEN, SAR Filings by Industry, (July 2023), https://www.fincen.gov/sites/default/files/shared/Section percent201 percent20- 

percent20Casino percent20and percent20Card percent20Club percent20SARs.xlsx

396 See 31 CFR Part 1021, Subpart B, https://www.ecfr.gov/current/title-31/subtitle-B/chapter-X/part-1021.

397 See 31 CFR Part 1021, Subparts C and D, https://www.ecfr.gov/current/title-31/subtitle-B/chapter-X/part-1021.
2024 ◆ National Money Laundering Risk Assessment 83

The risks in this sector involve not only compliance issues by casinos and card clubs regarding their 

respective AML/CFT obligations under the BSA, but also the misuse of casinos by foreign illicit actors 

(especially CMLOs and Junket Operators) and uneven supervision. CMLO threat actors have used “mirror 

trades” (See CMLO section) as a feature of casino junkets.398 Casino junkets attract high-net-worth 

individuals, such as those who want to move money out of mainland China and enable large transfers of 

funds between different jurisdictions. We discuss the risks associated with online gaming activities, including 

sports betting and offshore gaming platforms in the subsequent special focus section on those issues. 

Law enforcement reporting and criminal prosecutions suggest continuing money laundering risks 

associated with placing illicit proceeds in casinos. These are often earned from illegal gambling, fraud, 

CMLO-related activity, and the proceeds of drug, arms, and human trafficking. Recent SAR filing data 

suggests this activity may involve chip walking, structuring, and the large deposit or withdrawal of funds 

with minimal gaming activity. For example, in 2022 casinos and card clubs filed a record number of SARs 

relating to chip walking and a six-year record of SARs relating to structuring and minimal gaming with 

large transactions.399 Other methodologies may include the use of money-mule networks, the misuse 

of line-of-credit services to avoid CTR filings, the misuse of private gaming salons, and chip-walking in 

dominations lower than what casinos generally track (i.e., using chips valued at less than $5,000). 

According to federal and state law enforcement sources, some foreign illicit actors engage in intraproperty transfers, wherein they deposit funds at a foreign branch of a U.S.-based casino property and 

then access an equivalent amount of funds at a U.S. branch of that same casino property - either in cash, 

chips, or through a line-of-credit vehicle. Using this arrangement, actors may ultimately withdraw the 

funds (plus any additional gambling winnings) at either the United States or the foreign branch of the 

casino, potentially bypassing both foreign currency controls and BSA reporting obligations.

There are continuing concerns regarding covered casinos’ and card clubs’ compliance with relevant AML/

CFT obligations. Federal and state law enforcement underscored the extent to which covered casinos 

and card clubs may be fulfilling their required obligations, including SAR and CTR filing, but not taking 

other forms of proactive risk-based action against suspected money laundering. This approach may be 

indicative of casinos and card clubs seeking to attract, retain, and accommodate wealthy patrons, which 

may include illicit actors, despite money laundering concerns or their inability to determine sources of 

funds. Nonetheless, such practices can facilitate money laundering and other illicit activities occurring 

through licensed U.S. casinos. The sophistication and resourcing of regulatory and supervisory regimes 

for casinos varies considerably across federal, state, tribal, and territorial levels. This variation may create 

opportunities for jurisdictional arbitrage in the casino sector. 

Case Examples

•	 In October 2022, six individuals were indicted for drug, gun, and money laundering crimes by a 

federal grand jury. According to the indictment, the drug conspiracy occurred between August 2020 

and June 2022 and involved more than 400 grams of fentanyl and 500 grams of methamphetamine. 

The charged money laundering offenses included the transportation of large amounts of cash, the 

purchase of casino chips and placement of sportsbook bets, buying expensive jewelry, and leasing 

398 See FinCEN, Frequently Asked Questions on Casino Recordkeeping, Reporting, and Compliance Program Requirements, https://

www.fincen.gov/resources/statutes-regulations/guidance/frequently-asked-questions-casino-recordkeeping-reporting. 

399 FinCEN, SAR Filings by Industry, (July 2023), https://www.fincen.gov/sites/default/files/shared/Section percent201 percent20- 

percent20Casino percent20and percent20Card percent20Club percent20SARs.xlsx.
84 2024 ◆ National Money Laundering Risk Assessment

a luxury apartment and vehicle, all using the proceeds of drug trafficking. The indictment alleges, 

among other transactions, that $51,000 in cash was seized from a checked bag belonging to one 

individual; that two other individuals purchased casino chips and placed sportsbook bets totaling 

over $540,000 and later cashed out more than $445,000; and that members of the group spent tens of 

thousands of dollars on Rolex and Audemars Piguet watches and a diamond and gold chain.400

•	 In July 2022, Demetrius Burt Catching was sentenced to 93 months in federal prison after pleading 

guilty to the distribution of marijuana and money laundering. According to the plea agreement, 

Catching admitted to distributing marijuana in the Lexington area and then taking the proceeds from 

the marijuana sales and placing large sports bets and wagers at various Indiana casinos. According 

to the plea, after Catching was banned from one of the casinos, he recruited others to go in his place 

to make his wagers and bets. Cash from the wagers was deposited in bank accounts in his name. 

Catching was also ordered to forfeit approximately $215,000 in proceeds from his drug trafficking and 

money laundering offenses, and ordered to serve an additional, consecutive term of 55 months for 

supervised release violations on previous convictions.401

•	 In May 2022, the California Gambling Control Commission issued a stipulated settlement decision 

and order for Lucky Chances Casino, located in Colma, California. As part of the settlement 

decision, the commission required the Casino to perform the following actions, among others: (1) 

fully comply with the BSA and its implementing regulations, (2) report to the Bureau of Gambling 

Control any examination by FinCEN and IRS any examination regarding the Casino’s compliance 

with the implementation of the BSA (3) implement and maintain an effective AML program; (4) 

employ a compliance officer to ensure compliance with the BSA; (5) and hire a qualified independent 

consultant to review the effectiveness of the Casino’s AML program.402

1. Special Focus: Online Gaming

In recent years, legal and technological developments have led to substantial growth in online gaming 

activity in the United States. While online gaming can take a number of forms, of particular illicit finance 

concern are the emergent money laundering risks associated with sports betting, offshore sports betting, 

and virtual asset gambling. These activities bear many of the same risks associated with traditional 

gaming at brick-and-mortar casinos. However, there are unique risks stemming from the size and rapid 

growth of these sectors, uneven or inadequate regulation, and anonymity afforded by online gaming. 

a) Sports Betting

Since the U.S. Supreme Court overturned a broad prohibition on regulated sports betting in 2018, U.S.-

based persons have collectively wagered more than $220 billion in legal sports bets as of 2023, nearly 

half of which occurred between 2022 and 2023.403 Legal sports betting in the United States occurs across 

numerous settings, including at in-person sportsbooks (which can be co-located on casino premises) 

400 IRS-CI, October 27, 2022, Six Detroiters charged with drug, gun, and money laundering crimes, https://www.irs.gov/compliance/

criminal-investigation/six-detroiters-charged-with-drug-gun-and-money-laundering-crimes.

401 IRS-CI, July 25, 2022, Jessamine County man sentenced to 93 months for distribution of marijuana and money laundering, 

https://www.irs.gov/compliance/criminal-investigation/jessamine-county-man-sentenced-to-93-months-for-distribution-ofmarijuana-and-money-laundering.

