Money-Laundering Schemes Involving Checking Accounts: Roles, Typologies, and How Victims Become Willing Participants

By Kenneth Simmons

This publication explores how criminals exploit checking accounts as instruments in money-laundering schemes, focusing on the typologies of misuse, the roles people play, and the psychological and operational factors that turn ordinary individuals into participants.

By examining both structural and human dimensions, it sheds light on the evolving intersection between financial systems, fraud, and social engineering.

How Checking Accounts Fit Into Laundering Schemes

Checking accounts are a foundational component of the financial system—ubiquitous, trusted, and designed for accessibility. These very attributes make them prime tools for laundering illicit funds. They are particularly valuable during the placement and layering stages of laundering, where the goal is to introduce illegal proceeds into the legitimate financial system and obscure their origins through movement and transformation.

Criminals exploit the flexibility of checking accounts to execute rapid deposits, transfers, and withdrawals that mimic legitimate commerce. They may route illicit funds through multiple personal or business accounts, disguising them as payroll payments, vendor refunds, or customer remittances. The ordinary nature of these transactions—and the high volume of legitimate account activity—makes detecting anomalies exceptionally difficult without advanced behavioral analysis and cross-institutional cooperation.

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Typologies

Each typology represents a method by which criminals adapt legitimate banking tools for illicit ends. The following categories highlight both traditional and emerging approaches:

• Nominee and Shell Accounts

  Criminals create or use accounts under false names, shell companies, or stolen identities to obscure beneficial ownership. These accounts may appear legitimate on paper, complete with fabricated corporate documents or plausible business narratives. Shell entities are often registered in jurisdictions with weak beneficial ownership transparency laws, enabling launderers to operate across borders with minimal scrutiny.

  Example: A shell company registered as a “consulting firm” may invoice a criminal organization for fictitious services, routing payments through a checking account to give the funds a veneer of legitimacy.

• Money Mule Chains

  This typology involves a series of individuals who receive and forward funds through their personal checking accounts. Mules may be recruited knowingly or unknowingly, often via online job postings or social media messages promising easy income for “payment processing.”

  To enhance concealment, criminals structure transactions across multiple mules, creating a chain that spans countries and currencies. Each transfer adds a layer of separation between the original source of the funds and their final destination. Increasingly, cybercrime rings employ automated mule-management systems that instruct mules via messaging platforms and track their compliance in real time.

• Structuring and Smurfing

  Structuring—also known as “smurfing”—involves breaking large sums into smaller deposits to evade reporting thresholds (e.g., $10,000 under the U.S. Bank Secrecy Act). Launderers may combine structured deposits with rapid withdrawals, electronic transfers, or the purchase of cashier’s checks to further obfuscate money trails.

  This typology frequently intersects with other schemes, such as commercial layering or mule activity, and often relies on insiders or complicit account holders who understand how to avoid detection triggers.

• Commercial Layering

  Small and medium-sized businesses are particularly attractive conduits for laundering because their transaction volumes can mask irregularities. Criminals exploit legitimate commercial flows—such as supplier payments or customer refunds—to co-mingle illicit and legitimate funds.

  A retail business might inflate daily sales or fabricate vendor invoices to justify illicit deposits. In more sophisticated cases, launderers use multiple linked business accounts—domestic and offshore—to simulate genuine cross-border commerce.

• Insider Laundering

  This typology involves employees within financial institutions or private companies who leverage their access to systems, customer data, or compliance processes to facilitate laundering. Insiders may manipulate Know-Your-Customer (KYC) records, override transaction alerts, or deliberately misclassify suspicious activity.

  In some cases, insiders are coerced or bribed; in others, they are active collaborators who benefit financially from the scheme. The insider typology underscores the importance of strong internal controls, dual authorization systems, and continuous employee monitoring.

• Hybrid and Technology-Enabled Typologies

  Modern laundering schemes increasingly combine typologies and incorporate digital tools. Online banking, fintech platforms, and peer-to-peer payment systems allow launderers to rapidly move funds while maintaining a façade of legitimate digital commerce. Some schemes blend traditional checking-account misuse with cryptocurrency conversions or prepaid debit card withdrawals—creating hybrid laundering ecosystems that span both regulated and unregulated financial environments.

