Money launderers use a variety of complex transaction structures to mask the source of illegal funds and make them appear legitimate. Here are some common methods used in banking and financial services: 1. **Layered structures**: Money launderers use multiple layers of companies, trusts, and registered agents to mask the ownership and control of assets. This makes it difficult to track the flow of funds. 2. **Offshore banking and financial centers**: Money launderers take advantage of offshore banking and financial centers, which often have more lax regulatory and confidentiality laws. This allows them to hold bank accounts and transfer funds anonymously. 3. **Shell companies and fake entities**: Money launderers create shell companies or fake entities to mask the true ownership and purpose of funds. These companies may have no actual business operations and no assets that could generate income. 4. **Layers of transactions**: Money launderers conduct multiple transactions, each designed to mask the source and ownership of funds. This may involve moving funds between different accounts, attributing them to different companies or individuals. 5. **Currency exchanges and black markets**: Money launderers use currency exchanges and black markets to convert currencies, mask the flow of funds, and evade regulation. 6. **Programmable Payers (PPs)**: Money launderers use PPs, which are individuals or companies that act as intermediaries between money launderers and financial institutions. 7. **Structured Deposits**: Money launderers break large deposits into smaller amounts, often below reporting thresholds, to avoid raising suspicion. 8. **High-risk Payment Systems**: Money launderers use high-risk payment systems, such as remittances and prepaid cards, to move funds because these systems may not be subject to the same regulatory and reporting requirements as traditional banking systems. 9. **Virtual Currency and Cryptocurrency**: Money launderers use virtual currency and cryptocurrency to move funds because these currencies are often anonymous and difficult to track. 10. **Trade Finance and Currency Schemes**: Money launderers use trade finance and currency schemes, such as fake business transactions and unrealistic prices, to move funds and conceal the source of assets. To prevent and detect these complex transaction structures, financial institutions and regulators use a variety of methods, including: 1. **Risk Profiling**: Financial institutions conduct risk profiling of customers and transactions to identify potential money laundering threats. 2. **Know Your Customer (KYC): Financial institutions establish relationships with customers and collect information that identifies their identities and businesses. 3. **Transaction Monitoring: Financial institutions monitor transactions to detect suspicious activity, such as unusual or inconsistent transactions. 4. **Reporting Suspicious Activity: Financial institutions report suspicious activity to the Financial Intelligence Unit (FIU). 5. **Information Sharing: Financial institutions and regulators share information and best practices to prevent and detect money laundering. 6. **Use of Technology: Financial institutions use advanced technologies, such as machine learning and artificial intelligence, to detect and prevent money laundering. These methods help prevent and detect complex transaction structures and enable financial institutions and regulators to more effectively combat money laundering.