402 CGCB, “Stipulated Settlement, Decision and Order in the Matter of Lucky Chances Inc.,” Case No.: CGCC 2022-0210-14, (May 31, 

2022), http://www.cgcc.ca.gov/documents/adminactions/decision/Lucky_Chances_Stipulated_Settlement_App-32323.pdf. 

403 American Gaming Association, Assessing Shifts in the Sports Betting Market 5 Years Post-PASPA, (May 9, 2023), https://www.

americangaming.org/wp-content/uploads/2023/05/AGA_PASPA_LSBResearch.pdf. 
2024 ◆ National Money Laundering Risk Assessment 85

and at sporting events, such as stadiums and racetracks. However, most sports betting activity in the 

United States occurs via online or mobile gaming platforms. These platforms generally operate either (1) 

as third-party operators through licensing arrangements with BSA-covered casinos that are licensed at 

the state, tribal, or territorial level; or (2) by acquiring online gaming operator licenses or permits directly 

from relevant authorities without an affiliation with a brick-and-mortar, BSA-covered casino. 

Both models create AML/CFT compliance challenges and opportunities to launder illicit proceeds. For 

example, online gaming platforms may not have robust AML/CFT controls; they may not be affiliated 

with a BSA-covered casino or entity; they may be unaware of any BSA obligations to which they may 

be subject as an extension of any licensing arrangement with a casino; and a BSA-covered casino could 

have limited visibility into potential criminal activity occurring on its third-party operator’s services. In 

some instances, casinos and gaming operators that do not meet the BSA’s definition of a casino (often 

due to a licensing requirement) may be operating as money transmitters.404 These factors, in addition to 

the volume of the betting activity, the rapid growth of the sector, and the lack of uniform requirements 

or regulations of these services across state, territorial, and tribal jurisdictions, present significant and 

increasing money laundering risks. 

There are numerous types of money laundering methodologies and schemes associated with sports 

betting, many of which resemble traditional casino-based criminal schemes. For example, users may 

deposit the proceeds of crime into betting accounts and subsequently withdraw funds after minimal 

betting activity, disguising the illicit funds as betting earnings. These schemes also demonstrate how 

criminal actors abuse U.S. financial institutions. Confederates can also collude on one or a series of bets, 

working together to hide the illicit origin of the source of funds. 

In August 2023, a Georgia man was charged with money laundering and other crimes for a scheme to 

misdirect more than $30 million from faith-based charities and individual donors, originally intended 

for religious causes, for personal gain.405 In his misuse of the funds, the man deposited approximately 

$1 million of the misdirected funds into an online sports gambling website. In 2021, New Jersey state 

authorities arrested a man for a fraudulent scheme involving his alleged use of stolen identities to create 

and fund more than 1,800 online gambling accounts through Atlantic City’s online gaming providers.406

As part of the scheme, he also allegedly created fraudulent bank accounts using the victims’ stolen 

identities. He transferred funds from fraudulent unemployment benefits claims to those accounts, later 

making cash withdrawals.407

404 See 31 CFR 1010.100(t)(5)(i) and 31 CFR 1010.100(ff)(5)(i)(A).

405 DOJ, Fugitive charged in scheme that misdirected millions in charitable donations intended for Christian outreach in China, 

(August 1, 2023), https://www.justice.gov/usao-sdga/pr/fugitive-charged-scheme-misdirected-millions-charitable-donationsintended-christian.

406 State of New Jersey, State Police Arrest Man Who Stole Identities to Fund Online Gambling Accounts, (June 8, 2021), https://

www.nj.gov/njsp/news/2021/20210608.shtml.

407 State of New Jersey, State Police Arrest Man Who Stole Identities to Fund Online Gambling Accounts, (June 8, 2021), https://

www.nj.gov/njsp/news/2021/20210608.shtml.
86 2024 ◆ National Money Laundering Risk Assessment

b) Offshore Online Gaming

There is also a significant amount of online gaming activity occurring through offshore operators. 

Industry reporting suggests that Americans wager an estimated $64 billion annually on illegal or offshore 

gaming platforms, accounting for roughly 40 percent of the U.S. sports betting market.408 Many illegal 

sports betting platforms are based in foreign jurisdictions with deficient regulatory frameworks yet 

actively advertise to U.S. consumers and markets.

There is evidence that U.S. persons have used offshore gaming platforms to engage in illicit activity. For 

example, in January 2023, eleven defendants were charged in a multi-million-dollar scheme relating 

to the operation of an illegal sports betting organization.409 The scheme, which included the evasion of 

excise tax totaling nearly $20 million between 2019 and 2021, involved betting activities occurring online 

via an offshore server located in Costa Rica.

Some offshore gaming platforms use virtual assets as forms of payment, presenting additional risk 

factors. Large, transnational virtual asset gambling firms have grown rapidly since 2020, driven by 

increases in the adoption of virtual assets as well as the anonymity provided by the technology.410 In 

2019 guidance, FinCEN clarified that gaming operators and internet casinos that are not covered by the 

regulatory definition of casino, gambling casino, or card club but that accept and transmit virtual assets 

may still be regulated under the BSA as a money transmitter.411

Many large virtual asset gambling services screen for users’ locations and deny access to users located 

in the United States in accordance with U.S. law. However, virtual private networks can allow U.S.-based 

users to, with relative ease, fraudulently circumvent these location-screening protocols by obfuscating or 

misreporting their locations. This obfuscation may also inhibit the ability of virtual asset gambling firms 

to conduct due diligence into U.S.-based users and understand sources of funds.

Entities Not Fully Covered by AML/CFT Requirements

1. Investment Advisers 

The investment adviser (IA) industry in the United States consists of a wide range of business models that 

provide a variety of financial services to retail investors, high-net-worth individuals, private institutions, 

and governmental entities (including but not limited to local, state, and foreign government funds). The 

assets managed by different types of IAs—including IAs registered with the SEC (referred to as Registered 

Investment Advisers, or “RIAs”), IAs exempt from SEC registration (also known as Exempt Reporting 

408 American Gaming Association, Sizing the Illegal and Unregulated Gaming Markets in the U.S., (November 30, 2022), https://

www.americangaming.org/resources/sizing-the-illegal-and-unregulated-gaming-markets-in-the-u-s/#:~:text=AGA percent27s 

percent20report percent2C percent20Sizing percent20the percent20Illegal,billion percent20in percent20lost percent20tax 

percent20revenue.

409 DOJ, Eleven Indicted in Multi-Million Dollar Excise Tax Evasion and Money Laundering Scheme Involving Illegal Sports-Betting 

Organization, (January 6, 2023), https://www.justice.gov/usao-ndal/pr/eleven-indicted-multi-million-dollar-excise-tax-evasionand-money-laundering-scheme.

410 DOJ, Report of the Attorney General’s Cyber Digital Task Force: Cryptocurrency Enforcement Framework, see p. 39,. (October 

2020), https://www.justice.gov/archives/ag/page/file/1326061/download.

411 See FinCEN, “Application of FinCEN’s Regulations to Certain Business Models Involving Convertible Virtual Currencies,” (May 

9, 2019), https://www.fincen.gov/sites/default/files/2019-05/FinCEN percent20Guidance percent20CVC percent20FINAL 

percent20508.pdf.
2024 ◆ National Money Laundering Risk Assessment 87

Advisers, or “ERAs”), and state-registered IAs (who are prohibited from registering with the SEC)—vastly 

exceed the holdings of U.S. banks.