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Roles in Laundering Schemes

Money-laundering operations mirror organized-crime hierarchies, combining strategic control with distributed execution. The roles below represent key functional layers within these schemes:

• Organizers

  Organizers are the strategic architects—often connected to broader criminal enterprises—who design laundering pipelines, source participants, and control the flow of funds. They identify vulnerabilities in banking systems and adapt to enforcement trends. Organizers frequently operate offshore or use intermediaries to shield themselves from exposure.

  
  

• Handlers or Coordinators

  Handlers manage operational logistics. They recruit mules and front persons, provide instructions, monitor compliance, and troubleshoot issues such as blocked transactions or frozen accounts. Handlers are often the communication bridge between organizers and lower-level participants. They may oversee dozens or even hundreds of accounts simultaneously.

  
  

• Front Persons

  Front persons lend legitimacy to the operation by attaching their real or fabricated identities to accounts, businesses, or transactions. They might register shell companies, provide documentation, or claim ownership of assets. Some front persons are complicit, while others are manipulated through deception or intimidation. Their perceived legitimacy often provides cover during the early stages of laundering.

• Money Mules: The Operational Foot Soldiers

  Money mules are the operational foot soldiers of laundering networks—the individuals who physically or digitally move funds between accounts, withdraw cash, or transfer money abroad under instruction. Their participation bridges the gap between cyber-enabled crime and the regulated banking system.

  At first glance, their activities can resemble ordinary banking behavior: accepting payments, forwarding funds, or purchasing prepaid cards. However, these seemingly harmless actions are critical to the layering and movement of illicit proceeds.

  
  

  Criminal networks categorize money mules along a spectrum of awareness and intent. These categories are not only useful for understanding the psychology of participation but are also essential for law enforcement, as they influence charging decisions, rehabilitation potential, and preventive outreach.

1. Unwitting Mules — The Deceived Participants

Unwitting mules are individuals who genuinely believe they are performing a legitimate task. They may have been recruited through fake job offers, online freelance postings, or romance scams, where the transfer of funds is framed as part of normal business or personal support.

Typical characteristics:

• They are often new to online work or financial transactions involving third parties.

• They receive convincing communications that include contracts, company logos, and structured “onboarding” processes.

• The initial transactions are small, plausible, and presented as tests of reliability.

  
  

Example:

A person responds to an online job ad for a “financial coordinator” and is told to receive payments from “clients” before forwarding them to a “regional office.” Believing they are engaged in a legitimate role, the individual unknowingly launders fraud proceeds.

Implications:

Unwitting mules are considered victims rather than perpetrators, though their accounts may still be frozen or investigated. Awareness campaigns and early intervention are critical to prevent their exploitation.

2. Witting Mules — The Willfully Ignorant Participants

Witting mules occupy a gray zone between innocence and complicity. They sense something is wrong—such as unusual instructions, inconsistent explanations, or rewards that seem too generous—but choose not to question it.

Typical characteristics:

• They rationalize participation as “just helping someone out” or “taking a small risk for easy money.”

• They avoid asking probing questions that might confirm their suspicions.

• They may convince themselves the transactions are in a legal gray area rather than criminal activity.

  
  

Example:

A person is approached online to use their checking account “temporarily” for international payments in exchange for a commission. They suspect the money might not be clean but proceed anyway because “it’s already going through a bank, so it must be fine.”

Implications:

Witting mules present a major enforcement challenge. While they are partially culpable, their intent can be hard to prove. They often become repeat participants, making them a prime focus for targeted deterrence campaigns and behavioral education that highlight legal consequences and warning signs.

3. Complicit Mules — The Knowing Collaborators

Complicit mules are active partners in the laundering process. They fully understand that the funds are derived from illicit sources and willingly cooperate in exchange for financial gain, protection, or loyalty to a criminal group.

Typical characteristics:

• They may open multiple checking accounts under their own or false identities to facilitate transfers.

