Third-Party Round-Tripping
Funds are moved out of an entity to related parties, intermediaries or offshore vehicles and then cycled back, often disguised as loans, capital injections, invoice settlements or consultancy fees. The circular flow manufactures an appearance of legitimate revenue or financing while obscuring the original source and ownership of the funds.
What it is
Funds are moved out of an entity to related parties, intermediaries or offshore vehicles and then cycled back, often disguised as loans, capital injections, invoice settlements or consultancy fees. The circular flow manufactures an appearance of legitimate revenue or financing while obscuring the original source and ownership of the funds.
Control objective
Identify circular fund flows between related or connected parties that return value to its origin, distinguishing genuine intercompany financing from layering designed to legitimise illicit proceeds.
Data required
- Counterparty identities and beneficial ownership across linked accounts
- Transaction narratives and stated purpose (loan, invoice, dividend, capital)
- Timing and sequencing of outbound and inbound flows between connected parties
- Net economic effect over a rolling window (whether funds substantially return to origin)
- Corporate structure, common directors, addresses and shared control indicators
- Loan agreements, invoices and supporting documentation for stated purposes
- Use of offshore or shell intermediary jurisdictions
- Historical baseline of legitimate intercompany activity
Related typologies (Money Laundering)
Rapid Movement of Funds
Funds received and immediately transferred onward with minimal dwell time, suggesting the account is being used as a pass-through to layer illicit proceeds and obscure audit trails.
Structuring / Threshold Avoidance
Deliberate splitting of transactions to remain below reporting thresholds or monitoring triggers. Commonly associated with layering proceeds of crime or avoiding CTR filings.
Behavioural Change Indicators
Sudden or unexplained changes in a customer's transaction behaviour relative to their established profile, such as new geographies, increased volumes, or different payment types, potentially indicating account takeover or use for laundering.
Mule Account Activity
Accounts used to receive and rapidly disburse funds on behalf of criminal networks. Mule accounts are often opened by individuals who are recruited, coerced, or deceived into facilitating the movement of illicit proceeds.
Shell Company Indicators
Use of corporate entities with no genuine commercial activity to obscure beneficial ownership, layer funds, or create false invoicing chains. Shell companies are commonly used in trade-based money laundering and corruption schemes.