As of July 31, 2023, there were approximately 15,000 RIAs reporting approximately $125 trillion in assets 

under management (AUM) for their clients.412 There are also approximately 5,800 ERAs that report certain 

information to the SEC but are not required to register. According to the SEC, ERAs manage approximately 

$5 trillion in assets.413 Finally, there are approximately 17,000 investment advisers who are required to 

register with state securities regulators. As of December 31, 2022, these state-registered investment 

advisers managed approximately $420 billion in assets.414

Oversight of the investment adviser industry by federal and state securities regulators is generally 

focused on protecting investors and the overall securities market from fraud and manipulation. However, 

the IA sector is not uniformly subject to comprehensive AML/CFT regulations and is not typically 

examined for AML/CFT compliance. Some RIAs may implement an AML/CFT program as the entity may 

also be a registered broker-dealer (i.e., a dual registrant) or bank; other RIAs that are subsidiaries of a 

financial holding company may implement an enterprise-wide AML/CFT program. Additionally, some 

IAs may perform certain AML/CFT measures through contractual obligations for a joint customer of a 

regulated financial institution or as a voluntary best practice.415 But these arrangements are not uniform 

across the IA industry, and the IAs’ implementation of these measures is not subject to comprehensive 

enforcement and examination. 

A review of law enforcement cases and BSA reporting identified several illicit finance threats involving 

IAs. First, IAs have served as an entry point into the U.S. market for illicit proceeds associated with foreign 

corruption, fraud, and tax evasion. Second, certain investment advisers (or entities required to register 

as investment advisers) have managed billions of dollars ultimately controlled by designated Russian 

oligarchs and their associates. Separately, numerous fraud cases involving smaller IAs (both SEC and 

state-registered) where they defrauded their clients and stole their funds.416

IAs may be vulnerable to these threats, at least in part, for several reasons. First, the lack of 

comprehensive AML/CFT regulation for the IA sector may create arbitrage opportunities for illicit actors 

by allowing them to more easily find IAs with weaker or non-existent client due diligence practices as 

they seek to access the U.S. financial system. Second, IAs’ business activities may be segmented across 

intermediaries (and potentially national borders), possibly creating information asymmetries. Obligated 

entities (such as custodian banks or broker-dealers) working with an IA may not necessarily have a direct 

412 The number of RIAs and AUM, and the number of ERAs are based on a Treasury review of Form ADV information filed as 

of July 31, 2023. This Form ADV data is available at Frequently Requested FOIA Document: Information About Registered 

Investment Advisers and Exempt Reporting Advisers, http://www.sec.gov/foia/docs/invafoia.htm. The $125 trillion in AUM 

includes approximately $22 trillion in assets managed by mutual funds, which are advised by RIAs and are subject to AML/CFT 

obligations under the BSA and its implementing regulations. 

413 88 Fed. Reg. 63206, 63304 (Sept. 14, 2023).

414 North American Security Administrators Association, NASAA Investment Adviser Section 2023 Annual Report, p.3, https://www.

nasaa.org/wp-content/uploads/2023/09/2023-IA-Section-Report-FINAL.pdf.

415 See, for example, SEC, Letter to Mr. Bernard V. Canepa, Associate General Counsel, Securities Industry and Financial Markets 

Association, Request for No-Action Relief Under Broker-Dealer Customer Identification Program Rule (31 CFR 1023.220) and 

Beneficial Ownership Requirements for Legal Entity Customers (31 CFR 1010.230) (Dec. 9, 2022), https://www.sec.gov/divisions/

marketreg/mr-noaction/2020/sifma-120920-17a8.pdf. 

416 In most of the identified cases, authorities pursued civil or criminal enforcement for violations of the federal securities laws 

against the investment adviser or other associated individuals.
88 2024 ◆ National Money Laundering Risk Assessment

relationship with the client (or, in the case of private funds, the ultimate investor). They may be unable 

to require an IA to disclose relevant information. At the same time, entities that can obtain information 

about ultimate clients and investors (typically the IA and certain service providers for the advised fund) 

are not required to do so, nor are they required to report potentially suspicious activity. Third, certain 

business practices often promote the secrecy of client/ or investor identity and information and the 

outsourcing of key compliance responsibilities. 

The entities in the investment adviser sector that pose the highest risks are ERAs, RIAs who are not dually 

registered as, or affiliated with, a bank or broker dealer, and IAs who manage private funds. 

Private funds advised by investment advisers, such as hedge and private equity funds and, venture 

capital funds, hold over $20 trillion in assets, and have limited reporting obligations. Advisers managing 

these funds may also routinely invest assets from foreign legal entities that are generally not required 

to disclose their ultimate beneficial owners. As of Q4 2022, private funds managed by RIAs represented 

$284 billion in equity beneficially owned by non-U.S. investors where the RIA did not know, and could not 

reasonably obtain information about, the non-U.S. beneficial ownership because the beneficial interest 

was held through a chain involving one or more third-party intermediaries.417 

Case examples 

•	 In December 2021, a founder of a New York financial advisory and investment company was charged 

with wire fraud, IA fraud, and money laundering in connection with a scheme to misappropriate 

more than $1 million from current and prospective clients. As alleged in the indictment, the former 

investment adviser executed a calculated scheme in which he repeatedly lied to his current and 

prospective clients about putting their money into legitimate investments, when, in reality, he stole 

their money to fund his lavish lifestyle. As noted in the indictment, the victims sent multiple wire 

transfers to the private bank account of the IA’s investment firm. The IA then misappropriated the 

funds into his personal banking account, among other things.418 

•	 In November 2019, Mark Scott, a former equity partner at the law firm Locke Lord LLP, was convicted 

of one count of conspiracy to commit money laundering and one count of conspiracy to commit bank 

fraud. Beginning in 2016, Scott established fake private equity investment funds in the British Virgin 

Islands, known as the “Fenero Funds” to launder approximately $400 million in proceeds from a large 

international pyramid fraud scheme called OneCoin. Scott claimed that the investments were from 

“wealthy European families,” when in fact the money represented proceeds of the OneCoin fraud 

scheme. Scott layered the money through Fenero Fund bank accounts in the Cayman Islands and 

the Republic of Ireland. As part of the scheme, Scott and his co-conspirators lied to banks, including 

U.S. banks and other financial institutions, to cause those institutions to make transfers of OneCoin 

proceeds and evade AML procedures.419

417 SEC, “Private Fund Statistics, Fourth Calendar Quarter 2022”, (July 18, 2023), https://www.sec.gov/files/investment/privatefunds-statistics-2022-q4.pdf.

418 DOJ, “Founder of Investment Advisory Firm Charged with Wire Fraud, Investment Adviser Fraud and Money Laundering”, 

(December 6, 2021), https://www.justice.gov/usao-edny/pr/founder-investment-advisory-firm-charged-wire-fraud-investmentadviser-fraud-and-money; United States v. Slothower (Indictment) Case 2:21-cr-00602 (E.D.N.Y), December 1, 2021.