• They sometimes recruit new participants, functioning as low-level “handlers.”

• They often receive a fixed percentage of the laundered amount as payment.

• They employ tactics to avoid detection, such as using VPNs, scheduling transactions to avoid bank alerts, or using mixed currencies and payment methods.

  
  

Example:

A complicit mule knowingly allows their business account to receive fraud proceeds and issues false invoices to justify the inflows. In return, they keep 10% of the total transferred amount.

Implications:

Complicit mules are treated as co-conspirators and face serious criminal charges under money-laundering and fraud statutes. They represent the operational backbone of laundering networks and often transition into more senior roles as recruiters or handlers.

Why the Distinction Matters

Understanding the differences between unwitting, witting, and complicit mules is vital for both law enforcement and financial institutions.

1. For investigators, it helps distinguish victims from criminal collaborators, ensuring proportional responses.

2. For banks, it guides risk modeling, as behavioral patterns differ—unwitting mules often show erratic but limited activity, while complicit mules display structured, recurring patterns.

3. For policymakers, it informs education and deterrence efforts, emphasizing how personal responsibility, awareness, and digital literacy can prevent ordinary account holders from sliding down the spectrum from unaware to complicit.

• Insiders

  Insiders occupy trusted positions within banks, payment processors, or corporate finance departments. They enable laundering by falsifying documentation, suppressing alerts, or facilitating unauthorized transfers. Their insider knowledge allows criminal networks to bypass technical safeguards that would otherwise detect anomalies.

  
  

• Cleaners

  Cleaners, sometimes called “integration specialists,” are responsible for transforming laundered funds into assets that appear legitimately earned. They may convert cash into real estate, vehicles, investment portfolios, cryptocurrencies, or high-value goods. Cleaners often collaborate with professional intermediaries—such as accountants, lawyers, or notaries—who may be complicit or negligent in verifying the legitimacy of transactions.

  
  

• Enablers and Professional Facilitators

  Beyond the traditional hierarchy, certain professionals—lawyers, accountants, corporate service providers—play indirect but critical roles. By creating legal structures, drafting contracts, or managing client accounts without sufficient due diligence, they provide the infrastructure that allows laundering schemes to operate under a veil of legitimacy.

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How Victims Become Willing Participants

A defining and troubling feature of many checking-account laundering cases is that some participants begin as genuine victims. They are not career criminals but ordinary individuals—students, job seekers, retirees, or financially vulnerable people—targeted through deception. Over time, they are maneuvered into becoming active participants in laundering operations without realizing, or while denying to themselves, the criminal nature of their actions.

The Recruitment Process: From Approach to Entrapment

Criminal networks recruit potential mules through diverse psychological and social channels, often disguised as legitimate opportunities or relationships. Common recruitment avenues include:

• Fake Job Offers: Scammers pose as legitimate employers, advertising remote or part-time positions such as “payment processing agents,” “financial managers,” or “international logistics assistants.” Applicants are told they will receive customer payments and forward them to a regional branch or supplier, effectively laundering funds through their accounts.

• Romance Scams: Criminals establish long-term emotional relationships online, gradually building trust before introducing financial transactions under the guise of emergencies, travel expenses, or business investments.

• Investment or Crypto Schemes: Victims are persuaded to “test” new investment platforms by moving funds through their checking accounts or converting them into digital assets for supposed trading.

• Charity and Humanitarian Appeals: Fraudsters exploit empathy by framing transfers as part of relief efforts or community initiatives, using emotional urgency to override rational scrutiny.

Each of these tactics leverages credibility cues—professional-looking websites, official-sounding email addresses, and realistic documentation—to create a sense of legitimacy.

Psychological Conditioning and Manipulation Techniques

Once contact is established, criminals employ a series of manipulation techniques designed to erode skepticism and create compliance:

• Authority Impersonation: Offenders claim affiliation with reputable companies, law firms, or government bodies, instilling obedience through perceived legitimacy.

• Urgency and Scarcity: Victims are pressured to act quickly—“the transfer must happen today”—leaving no time for due diligence or reflection.

