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Air Travelers Help Fuel $2 Trillion Global Money Laundering System

Each year, money launders funnel $2 trillion in ill-gotten gains into the financial system.

And a lot of that money travels by air, in cash, often in people’s suitcases, The Wall Street Journal (WSJ) reported Sunday (April 21).

The report cited figures from the United Nations Office on Drugs and Crime and the Financial Action Task Force (FATF) showing that international air travelers likely move hundreds of billions in laundered funds in cash each year.

According to the report, this rise in airline smuggling is the result of banks stepping up their suspicious transaction monitoring in the wake of money-laundering scandals.

“You just can’t walk into a bank with this much money without being flagged,” George Voloshin, of ACAMS, a money laundering watchdog group, told WSJ. “You will be arrested at the next branch.”

The report noted that officials and industry groups argue that moving cash through airlines is a relatively low risk for smugglers.

Among them is a woman named Jo-Emma Larvin, part of a group of people accused of working for a money launderer from the United Arab Emirates. Authorities say they transported $125 million, primarily between July and October in 2020. 

“How the hell did they get away with it — so much money in such a short space of time?” said Ian Truby, a senior investigating officer for Great Britain’s National Crime Agency

Part of the reason, he told WSJ, is that airport security is focused on flight safety, not spotting financial crime.

As PYMNTS wrote earlier this month, this trend is happening amid new efforts to crack down on money laundering and other financial crimes. Late last month, the Financial Crimes Enforcement Network (FinCEN) requested comments on its Customer Identification Program (CIP) requirements for banks.

And in February, the FATF added new countries to its “increased monitoring” list, with Kenya and Namibia joining that list while the group removed Barbados, Gibraltar, Uganda and the UAE.

Research by PYMNTS Intelligence and Hawk AI has found that more than 40% of financial institutions (FIs) are seeing increasing volumes of fraud and financial crime. Seventy percent of FIS said they now are using AI and machine learning to battle bad actors. 

“Uncovering whether someone is who they say they are is critical,” PYMNTS wrote. “Separate data shows that 4.6% of transactions were classified as synthetic identity fraud.”