419 DOJ, “Former Partner Of Locke Lord LLP Convicted In Manhattan Federal Court Of Conspiracy To Commit Money Laundering 

And Bank Fraud In Connection With Scheme To Launder $400 Million Of OneCoin Fraud Proceeds,” (Nov. 21, 2019), https://www.

justice.gov/usao-sdny/pr/former-partner-locke-lord-llp-convicted-manhattan-federal-court-conspiracy-commit-money. 
2024 ◆ National Money Laundering Risk Assessment 89

2. Third-Party Payment Processors

Third-party payment processors (TPPPs or payment processors) are services that enable merchants and 

other business entities to accept card and other non-cash payments from consumers without having to 

maintain their own merchant account with a financial institution. TPPPs simplify payment processing 

for merchants by using their own commercial bank accounts to process merchants’ payments, often 

aggregating all of their clients’ transactions into a single merchant account or, in some cases, opening an 

account at a financial institution in the merchant’s name. Merchant transactions primarily include credit 

card payments but can also include Automated Clearing House (ACH) transactions, remotely created 

checks (RCC), digital wallet payments, and debit and prepaid card transactions. Payment processors 

traditionally contracted primarily with retailers with physical locations; however, retail borders have been 

eliminated with the expansion of the Internet and e-commerce.420

As described in the 2022 NMLRA, TPPPs generally are not subject to AML/CFT regulatory requirements, 

and the scope of BSA coverage depends on the company’s unique circumstances. However, only those 

payment processors that meet very specific conditions outlined in FinCEN guidance are exempt from BSA 

obligations.421 These conditions are as follows: (1) the company must facilitate the purchase of goods or 

services, or the payment of bills for goods or services (other than money transmission itself); (2) it must 

operate through clearance and settlement systems that admit only BSA-regulated financial institutions 

(e.g., the Automated Clearing House); (3) it must provide the service pursuant to a formal agreement; and 

(4) the entity’s agreement must be at a minimum with the seller or creditor that provided the goods or 

services and receives the funds from the entity.

The FDIC, OCC, and FinCEN each issued guidance in the early 2010s regarding the risks, including the 

AML/CFT risks, associated with banking third-party processors. In 2023, the FDIC, OCC, and the FRB 

issued joint guidance for banking organizations regarding managing third-party relationships, as 

such relationships can reduce a bank’s direct control over activities and may introduce new risks.422 

Banks may face heightened ML/TF risks when dealing with a processor account, similar to risks from 

other activities in which the bank’s customer conducts transactions through the bank on behalf of the 

customer’s clients. Some higher-risk merchants routinely use payment processors to process their 

transactions because they do not have a direct bank relationship. Criminals can use payment processors 

to mask illegal or suspicious transactions and launder proceeds of crime, especially if the processor does 

not have an effective means of verifying their merchant clients’ identities and business practices. In 

addition, payment processors have been used to place illegal funds directly into a financial institution 

using ACH credit transactions originating from foreign sources.423

420 Federal Financial Institutions Examination Council (FFIEC) Manual, “Risks Associated with Money Laundering 

and Terrorist Financing, Third-Party Payment Processors—Overview,” https://bsaaml.ffiec.gov/manual/

RisksAssociatedWithMoneyLaunderingAndTerroristFinancing/10. 

421 FinCEN, “Application of Money Services Business Regulations to a Company Acting as an Independent Sales Organization and 

Payment Processor,” (FIN-2014-R009), (August 24, 2014), https://www.fincen.gov/sites/default/files/administrative_ruling/FIN2014-R009.pdf.

422 Interagency Guidance on Third-Party Relationships: Risk Management, 88 Fed. Reg. 37920 (June 9, 2023), https://www.occ.gov/

news-issuances/federal-register/2023/88fr37920.pdf. 

423 FinCEN Advisory, “Risk Associated with Third-Party Payment Processors,” FIN-2012-A010, (October 22, 2012), https://www.fincen.

gov/sites/default/files/advisory/FIN-2012-A010.pdf. 
90 2024 ◆ National Money Laundering Risk Assessment

A review of cases, including criminal cases and civil enforcement actions, over the last three years 

involving TPPPs revealed several patterns of fraudulent behavior. The most common typology, present 

in eight of the cases, involved complicit TPPPs. As a primary gateway to the legitimate financial system, 

payment processors are in a unique position to facilitate high volumes of fraud by working together 

with fraudulent merchants or failing to address suspicious activity. In some cases, payment processors 

ignored red flags indicating fraudulent activity by merchants, such as a high rate of chargebacks, which 

can indicate unlawful debiting; in other cases, payment processors actively worked to disguise merchant 

activity, misrepresenting the types of transactions merchants were processing to banks or even creating 

shell companies or designing fake websites.

In six of the cases, the payment processors were taken advantage of by merchants and used to process 

transactions. These cases often involve merchants misrepresenting the nature of their transactions to 

payment processors. In other instances, the defendant made micro-debits from victims’ accounts, which 

often went unnoticed and lowered the merchant’s chargeback rate. Finally, four cases involved TPPPs 

that were themselves defrauding either merchants or consumers. 

These and other recent cases indicate that the use of TPPPs for money laundering and fraud is on the 

rise. This vulnerability seems to be largely driven by TPPPs themselves, which can take advantage of the 

exemption from BSA requirements and the access they have to the financial system to facilitate money 

laundering. 

Case Examples

•	 In May 2023, Stephen Short was sentenced in federal court to 78 months in prison for conspiracy to 

commit wire and bank fraud in connection to a scheme to obtain credit card processing services for 

his telemarketing operation through a third-party credit card processing network. Between 2012 and 

2015, Short targeted customers with outstanding credit card debt to offer services, including debt 

consolidation and interest-rate reduction, to generate over $19 million in fraud proceeds. The scheme 

involved collaboration between Short’s company and CardReady, with the latter keeping one-third 

of credit card sale transactions in exchange for access to the credit card processing network and 

concealment of the underlying merchant.424

•	 In July 2022, the executives of Electronic Transactions Systems Corporation were indicted for 

defrauding approximately 7,000 merchant clients out of millions of dollars. Between 2012 and 2019, 

the defendants intentionally disguised a portion of processing fees for clients, embedding hidden 

markups and failing to disclose the true fee structure in billing and account statements. Specifically, 

the company altered the Interchange fees to include hidden markups by accessing software on 

computer systems belonging to a third-party company.425 This action facilitated the over-valuing of 

the company during its acquisition in 2018.426

424 DOJ, “Head Of Telemarketing Operation Sentenced To 78 Months In Prison For $19 Million Credit Card Laundering Scheme,” 

(May 2, 2023), https://www.justice.gov/usao-sdny/pr/head-telemarketing-operation-sentenced-78-months-prison-19-

million-credit-card#:~:text=U.S.%20Attorney%20Damian%20Williams%20said,more%20than%2019%2C000%20victims%20

nationwide. 

425 DOJ, “Executives of Card Payment Processing Company Indicted in East Texas for Nationwide Multimillion Dollar Fraud 

Scheme,” (July 27, 2022), https://www.justice.gov/usao-edtx/pr/executives-card-payment-processing-company-indicted-easttexas-nationwide-multimillion. 

426 Id.
2024 ◆ National Money Laundering Risk Assessment 91

3. Attorneys 

There are over 1.3 million attorneys in the United States whose practices encompass a broad range of 

client services.427 Certain legal practice areas or services such as representing clients in disputes and 

mediations, providing advice concerning childhood custody proceedings, and providing regulatory 

advisory services, may pose lower inherent money laundering or illicit finance risk than others. 

On the other hand, where attorneys advise on real estate transactions, assist in the formation and 

administration of legal entities and trusts, and transfer and manage client assets, they may be more 

vulnerable because these attorneys may act as intermediaries between a client and the U.S. financial 

system (i.e., a gatekeeper).428 These practice areas are at higher risk because the associated services are 

typically essential to the specific transactions undertaken, and, because of the involvement of attorneys, 

the underlying transactions may acquire a veneer of respectability and integrity.

Similarly, the involvement of attorneys may effectively shield the illicit actors’ identities from financial 

institutions processing transactions involving those clients. This issue may occur due to misapplication 

of attorney-client privilege, the duty of confidentiality, and the lack of AML/CFT obligations covering the 

legal profession. As a result, attorneys may be attractive to illicit actors intending to launder the proceeds 

of crime.

