What Is Money Laundering? [With Examples]

Why does money laundering matter in a digital economy?

Money laundering disguises criminal proceeds so they appear legitimate. It funds terrorism, corruption and organized crime—and it now moves at digital speed.

Every company that handles money — banks, payment processors, fintechs and marketplaces — is expected to stop it. Global regulators such as the Financial Crimes Enforcement Network (FinCEN) require Anti-Money Laundering (AML) controls that verify users, monitor transactions and flag suspicious activity.

Without accurate identity data and automated oversight, businesses face financial penalties and brand damage that can take years to repair.

What you’ll learn:

• The mechanics and red flags of money laundering
• Why AML enforcement extends beyond banks
• How Trulioo converts compliance into business confidence

How does money laundering work in practice?

Most schemes follow three familiar stages:

1. Placement: Introducing illicit funds into the financial system through cash deposits, prepaid cards or crypto transfers.
2. Layering: Moving money through complex networks of accounts, shell companies and jurisdictions to conceal its origin.
3. Integration: Re-entering the legitimate economy through purchases, investments or corporate accounts.

As digital finance expands, criminals exploit speed and anonymity to blur these stages. Detecting them requires real-time identity intelligence.

What happens when businesses ignore AML risk?

Fintech Global reported that regulatory fines for financial institutions jumped 417% in the first half of 2025 compared to H1 2024, reinforcing the urgency for stronger AML practices.

Financial crime doesn’t only target banks. Any organization facilitating payments or onboarding users could inadvertently enable illicit activity. AML compliance requires identifying both the individuals and businesses behind each transaction.

Without robust verification, organizations risk:

• Hidden ownership: Shell or front companies mask ultimate beneficial owners (UBOs).
• Synthetic identities: AI-generated profiles bypass legacy checks.
• Fragmented compliance: Multiple vendors create data gaps and increase the need for manual reviews.

Combating money laundering with verification and intelligence

Step 1: Verify people (KYC)

Know Your Customer (KYC) procedures confirm a person’s identity through authoritative data sources, documents and biometric checks. Trulioo KYC Data matches personal information against trusted sources to detect anomalies, reduce onboarding friction and meet regulatory requirements.

Step 2: Verify businesses (KYB)

Know Your Business (KYB) verifies that an organization is legitimate, identifies its ultimate beneficial owners (UBOs) and screens them against sanctions and watchlists. Trulioo’s Business Verification unifies data intelligence and automation to identify shell companies and high-risk entities in real time.

Step 3: Monitor for risk and fraud

Continuous monitoring ensures that if a verified entity’s risk profile changes—such as new directors, sanctions or unusual transaction behavior—the system detects and flags emerging threats in real time. Trulioo Fraud Intelligence enhances these checks with predictive insights, digital signal analysis and global risk scoring.

Together, these layers of verification help organizations comply with AML regulations while maintaining a trusted, efficient onboarding experience.

What competitive advantages does Trulioo offer over traditional AML tools?

Most organizations juggle multiple vendors and disconnected systems to meet regulations. That fragmentation creates blind spots, drives cost and slows onboarding.

Trulioo solves those problems through a single, global identity platform that combines verification and fraud prevention across 195+ countries through a single API. Its advantages include:

• Accuracy at scale: AI-optimized data sequencing calls the highest-confidence sources first.
• Lower cost per verified user: Automation reduces manual reviews and false positives.
• Faster onboarding: One API connects KYC, KYB and Fraud Intelligence without engineering overhead.
• Regulator-ready transparency: Every decision is timestamped, logged and exportable.

Take a tour of the Trulioo platform.

Which best practices strengthen AML programs?

• Implement risk-based KYC and KYB based on transaction volume and risk exposure.
• Maintain complete audit trails for every verification.
• Leverage AI and machine learning to spot anomalies faster than manual review.
• Re-evaluate controls regularly as regulations evolve.

Following these principles helps organizations meet AML standards while streamlining user experience and growth.

How does Trulioo turn compliance into confidence?

Money laundering is a global risk that demands precision and trust. Trulioo delivers both through a unified identity platform that verifies people and businesses, detects fraud and simplifies regulatory reporting.

By automating complex AML workflows, Trulioo reduces compliance costs, accelerates onboarding, and helps businesses scale safely and globally.”