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How Criminals Use Peer-to-Peer Marketplaces to Launder Money

Whether your company wants to sell a vehicle, buy office furniture, or liquidate obsolete inventory, there is likely an online peer-to-peer (P2P) marketplace available to help you do it. Yet unlike banks and other financial services organizations, P2P providers sometimes lack the technology, processes, and experience to fully vet buyers and sellers. This creates an opportunity for criminals looking to launder money.

Distancing money from crime

Here is how these schemes work: a money launderer (masquerading as a legitimate buyer) agrees to purchase, say, office furniture your company advertises for sale on a P2P site. Instead of taking possession of the furniture, the money launderer sends the amount due to a colluding employee in your company and instructs the employee to keep a small percentage for facilitating the sham transaction. The employee then sends most of the sales proceeds back to the launderer via check, Automated Clearing House transfer, or wire.

Each fake transaction recorded on the P2P platform further weakens the connection between the money and the crime that produces it.

Screening providers

To avoid becoming party to a P2P money laundering scheme, choose your online marketplace carefully. Start by searching online for news and reviews by buyers and sellers. Although you are likely to encounter a few negative items for every site, stay away from marketplaces with pervasive problems or fraud claims. Also research how the P2P provider screens and verifies buyer and seller identities. If verification does not appear to be a priority, that is a red flag.

Because P2P money laundering schemes usually require accomplices on the ‘inside,’ you should monitor the email of employees who work with P2P accounts. Let employees know whom they should notify if they receive a solicitation from a money launderer or if a P2P transaction raises concerns.

Avoiding risk

P2P money laundering is only one of many new and evolving fraud schemes targeting businesses online. Contact us for help shielding your company from such risks.

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