Common threads running through these vulnerable or high-risk practice areas include the movement of 

funds and the level of beneficial ownership information available to financial institutions. Two possible 

examples might be escrow accounts and the IOLTAs required to be maintained by lawyers and their firms, 

primarily for the collection and disbursement of settlement and other funds payable to their clients. 

These are pooled bank accounts in which attorneys deposit client funds to keep them separate from the 

attorneys’ funds, as legal ethics require.429 An IOLTA functions as a standard bank account, except that the 

bank has no direct relationship with or knowledge of the beneficial owners of the client funds in these 

accounts. The bank transfers the interest earned by these accounts to a state IOLTA program, which uses 

this money to fund charitable causes, including the delivery of legal services to indigent clients.430 

These IOLTA and other attorney-client trust accounts, including escrow accounts, are not titled in the 

name of any underlying client, causing banks to find it difficult to identify suspicious transactions 

effectively. Without comprehensive AML/CFT regulations covering attorneys, the obligation to report 

suspicious transactions involving IOLTAs falls on the financial institution that serves them. Even where 

neither privilege nor legal ethics prohibit reporting client identities or facts of a transaction, financial 

427 2022 ABA National Lawyer Population Survey, available at https://www.americanbar.org/content/dam/aba/administrative/market_

research/2022-national-lawyer-population-survey.pdf; see also The American Bar Association’s 2022 Profile of the Legal Profession 

Report, which contains state-by-state demographic details of the legal profession. Given that one quarter of all attorneys are subject to 

ethics rules and disciplinary procedures in two jurisdictions (New York and/or California), reform efforts focused on these states may 

have a disproportionate affect in bringing the U.S. legal profession in line with international standards. 

428 See supra note [375] (Section II, covering BSA/AML compliance deficiencies and complicit professionals, explaining the 

definition and origin of the term “gatekeeper”).

429 According to the American Bar Association (ABA), before state and Supreme Court rules created the IOLTA framework, attorneys 

typically placed client deposits into combined, or pooled, trust accounts that contained other nominal or short-term client 

funds. Trust funds pooled in this manner earned no interest because trust accounts typically are checking accounts (to allow 

easy access to the funds) and, until the early 1980s when the IOLTA framework was crafted, checking accounts did not earn 

interest. In addition, these trust funds earned no interest because it is unethical for attorneys to derive any financial benefit 

from funds that belong to their clients.

430 FFIEC, “Bank Secrecy Act/Anti-Money Laundering InfoBase, Professional Service Providers – Overview,” https://bsaaml.ffiec.gov/

manual/RisksAssociatedWithMoneyLaunderingAndTerroristFinancing/26. 
92 2024 ◆ National Money Laundering Risk Assessment

institutions are not well placed to detect such transactions. They do not have a relationship with the 

attorney’s client or effective means to dispute a lawyer’s claim of privilege, which results in vulnerabilities 

in the U.S. financial system. The Treasury assesses complicit attorneys may misuse IOLTA and other 

lawyer trust accounts to launder criminal proceeds into and out of the United States, as reflected in its 

review of case examples.

The vulnerability stems from the ability of the attorney to direct transfers into and out of the account 

without necessarily raising red flags at the bank where the account is held. Banks may not be able to 

successfully identify the transaction pattern for the account since they do not have insight into the 

ultimate source of funds or beneficial ownership information. This can be challenge exacerbated when 

attorneys use one account to facilitate transactions on behalf of multiple clients, as the commingled 

funds make the expected activity murkier. For example, two Beverly Hills attorneys assisted the son of 

the President of Equatorial Guinea to circumvent AML and PEP controls at U.S. financial institutions by 

allowing him to use IOLTAs as conduits for over $100 million and without alerting the bank to his use of 

those accounts. When a bank uncovered the illicit actor’s use of an account and closed it, the attorneys 

helped him open another account, thus allowing the IOLTAs to accept millions of dollars in wire transfers 

from Equatorial Guinea, moving those funds into other related accounts, and using them to pay bills and 

expenses. Both attorneys declined to testify before the U.S. Senate Select Committee on Intelligence 

hearing, citing the Fifth Amendment, and the California Bar disciplined neither of them.431

A resonant example that reflects the complexity of attorneys’ involvement in money laundering and 

other illicit activity was detailed in the 2022 NMLRA. The DOJ identified a prominent global law firm in a 

series of civil forfeiture actions as having provided a trust account through which they illicitly siphoned 

hundreds of millions of dollars belonging to Malaysia’s 1MDB fund.432 

Despite these well-understood risks the United States has no uniform national regulation of attorneys. 

Instead, attorneys are self-regulated by state bar associations, although not for AML/CFT. Across the 

country, attorneys are not subject to comprehensive AML/CFT measures. Like any person in any trade or 

business, they are obligated to file Form 8300 for cash transactions exceeding $10,000 and may choose 

to use Form 8300 under certain circumstances for cash transactions of $10,000 or less. Attorneys, like any 

other person, may be subject to penalties for failures to file a correct and complete Form 8300, including 

a minimum penalty of $31,520 that may be imposed if the failure is due to an intentional or willful 

disregard of the cash reporting requirements.433 The Treasury assesses IOLTA accounts and other lawyer 

431 United State Senate Permanent Subcommittee on Investigation, “Keeping Foreign Corruption out of the United 

States: Four Case Histories,” (February 04, 2010), https://www.hsgac.senate.gov/wp-content/uploads/imo/media/doc/

FOREIGNCORRUPTIONREPORTFINAL710.pdf. See also DOJ, “Second Vice President of Equatorial Guinea Agrees to Relinquish 

More Than $30 Million of Assets Purchased with Corruption Proceeds,” (October 10, 2014), https://www.justice.gov/opa/pr/

second-vice-president-equatorial-guinea-agrees-relinquish-more-30-million-assets-purchased. 

432 See Treasury, National Money Laundering Risk Assessment, February 2022. See also Complaint at 42, U.S. v. One Drawing Entitled 

“Self-Portrait” by Jean-Michel Basquiat, (C.D. Cal. 2020) (No. e 2:20-cv-05910) (“Between approximately October 21, 2009, and 

October 13, 2010, eleven wires totaling approximately $368 million were sent ...to an Interest on Lawyer Account held by the 

law firm Shearman & Sterling LLP in the United States.”) See also Press Release, U.S. Repatriates $300 Million to Malaysia in 

Proceeds of Funds Misappropriated from 1Malaysia Development Berhad (Apr. 14, 2020), available at https://www.justice.gov/

opa/pr/us-repatriates-300-million-malaysia-proceeds-funds-misappropriated-1malaysia-development. One notable example 

is the 1MDB case where hundreds of millions of dollars were siphoned out of Malaysia’s sovereign wealth fund. These funds 

passed through pooled accounts held at law firms in the U.S. Law firms authorized transfers that were used to pay for luxury 

U.S. real estate, jewelry, and yacht and jet rentals. 

433 IRS Form 8300 Reference Guide, https://www.irs.gov/businesses/small-businesses-self-employed/irs-form-8300-referenceguide#penalties. 
2024 ◆ National Money Laundering Risk Assessment 93

trust accounts that complicit attorneys are using to launder criminal proceeds into and out of the United 

States. 

