A map for asking better questions
These original teaching diagrams do not describe real customers or establish guilt. Typologies can overlap and do not always follow a rigid placement, layering and integration sequence.
For accountants, CSPs and real estate professionals, ask what is observable and what evidence is missing. An ordinary import-export business is not automatically an AML obliged entity: distinguish legally required CDD from commercial, fraud-prevention or contractual checks. Foreign sources illustrate patterns; US/UK thresholds and procedures are not imported into Italy or Malta.
Structuring and smurfing
Illustrative mechanism: value is split across transactions; smurfing may involve several people. Potential evasion of controls matters, rather than instalments alone.
- Red flags: linked, recurring transactions without a consistent explanation.
- Lawful alternative: retail receipts or an agreed payment schedule.
- Check: reconstruct period, parties, amounts and payment reasons together; compare the expected profile.
Shell companies and opaque structures
Illustrative mechanism: layers of vehicles or nominee arrangements obscure who controls assets and benefits from flows.
- Red flags: an untraceable ownership chain, inconsistent authority or activity.
- Lawful alternative: a holding company or vehicle with genuine, evidenced functions.
- Check: trace ownership and control to natural persons, linking these to contracts, activity and funds. A foreign company is not inherently unlawful.
Funnel accounts
Illustrative mechanism: an account gathers deposits across locations and funds are quickly withdrawn elsewhere without an evidenced economic explanation.
- Red flags: geographic distance and transit activity inconsistent with the stated business.
- Lawful alternative: receipts from a distribution network with centralised treasury.
- Check: map locations, depositors, recipients and timing; establish who generates receipts and why they are pooled.
Money mule activity
Illustrative mechanism: an account receives and transfers funds for others, potentially involving recruited or exploited individuals.
- Red flags: rapid inflows and outflows unrelated to the holder’s income or activity.
- Lawful alternative: delegated administration or evidenced reimbursements; a mandate alone does not explain origin.
- Check: establish who gives instructions, the reason for flows and potential customer vulnerability. Consider fraud and customer protection as well as transit activity.
Circular transactions
Illustrative mechanism: value moves through several parties and returns to its starting point or a connected party, creating an apparent economic explanation.
- Red flags: repeated returns, connected parties and no evidenced underlying service.
- Lawful alternative: cash pooling, loan repayments or refunds for cancelled transactions.
- Check: reconcile contracts, balances, final beneficiaries and each movement’s rationale; review the network rather than one account.
Trade-based money laundering
Illustrative mechanism: trade is used to transfer value disguised through inconsistent goods, invoices or prices.
- Red flags: mismatches between contract, invoice, quantity, shipment and payment beneficiary.
- Lawful alternative: differences in quality, delivery or transport terms, or a documented assignment of receivables.
- Check: compare records accessible within your role; clarify price and the different beneficiary’s legal basis. Customs data may not be available to the adviser.
Crypto layering
Illustrative mechanism: movements between addresses, assets and services make the origin and destination of value harder to reconstruct.
- Red flags: unexplained sequences and flows inconsistent with the stated profile.
- Lawful alternative: transfers between own wallets or documented investment activity.
- Check: connect person, wallets, transactions and economic rationale using reliable evidence. A blockchain tool does not certify identity, lawfulness or absence of risk.
Inconsistent counterparties and flows
Illustrative mechanism: the invoice issuer, goods recipient and payment beneficiary differ and their roles remain unexplained. Not every mismatch is a distinct typology or unlawful.
- Red flags: last-minute beneficiary changes, contradictory roles and urgent instructions.
- Lawful alternative: logistics agents, factoring or mandated payment with a verifiable legal basis.
- Check: corroborate role, authority, payment purpose and instructions through a previously verified independent channel.
From verification to escalation
Record facts, explanations, corroboration, gaps and residual risk. If inconsistencies remain, involve the designated owner and apply local rules on proceeding, incomplete CDD and possible STR/SAR reporting where applicable. The typology’s name alone does not trigger automatic reporting; protect confidentiality and observe disclosure restrictions.
Specialist support can turn these scenarios into CDD/EDD controls, file reviews and team training. The engagement complements existing firms and professionals; it does not automatically transfer their legal responsibilities.
Sources and references
Informational content. It does not replace an assessment of a specific case.
FATF–Egmont — Concealment of Beneficial Ownership (2018)FATF–Egmont — TBML Risk Indicators (2021)FATF — Virtual Assets Red Flags (2020)FinCEN — Funnel Accounts, FIN-2014-A005 (2014)FCA — Money mule activity and cashing out (2026)FFIEC — BSA/AML Manual, Introduction