To benefit from their ill-gotten gains, organised crime groups need to inject them into the legal economy through different money laundering schemes. There is a lot of “dirty” money that must be cleaned; in fact, the United Nations Office on Drugs and Crime (UNODC) estimates that between 2 per cent and 5 per cent of global GDP is laundered each year – roughly between €715 billion and €1.87 trillion annually.
Puneet Kukreja, EY UK and Ireland cyber security leader, explains that money laundering typically follows three core stages: placement, layering and integration. “Criminals begin by placing illicit funds into the financial system, often by depositing cash into banks, purchasing high-value assets or using cash-intensive businesses,” he says. The layering phase then obscures the money’s origin through a web of transactions, cross-border transfers, crypto conversions or investments in front companies.
“Finally, integration reintroduces the funds into the legitimate economy, often via real estate, luxury goods or corporate investments.”
The scale of the problem cannot be overstated, Kukreja says; EY’s latest financial crime survey estimates that money laundering and associated crimes could actually be costing the global economy up to $3.5 trillion each year.
“In short, this is not a niche crime; it is a structural threat that affects economies, fuels organised crime and erodes public trust in financial systems.”
But how can financial institutions ensure they don’t become unwitting accomplices to criminals attempting to launder the proceeds of crime? Cal Muckley, professor of operational risk in the banking and finance area at the UCD College of Business, says improved co-operation between law enforcement, banks and regulatory supervisors is key.
“In the European Union, a single EU rule book for customer due diligence and a harmonisation of judicial procedures and criminal offences for money laundering is required,” he states, adding that improved policy on data, transparency and information sharing is required.
Muckley also believes that financial institutions should increase penalties and incentivise money laundering whistleblowers, but he adds that there has been an “unfair pass” for non-banks. “For lawyers, accountants and fintech firms, sanctions have been near non-existent,” he says. “In addition, cryptocurrencies probably receive inadequate regulation on money laundering.”
Kukreja agrees with this assessment, noting that despite all the regulations in this space, less than one per cent of that money is ever seized or frozen. “Even the Financial Action Task Force, the global watchdog on this issue, admits the current system struggles to keep up, especially when criminals exploit weak points between jurisdictions.”
AIB’s head of financial crime, Mary McHale, says the bank works closely with other financial institutions and the Banking and Payments Federation of Ireland (BPFI), Gardaí, telecom companies, and other stakeholders to prevent fraud. “We are also engaged with the BPFI’s FraudSmart education programme to ensure we are taking a co-operative approach to tackling this issue,” she says.
One key aspect of protecting their customers is educating them about the dangers of becoming a money mule, someone who is recruited by fraudsters to help transfer stolen or fraudulently obtained money from bank accounts. This is a growing problem, McHale says, with children as young as 15 being recruited, sometimes unwittingly, to allow their own bank accounts to be used.
“Although younger people are often targets, people of any age are vulnerable to be used as mules,” she adds.
Kukreja agrees, noting that in Ireland, more than €44 million moved through money mule accounts between 2020 and 2023: “This was often involving people unaware they were helping criminal gangs.”
Potential money mules can be approached online, in person, on social media or through fake job adverts. “In some cases, they see this as earning some quick money and don’t realise this is a crime,” says MacHale. “By taking part and allowing someone to use their account, even if they don’t know where the money has come from or is going to, they are facilitating money laundering.
“We would warn people to be very cautious of unsolicited emails or approaches promising opportunities to make easy money, particularly on social media, and to thoroughly research any work from home opportunities – do not get involved unless you are sure the business is legitimate.”
Muckley says customers should be informed about what money laundering is really about. “The list of crime that generates the most ‘dirty’ money includes trafficking drugs, counterfeiting, human trafficking, trafficking in oil, wildlife, timber, fish, art and cultural property, gold, human organs and small and light weapons.”
The message is clear, he says: “If someone asks to use your bank account, decline firmly.”