The American Bar Association (ABA), a voluntary, member-led organization, publishes Model Rules of 

Professional Conduct (“Model Rules”) that have substantially influenced nearly every state jurisdiction’s 

standards of conduct, ethics, and discipline for attorneys. Accordingly, in most states, the professional 

discipline of attorneys is conducted pursuant to regulations contained in codes that have been approved 

by the highest court in the jurisdiction in which the attorney is admitted. The ABA revised its Model Rules 

of Professional Conduct on August 8, 2023, in an effort to better protect the legal profession and U.S. 

financial system from money laundering and terrorist financing risks. 434 To date, no state bar association 

has adopted these amendments. 

The revision to these codes by states leaves attorneys substantial discretion to determine whether 

to accept or continue representation under the facts and circumstances of a particular case. These 

state codes are permissive rather than mandatory because they generally leave final decision-making 

and authority over the conduct of attorneys to a state court or a specially designated grievance or 

discipline committee within the state. These entities generally lack the resources or authority to conduct 

systematic audits, examinations, or other regulatory measures for AML/CFT purposes. At the same time, 

unscrupulous attorneys continue to be involved in complex money laundering, sanctions evasion, and 

other illicit finance schemes.

Case Examples

•	 In March 2023, Jack Stephen Pursley, a Texas attorney pleaded guilty to conspiring with a former 

client to repatriate more than $18 million in untaxed income from offshore accounts held in the Isle 

of Man that the client had earned through his company. Pursley was aware that his client had never 

paid taxes on these funds. He designed and implemented a scheme whereby fund transfers from an 

Isle of Man bank account to the United States were disguised as stock purchases in U.S. corporations 

Pursley and his client owned and controlled. The attorney received more than $4.8 million and a 25 

percent ownership interest in his client’s business for his role in the fraudulent scheme.435

•	 In 2022, an Illinois attorney named Hassan Abbas was sentenced for his role in a scheme to defraud 

victims in multiple states, many of whom thought they were closing real estate transactions or 

sending money to romantic partners. Once the attorney received the funds, he sent large sums 

to fellow fraudsters overseas and took a cut, which he used to spend on luxury items and an 

international lifestyle. When approached by financial institutions about his account activity, the 

attorney disguised the purposes of wire transfers to bank investigators, claiming that certain transfers 

were for non-existent “clients” and, in one instance, insisting that information about the wires was 

protected by the attorney-client privilege.436

434 The changes create a duty to “inquire into and assess the facts and circumstances of each representation to determine whether 

the lawyer may accept or continue each representation,” and to decline to represent or withdraw from representing a client 

who “seeks to use or persists in using the lawyer’s services to commit or further a crime or fraud.” See ABA Model Rules of 

Professional Conduct 1.16 (a)(4).

435 DOJ, “Houston Attorney Pleads Guilty to Offshore Tax Evasion Scheme,” (March 28, 2023), https://www.justice.gov/opa/pr/

houston-attorney-pleads-guilty-offshore-tax-evasion-scheme. 

436 DOJ, “Illinois Lawyer Sentenced to Nine Years in Prison for Sophisticated Wire Fraud and Money Laundering Scheme,” (October 

28, 2022), https://www.justice.gov/usao-ma/pr/illinois-lawyer-sentenced-nine-years-prison-sophisticated-wire-fraud-andmoney-laundering. 
94 2024 ◆ National Money Laundering Risk Assessment

4. Accountants

The U.S. accounting sector includes approximately three million individuals who provide a wide range of 

services. These include (but are not limited to) Certified Public Accountants (CPAs); non-licensed public 

and private accountants; internal and external auditors; and bookkeeping, accounting and auditing 

clerks (who do not require professional licenses or four-year college degrees). Accountants in the United 

States are regulated through a complex framework at the federal, state, and local levels, including several 

private sector bodies that promulgate professional and ethical standards. State accountancy boards 

also supervise CPAs. The U.S. accounting sector is generally not subject to comprehensive requirements 

under the BSA for the purposes of AML/CFT, and oversight of the accounting industry is largely aimed 

at protecting the market and the public from fraud and manipulation.437 Additionally, as U.S. persons, 

accountants are subject to sanctions regulations issued by OFAC concerning prohibitions on providing 

financial services to sanctioned persons or entities. 

A review of this sector for ML/TF risks finds that licensed and unlicensed accountants face a lower to 

medium-low level of ML/TF risk largely because U.S. accountants generally provide financial record 

keeping or advice services rather than managing or holding client funds, purchasing real estate, or 

establishing companies. For example, even a CPA certification does not grant an accountant special 

access to form accounts or manage financial transactions. 

While accountants are not financial service providers in the United States, there is some concern about 

an accountant’s ability to act as financial facilitators for criminal or terrorist organizations due to their 

knowledge of the legal and financial system. For example, an accountant’s knowledge on creating 

and structuring shell companies, bank accounts, wire transfers, and financial statements could be 

attractive to those looking to conceal financial transactions or launder money. However, an accounting 

background does not afford an individual any ability to register companies, open bank accounts, or 

authorize financial transactions beyond what an ordinary citizen can do. When accountants do commit 

ML offenses, their status as accountants does not allow them special access or privileges to mechanisms 

for hiding or transferring money. While a complicit accountant could perform these services for a criminal 

or terrorist organization, professional accountants or CPAs are not routinely involved in organized 

crime or major narcotics investigations. A criminal organization may have a “money person” that they 

call a “bookkeeper” or “accountant” but this may be a person with no professional training but who is 

entrusted by the criminal organization to coordinate payments throughout the criminal enterprise. 

In the limited cases since 2016 where accountants were charged with money laundering offenses, only 

a few cases involved accountants using their professional capacity to launder money. Accountants have 

not frequently come up in large-scale money laundering or illicit finance schemes.

437 AML/CFT requirements under the BSA do not apply to the accounting sector as accountants, or accounting firms, are not 

defined as one of the enumerated financial institution categories; however, as with any U.S. person, they are subject to 

BSA requirements for filing reports when receiving $10,000 or more in currency. See https://www.irs.gov/businesses/smallbusinesses-self-employed/form-8300-and-reporting-cash-payments-of-over-10000. Further, participants in the U.S. accounting 

sector may be subject to certain cash-based reporting requirements under the BSA applicable to non-financial businesses and 

trades. They may also be subject to other requirements under the BSA depending on whether sector participants meet other 

conditions, such as whether they meet the definition of a financial institution, such as a broker-dealer, already subject to BSA 

requirements.
2024 ◆ National Money Laundering Risk Assessment 95

Case examples

•	 In August 2023, Craig Clayton, the owner of a “virtual CFO” business, agreed to plead guilty 

to laundering tens of millions of dollars in proceeds from internet fraud schemes by creating 

shell companies and opening fraudulent business bank accounts.438 According to the charging 

documents, from 2019 to 2021, Clayton and others used his accounting and “virtual CFO” business, 

Rochart Consulting, as a front to launder the proceeds of internet fraud schemes. As part of the 

conspiracy, Clayton founded shell companies to open business bank accounts in Rhode Island and 

Massachusetts, through which he laundered the proceeds of internet fraud schemes on behalf of his 

clients. In total, Clayton laundered more than $35 million.