• Emotional Bonding: Especially in romance or mentorship scenarios, trust and affection are weaponized. Victims prioritize emotional connection over rational evaluation.

• Normalization of Suspicious Requests: The process begins with harmless-seeming tasks (e.g., forwarding small sums) that gradually escalate. Each step makes the next one feel more acceptable—a phenomenon known as the “compliance ramp.”

• Reward and Reinforcement: Victims receive small payments or praise, reinforcing their perception of legitimacy and trustworthiness.

This process systematically shifts the victim’s moral and cognitive boundaries, leading them to rationalize questionable actions as “helping a friend,” “following company policy,” or “just doing their job.”

The Psychological Transformation: From Victim to Apparent Collaborator

Over time, the manipulation produces a subtle but powerful transformation. The victim begins to internalize the criminal’s narrative, developing a sense of personal responsibility for the transactions. When suspicions arise, cognitive dissonance leads them to justify their behavior rather than confront the possibility of deception.

Several stages are common in this transformation:

1. Trust and Belief: The victim accepts the fraudster’s identity and motives as genuine.

2. Action and Routine: Handling money becomes normalized, eroding sensitivity to red flags.

3. Rationalization: The victim convinces themselves the activity is harmless or technically legal.

4. Dependence: Financial incentives or emotional bonds make withdrawal from the scheme difficult.

5. Realization and Entrapment: By the time the victim recognizes the deception, they are deeply entangled—often facing frozen accounts, financial loss, or legal scrutiny.

   
   

This blurring of victimhood and complicity is a defining feature of modern laundering networks, particularly those operating in cyber-enabled fraud ecosystems where personal interaction is replaced by digital manipulation.

Law Enforcement Perspectives and Challenges

From a law enforcement standpoint, these cases present significant investigative and prosecutorial complexity. The key challenge lies in distinguishing between intentional participation and coerced or manipulated behavior.

• Intent Assessment: Investigators examine the individual’s level of knowledge, the plausibility of the scam, and the presence of deliberate evasive behavior (e.g., using false explanations or concealing communications).

• Behavioral and Financial Indicators: Patterns such as rapid transaction escalation, multiple account openings, or continued participation after explicit warnings may shift the perception from victim to accomplice.

• Psychological Evaluation: In many jurisdictions, prosecutors consult behavioral experts to assess susceptibility, manipulation, and cognitive impairment to determine the degree of culpability.

• Evidence of Coercion or Deception: The existence of persuasive correspondence, fabricated contracts, or emotional grooming strengthens the case for victimhood.

  
  

Agencies such as the FBI, Europol, and FinCEN increasingly emphasize that not all money mules are criminals. Public advisories often distinguish “recruited” or “groomed” mules from professional launderers. The focus is shifting toward early intervention—identifying victims before they become repeat participants—rather than default prosecution.

Preventive and Investigative Strategies

Law enforcement and financial institutions now collaborate to identify behavioral patterns that signal grooming or recruitment. Techniques include:

• Transaction Pattern Recognition: Identifying new accounts showing rapid inflows and outflows inconsistent with customer profiles.

• Communication Forensics: Tracing social media or email recruitment channels linked to known fraud networks.

• Victim Outreach Programs: Providing education and amnesty opportunities for individuals who report suspicious recruitment.

• Public Awareness Campaigns: Messaging that reframes money mule activity as a form of victim exploitation rather than “easy income.”

  
  

Ultimately, the law enforcement view recognizes that willing participation is often manufactured rather than chosen. The transition from victim to accomplice reflects a continuum of deception and manipulation—one that demands both investigative rigor and empathy. Protecting individuals from this transformation is as crucial to anti-money-laundering strategy as tracking the funds themselves.

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Detection and Prevention

Financial institutions employ multiple tools to detect and prevent checking-account laundering, including:

• Transaction Monitoring Systems: Automated detection of unusual or high-risk patterns.

• KYC and CDD Protocols: Know-Your-Customer and Customer Due Diligence procedures that verify identities and business purposes.

