On-line banking offers a significant money laundering risk to a financial institution because:

The nature of on-line banking can make it difficult to establish who is controlling the account. On-line

banking allows customers to access their accounts remotely, without face-to-face contact with the

financial institution. This can pose challenges for verifying the identity and legitimacy of the account

holder, especially if the account is opened on-line or through a third-party intermediary. On-line

banking can also facilitate the use of anonymous or fictitious identities, or the use of proxies or

nominees to hide the true beneficial owner of the account.

The ease of access through the internet enables cross border movement of funds. On-line banking

allows customers to transfer funds quickly and easily across different jurisdictions, without physical

movement of cash or other instruments. This can increase the risk of money laundering, as funds can

be moved to or from high-risk countries or regions, or through multiple accounts or financial

institutions, to obscure the origin, destination, or purpose of the funds. On-line banking can also

enable customers to access or use alternative payment systems or virtual currencies, which may

have lower regulatory oversight or transparency standards than traditional banking systems.

The speed of electronic transaction enables execution of multiple complex transactions within short

time frame. On-line banking allows customers to conduct transactions in real time, with minimal or

no human intervention or verification. This can increase the risk of money laundering, as customers

can execute multiple transactions in a short period of time, or use complex transaction structures or

patterns, to avoid detection or reporting thresholds, or to conceal the source, nature, or ownership

of the funds. On-line banking can also enable customers to use automated or algorithmic trading

systems, which may generate large volumes of transactions that are difficult to monitor or analyze.

CAMS Study Guide - 6th Edition, Chapter 5, pages 139-140

CAMS Certification Exam Outline, Domain 2, Task 2.1, Skill 2.1.1

Online Banking and Money Laundering, ACAMS Today, September 2012