•	 In October 2018, San Diego-based CPA Luke Fairfield, was sentenced to 21 months in prison for his 

role in the criminal enterprise led by former USC football player Owen Hanson – an international drug 

trafficking, gambling, and MLO known as “ODOG.” 439 Hanson operated ODOG in the United States, 

Central and South America, and Australia from 2012 to 2016, trafficking in thousands of kilograms 

of cocaine, heroin, methamphetamine, MDMA (also known as “ecstasy”), and other illegal drugs in 

wholesale and retail quantities. The ODOG enterprise also operated a vast illegal gambling network 

focused on high-stakes wagers placed on sporting events. To carry out its gambling operation, the 

ODOG enterprise employed numerous bookies and money runners, and in the event a customer did 

not pay his gambling debt, the ODOG enterprise employed enforcers to threaten, intimidate, and 

injure its customers to force compliance. As Fairfield admitted when pleading guilty in March of 2017, 

his role in the ODOG enterprise included laundering money, aiding in the creation of shell companies 

to hide ODOG’s criminal proceeds, and training ODOG money runners on methods and tactics to hide 

the enterprise’s activities from law enforcement and banks. Because of this conviction, Fairfield is no 

longer licensed as a CPA.

Although accountants pose a lower ML/TF risk, a review of law enforcement cases and information 

available to the U.S. government finds that other illicit finance risks are present, especially regarding 

tax offenses, embezzlement, fraud, and crimes of professional misconduct. Additionally, accountants 

working as auditors warrant continued regulatory attention as they are guarantors of financial data 

prepared by businesses, companies, trusts, and other legal entities. However, these additional risks 

are outside the scope of this risk assessment. The U.S. government will continue to monitor the money 

laundering risks posed by accountants.

438 DOJ, “Rhode Island Business Owner to Plead Guilty to Money Laundering Conspiracy and Obstruction of Justice” (August 17, 

2023), https://www.justice.gov/usao-ma/pr/rhode-island-business-owner-plead-guilty-money-laundering-conspiracy-andobstruction.

439 DOJ, “CPA Sentenced for Role in Racketeering Enterprise”, ( October 2, 2018), https://www.justice.gov/usao-sdca/pr/cpasentenced-role-racketeering-enterprise.
96 2024 ◆ National Money Laundering Risk Assessment

CONCLUSION

While many of the U.S.’ most significant money laundering risks have remained consistent in recent years, 

a range of new factors have emerged that are reshaping the risk landscape in the United States. As this 

National Money Laundering Risk Assessment identifies, crimes like fraud, drug and human trafficking, 

cybercrime, corruption, and human smuggling remain the most significant proceeds-generating 

activities associated with money laundering. However, in the aftermath of the COVID-19 pandemic, 

and, other recent geopolitical, technological, and financial developments, the broader illicit finance 

ecosystem in which these crimes occur has substantially evolved. The result, therefore, is an evolved 

‘landscape’ for money laundering risk. 

A number of recent money laundering threats and vulnerabilities have become more significant and 

pernicious over the past two years. For example, criminals, scammers, and illicit actors are increasingly 

using virtual assets and digital peer-to-peer payment systems to engage in fraud and other crimes. 

CMLOs are no longer just emerging threats but are now dominant across the professional money 

laundering market. The wide availability of illicit fentanyl throughout the United States is indicative of 

the reach and scale of the transnational illicit supply chains supporting the production of these deadly 

substance.

This 2024 NMLRA aims to highlight to the public and private sectors these and other high-level threats 

to the U.S. financial system, both the continuing challenges as well as emerging vulnerabilities and 

risks that the United States faces. Only by enumerating these challenges can the United States work to 

prioritize and address them effectively. 

As the case examples within this report demonstrate, there is robust coordination between financial 

oversight entities and law enforcement agencies to identify, prosecute, and ultimately dismantle money 

laundering activity within the United States. Indeed, it is due to the integrity, reliability, and security 

of the U.S. financial system that individuals and businesses both within the United States and across 

the world continue to use and invest their funds in the U.S. financial system—it is the most secure and 

trusted in the world.

The findings of the 2024 NMLRA, taken in tandem with the findings of the proliferation finance risk 

assessment and the terrorist financing risk assessment, will inform the forthcoming 2024 National Illicit 

Finance Strategy, which will lay out the roadmap to address the threats and vulnerabilities to the U.S. 

financial system, and ultimately strengthen the integrity of the U.S. financial system.
2024 ◆ National Money Laundering Risk Assessment 97

PARTICIPANTS

In drafting this assessment, the Department of the Treasury’s Office of Terrorist Financing and Financial 

Crimes consulted with staff from the following U.S. government agencies, who also reviewed this report: 

•	 Department of the Treasury 

 Internal Revenue Service - Criminal Investigation (IRS-CI) 

 Internal Revenue Service - Passthroughs & Special Industries

 Terrorism and Financial Intelligence (TFI) 

 Financial Crimes Enforcement Network (FinCEN) 

 Office of Foreign Assets Control (OFAC) 

 Office of Intelligence and Analysis (OIA) 

 Office of Terrorist Financing and Financial Crimes (TFFC)

•	 Department of Justice 

 Criminal Division 

 Computer Crime and Intellectual Property Section 

 Fraud Section 

 Money Laundering and Asset Recovery Section 

 Narcotic and Dangerous Drugs Section 

 Organized Crime and Gang Section 

 Environment and Natural Resources Division 

 Executive Office for U.S. Attorneys 

 Drug Enforcement Administration (DEA) 

 Federal Bureau of Investigation (FBI) 

 Organized Crime Drug Enforcement Task Forces (OCDETF) 

•	 Department of Homeland Security 

 Customs and Border Protection (CBP)

 Homeland Security Investigations (HSI) 

 United States Secret Service (USSS) 

•	 Department of the Interior 

 U.S. Fish and Wildlife Service 

•	 U.S. Postal Inspection Service (Inspection Service) 

•	 Staff of the Federal functional regulators440

•	 Nevada Gaming Control Board

440 This includes staff of the Commodity Futures Trading Commission (CFTC), the Federal Deposit Insurance Corporation (FDIC), 

the Board of Governors of the Federal Reserve System (FRB), the National Credit Union Administration (NCUA), the Office of 

the Comptroller of the Currency (OCC), and the Securities and Exchange Commission (SEC). The SEC staff also sought input 

from the staff of the Financial Industry Regulatory Authority (FINRA), which is the largest self-regulatory organization for brokerdealers doing business with the public in the United States.
98 2024 ◆ National Money Laundering Risk Assessment

METHODOLOGY

Treasury’s Office of Terrorist Financing and Financial Crimes by statute is the AML/CFT policy 

coordination for Treasury and routinely interacts with our domestic partners. This report is based on 

a review of federal and state public sector analysis, enforcement actions, guidance, and interviews 

with U.S. Treasury staff, intelligence analysts, law enforcement agents, and prosecutors. During the 

research and analysis phase we shared working drafts of different sections with relevant stakeholders for 

comment and coordinated input and feedback on three separate drafts of this document.

The NMLRA uses all available information to identify the current money laundering environment within 

the United States. This initiative includes feedback and input from various private sector participants 

through formal and informal mechanisms and targeted meetings on illicit finance trends. This action is 

generally done though outreach following the publication of the previously released NMLRA. Relevant 

components of agencies, bureaus, and offices of the Treasury, the U.S. Department of Justice (DOJ), the 

U.S. Department of Homeland Security (DHS), and others s listed above, participated in the development 

of the risk assessment. This year, we engaged with several State agencies, particularly with respect to the 

Casino and Gaming Section (See list of Participants). Data collected is current as of January 31, 2024.

Section I on Threats is based on discussions with law enforcement and cites specific public charges that 

are intended to provide an example of the wider trends identified by investigators. The discussion of 

each threat category highlights their consequences, including the harm inflicted upon U.S. citizens and 

the effects on the U.S. economy. Understanding the threat environment is essential to understanding the 

vulnerabilities that create opportunities for laundering illicit proceeds. 