• Behavioral Analytics: AI and statistical modeling to flag deviations from normal account behavior.

• Suspicious Activity Reports (SARs): Mandatory filings to FinCEN and other authorities.

• Public Education Campaigns: Informing consumers about money-mule recruitment tactics and scam awareness.

• Law Enforcement Collaboration: Data sharing and joint investigations between banks, FinCEN, the FBI, and international partners.

Preventive strategies focus increasingly on human factors—identifying manipulation tactics, raising awareness, and providing early intervention to potential victims before they become complicit.

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Conclusion: The Value of Industry Expertise in AML Litigation

The complexity of money-laundering schemes involving checking accounts underscores why both complainants and defendants in Anti-Money Laundering (AML) cases benefit greatly from the insight of an industry expert in financial crime and banking operations. Laundering through ordinary financial instruments blurs distinctions between intentional misconduct, negligence, and victimization. Transactions that appear incriminating in isolation often take on different meaning when viewed through the lens of industry practice, compliance protocols, and behavioral manipulation patterns.

SEDA Experts has extensive experience advising both plaintiffs and defendants, including financial institutions and individual parties, in complex AML and banking matters.

An industry expert provides the specialized understanding needed to contextualize financial behavior—clarifying whether activities align with established laundering typologies, such as structuring, layering through commercial accounts, or mule recruitment. They can distinguish between routine account management and deliberate concealment, offering the court or investigative body a fact-based interpretation of transactional data and institutional procedures.

For complainants, expert testimony can strengthen a case by articulating how specific actions or control failures violated regulatory expectations or standard banking protocols. Experts help demonstrate the systemic risks or internal weaknesses that enabled illicit movement of funds, and can clearly explain the “red flags” that a reasonable financial institution or individual should have recognized. This supports the evidentiary burden of proving negligence, compliance breaches, or willful blindness.

For defendants, especially individuals accused of participation in laundering, an expert’s perspective can be equally vital. Many participants in checking-account laundering schemes begin as manipulated victims—unwittingly drawn into financial flows they did not understand. An expert can explain how deception, social engineering, and normalized financial behavior blur intent. By referencing established AML frameworks, banking procedures, and psychological grooming techniques, experts help courts evaluate whether a defendant’s conduct truly demonstrated criminal intent or reflected plausible ignorance within a realistic context.

Moreover, in disputes involving financial institutions, an AML or banking expert can assess whether internal systems—such as transaction monitoring, KYC processes, and escalation mechanisms—met regulatory standards at the time of the alleged failure. This technical clarity ensures accountability is fairly attributed and not oversimplified by hindsight bias.

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EXPERT INVOLVED

Kenneth Simmons

Kenneth Simmons, brings more than 30 years of banking and regulatory experience, including his pivotal tenure with the Office of the Comptroller of the Currency (OCC) — the primary federal regulator for national banks. At the OCC, Simmons was deeply involved in bank supervision, risk management oversight, and the enforcement of compliance with the Bank Secrecy Act (BSA) and AML frameworks. His hands-on regulatory experience provides a rare dual perspective: understanding how institutions are expected to design and operate AML programs, and how regulators assess, critique, and enforce those systems.

This insider knowledge makes Simmons particularly effective in litigation and arbitration involving BSA/AML violations, internal control failures, regulatory remediation, and due diligence deficiencies. He translates dense regulatory language into actionable analysis and clear, credible testimony.

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SEDA Experts, through specialists like Mr. Simmons, provides the financial and regulatory acumen that enables legal teams to:

• Clarify whether a bank’s AML controls met regulatory standards;

• Assess the reasonableness of compliance officer decisions and responses to red flags;

• Evaluate whether regulators acted within or beyond their supervisory authority; and

• Support or challenge findings in consent orders, civil money penalties, or enforcement actions.

  
  

In AML disputes, credibility and regulatory fluency are everything.

Engage SEDA Experts to bring unparalleled insight, authoritative testimony, and the assurance of industry veterans who understand both sides of compliance — from inside the bank and inside the regulator’s office.

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