Numerous federal agencies collect data on the outcomes of their illicit finance investigations at 

the agency, interagency, and government-wide levels. However, a single source of comprehensive, 

government-wide data on the full range of such outcomes does not exist. Therefore, identifying cases 

based solely on charges filed is challenging. For instance, although there are specific money laundering 

statutes, additional statutes might include relevant cases - such as tax evasion - but be overly broad 

for the purpose of conducting such searches. Furthermore, agencies may charge defendants under the 

predicate crime instead of under a money laundering-related statute or a prosecutor may drop a money 

laundering charge as part of a plea bargain. We have identified those cases (mainly citing DOJ or LEA 

Press Releases) that demonstrate some type of ML activity or how criminal actors used the U.S. financial 

system to move, disguise, or hide proceeds of crime. Case examples may involve criminal charges in an 

indictment, which are merely allegations. All defendants are presumed innocent unless, and until, proven 

guilty beyond a reasonable doubt in a court of law. The case examples only cite the names of those 

found guilty. We have also utilized qualitative data, often provided by LEAs, when no public sources are 

available (e.g., press releases or court documentation). When citing qualitative data, the NMLRA makes 

clear that certain information is “according to law enforcement sources.” 

We have incorporated advisories, alerts and bulletins published by our LEAs, FinCEN, and consumer 

protection agencies (e.g., the Consumer Trade Commission). Examples include public service 

announcements on various types of frauds/scams. From a drug perspective, we relied on national drug 

threat assessments and data provided by our health protection agencies (e.g., Centers for Disease Control 

and Prevention). We also rely on top-down assessments or strategies produced at the national level, 

which the President of the United States issues. These have included national efforts to combat human 
2024 ◆ National Money Laundering Risk Assessment 99

trafficking, ransomware, and corruption among other criminal threats with a financial nexus. We also use 

open-source documents from our Intelligence Community such as the “Annual Threat Assessment of the 

U.S. Intelligence Community.”

From a vulnerability perspective, we rely on regulatory agencies who issue public advisories, such as on 

the role of the U.S. Dollar, data on financial products or services, or various types of frauds and scams. 

U.S. federal functional regulators (banks, securities, commodities) also issue annual supervisory insights 

and examination priorities which provides insight into areas of focus for compliance based on current or 

emerging shortcomings in AML/CFT compliance. We also utilize information from our FFIRAs, including 

the BSA/AML Manual issued by the Federal Financial Institutions Examination Council (FFIEC). Within the 

Treasury, we often conduct public (e.g., Art, DeFi) and non-public sectoral (e.g., DNFBPs) risk assessments 

which assist us in developing our understanding of ML risk and that we have incorporated into the NMLRA.

The Department of the Treasury will conduct extensive outreach to our public and private sectors to 

deliver the results of this report. In doing so, we hope to receive valuable feedback on the usefulness of 

this assessment and how we can continue to improve this process.
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TERMINOLOGY

The terminology and methodology of the NMLRA are based in part on the guidance of the FATF, the 

international standard-setting body for AML/CFT safeguards. The following concepts are used in this risk 

assessment: 

Threats: For purposes of the NMLRA, threats are the predicate crimes that are associated with money 

laundering. The environment in which predicate offenses are committed and the proceeds of crime are 

generated is relevant to understanding why, in some cases, specific crimes are associated with particular 

money laundering methods. 

Vulnerabilities: Vulnerabilities are what facilitate or create the opportunity for money laundering. They 

may relate to a specific financial sector or product or a weakness in law, regulation, supervision, or 

enforcement. 

Consequences: Consequences include harms or costs inflicted upon U.S. citizens and the effect on the 

U.S. economy, which provide further context on the nature of the threats. 

Risk: Risk is a function of threat, vulnerability, and consequence. It represents an overall assessment, 

considering the effect of mitigating measures, including regulation, supervision, and enforcement.
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LIST OF ACRONYMS

ACH Automated Clearinghouse

ABA American Bar Association

AEC Anonymity-Enhanced Cryptocurrencies

AML/CFT Anti-Money Laundering / Countering the Financing of Terrorism

ANPRM Advance Notice of Proposed Rulemaking

ATM Automated Teller Machine

AUM Assets Under Management

BCS Bulk Cash Smuggling

BEC Business Email Compromise

BOI Beneficial Ownership Information

BSA Bank Secrecy Act

CBP U.S. Customs and Border Protection (Department of Homeland Security)

CDD Customer Due Diligence

CDG Clan del Golfo

CEO Chief Executive Officer

CFTC Commodity Futures Trading Commission

CIB Cash-Intensive Business

CIP Customer Identification Program

CJNG Cártel Jalisco Nueva Generación

CMLO Chinese Money Laundering Organization

CTA Corporate Transparency Act

CTR Currency Transaction Report

CVC Convertible Virtual Currency

DEA Drug Enforcement Administration (U.S. Department of Justice)

DeFi Decentralized Finance

DHS Department of Homeland Security

DOJ Department of Justice

DPRK Democratic Republic of North Korea

DTO Drug Trafficking Organization

EDD Enhanced Due Diligence

EFE Elder Financial Exploitation

EIDL Economic Injury Disaster Loan

ERC Employee Retention Credit 

FAA Federal Aviation Administration

FATF Financial Action Task Force

FBI Federal Bureau of Investigation
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FCM Futures Commission Merchant

FCPA Foreign Corrupt Practices Act

FDIC Federal Deposit Insurance Corporation

FFIEC Federal Financial Institutions Examination Council

FFIRAs Federal Financial Institution Regulatory Agencies

FinCEN Financial Crimes Enforcement Network (U.S. Department of the Treasury)

FINRA Financial Industry Regulatory Authority

FRB Board of Governors of the Federal Reserve System (or “Federal Reserve Board”)

FTC Federal Trade Commission

FY Fiscal Year

GTO Geographic Targeting Order

ICE HSI U.S. Immigration and Customs Enforcement Homeland Security Investigations 

(U.S. Department of Homeland Security)

IC3 Internet Crime Complaint Center (Federal Bureau of Investigation)

IOLTA Interest on Lawyers’ Trust Accounts

IPO Initial Public Offering

IRS-CI Internal Revenue Service-Criminal Investigation

IVTS Informal Value Transfer Service

ML/TF Money Laundering/Terrorist Financing

MLO Money Laundering Organization

MSB Money Services Business

NCUA National Credit Union Administration

NDAA National Defense Authorization Act

NDTA National Drug Threat Assessment

NPRM Notice of Proposed Rulemaking

OCC Office of the Comptroller of the Currency

OCDETF Organized Crime Drug Enforcement Task Forces (U.S. Department of Justice)

OFAC Office of Foreign Assets Control (U.S. Department of the Treasury)

PII Personally Identifiable Information

PML Professional Money Laundering 

PMSJs Precious Metals, Stones, And Jewels

PEP Politically Exposed Person

PMO Postal Money Order

PPP Paycheck Protection Program

PRC People’s Republic of China

P2P Peer-To-Peer

RIA Registered Investment Adviser

RMB Chinese Renminbi 
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SAR Suspicious Activity Report

SBA Small Business Administration

SB/SE Small Business/Self-Employed

SEC Securities and Exchange Commission

SDN Special Designated National

TBML Trade-Based Money Laundering

TCO Transnational Criminal Organization

TCSP Trust and Company Service Provided

TPPP Third-Party Payment Processor 

USD U.S. Dollar

USPIS U.S. Postal Inspection Service

VAIS Virtual Asset Investment Scheme

VASP Virtual Asset Service Provider
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