Evolutions in the Money Laundering Market (2013–2024): Analysis of Supply, Intermediation, and Competitive Dynamics
Money laundering constitutes a fundamental component of criminal economies, enabling the reintegration of illicit profits into legal financial systems. Recent developments in money laundering practices indicate a profound transformation in both the organisational and economic functioning of this market.
The article by Kramer et al., “Money Laundering as a Service: Investigating Business-like Behaviour in Money Laundering Networks in the Netherlands” (2024), examines money laundering processes provided as a service to drug traffickers. Drawing on Dutch police data concerning 198 identified financial facilitators between 2016 and 2020, the authors—Jo-Anne Kramer, Arjan A. J. Blokland, Edward R. Kleemans, and Melvin R. J. Soudijn—highlight the professional dynamics structuring these illicit activities.
In line with the findings of the Financial Action Task Force (2018), the authors identify professional money laundering networks. Among the diverse methods employed 1, two dominant structures emerge: networks operating within the real estate sector and those associated with underground banking activities.
Real estate money laundering networks comprise estate agents, notaries, financial advisors, and lawyers. They conduct buy-sell operations through shell companies, exploiting the sector’s susceptibility to money laundering due to the difficulty in assessing the true value of properties, real estate speculation, and the ease of concealing beneficial ownership.
Underground banking networks, on the other hand, represent an extension of the hawala 2 system, serving a broader clientele beyond its traditional community or familial foundations. These systems facilitate anonymous capital transfers, evading regulatory oversight.
A central contribution of the article is the identification of a subgroup of facilitators occupying pivotal positions within these networks. These money laundering brokers act as versatile intermediaries, controlling information and resource flows. While the FATF refers to them as cash controller networks, their role extends beyond mere liquidity management, influencing all stages of the money laundering process, particularly their ability to operate multiple forms of layering simultaneously.
The conclusions of Kramer et al. differ significantly from those of Malm and Bichler (2013), discussed in a previous blog “How Personal Relationships Structure Money Laundering.” Although the methodologies differ, these discrepancies suggest a substantial evolution in practices between 2013 and 2024. Three hypotheses may account for this transformation.
Firstly, there appears to have been an increased professionalisation of money laundering. Data from 2013 indicated that 80% of traffickers laundered money themselves. By 2024, however, reliance on professional money launderers seems to predominate.
Secondly, this shift does not appear to result from improved efforts to combat drug trafficking or money laundering, in the sense proposed by Becker 3 (1968). Instead, it likely stems from an oversupply of money laundering services, fostering a more competitive market structure. This hypothesis is supported by the role of the brokers mentioned earlier. They act as advisors to traffickers overwhelmed by the excess supply of laundering services. Their role is further justified by the growing sums generated by drug trafficking, necessitating coordinated network operations.
Thirdly, the evolution of hawala systems into globalised underground banking networks draws a historical parallel with the development of Lombard banks from the 12th century. These new hawala systems function as clearinghouses, reducing transaction costs and minimising fund losses due to rival criminals or law enforcement actions.
Consequently, unlike the situation in 2013, when traffickers favoured local channels for quick access to their proceeds, the internationalisation of money laundering routes by 2024—facilitated by brokers and underground banks—enables rapid, globalised access to laundered capital, even for relatively modest amounts.
This transformation of money laundering networks into deregulated and globalised markets demands technological and collaborative responses. The ENSEMBLE project is developing a modular toolkit based on artificial intelligence to detect and analyse illicit financial flows, particularly those involving cryptocurrencies. Its tools aim to reconstruct laundering chains by cross-referencing multimodal data (transactions, registries, dark web) and to enhance cross-border cooperation among police and judicial authorities. This approach could prove crucial in identifying key intermediaries, such as the cash controller networks described by Kramer et al., who now exploit underground banking systems and cryptocurrencies to conceal funds.
One of ENSEMBLE’s major contributions is its ability to trace cryptocurrency transactions using graph analysis algorithms capable of deanonymising criminal actors. The project also includes secure information-sharing mechanisms (via the MISP platform) to overcome jurisdictional obstacles often exploited by laundering networks. These innovations aim to strengthen investigative capacities, including training modules for investigators on new concealment methods, such as the use of mixers or shell companies.
Finally, ENSEMBLE emphasises the need for an integrated response, combining financial analysis, international cooperation, and awareness-raising among key stakeholders (notaries, estate agents). Such an approach could counter the evolving criminal practices characterised by the internationalisation of routes and the adoption of anonymising technologies. However, its effectiveness will depend on authorities’ ability to adapt to evasion strategies, such as the use of uncooperative jurisdictions or anonymous cryptocurrencies.
In conclusion, if the three hypotheses – heightened professionalisation of money laundering, oversupply of laundering services, and the emergence of new hawala systems – are confirmed, money laundering now operates as a deregulated market structured around an excess supply of illicit placement solutions, driven by expanding criminal intermediation. This configuration raises a central, largely unexplored question:
What is the profitability structure for criminal actors in such an environment? In other words, how do mechanisms of competition, specialisation, and segmentation influence the margins, risks, and economic trade-offs of these illicit financial services?
Written by Paul Labic. Laboratory for theoretical and applied economics (BETA), CNRS UMR 7522. Associate researcher at the research lab of the French police academy (ENSP)
REFERENCES
Becker, G. S. (1968) Crime and punishment: An economic approach. Journal of Political Economy, 76(2), 169–217. https://doi.org/10.1086/259394
Financial Action Task Force (FATF). (2018) Professional Money Laundering Through Trade and Money Services Businesses (Issue July). https://www.fatf-gafi.org/en/publications/Methodsandtrends/Professional-money-laundering.html
Kramer, J. A., Blokland, A. A. J., Kleemans, E. R., & Soudijn, M. R. J. (2024) Money laundering as a service: Investigating business-like behavior in money laundering networks in the Netherlands. Trends in Organized Crime, 27(3), 314–341. https://doi.org/10.1007/s12117-022-09475-w
Maillard, J. De, & Grézaud, P.-X. (1998) Un monde sans loi. Stock.
Malm, A., & Bichler, G. (2013) Using friends for money: The positional importance of money-launderers in organised crime. Trends in Organized Crime, 16(4), 365–381. https://doi.org/10.1007/s12117-013-9205-5
NOTES
- Most authors classify money laundering according to its central layering phase (1-placement, 2-layering, 3-integration). Maillard and Grézaud (1998) define twelve layering categories, from Japanese ant methods to round-tripping on financial markets. However, the ingenuity of launderers is limitless, as are the layering opportunities, which can themselves be layered. One technique to avoid detection is to move funds regularly. The ultimate goal of sanctification is never guaranteed. ↩︎
- Hawala is an informal fund transfer system operating as a decentralised clearinghouse, based on trust and personal relationships, often within ethnic or familial communities. In this system, hawaladars act as intermediaries who settle debts among themselves without physically transferring money from one location to another. ↩︎
- Becker describes crime as a cost-benefit calculation, where individuals weigh potential gains against the probability of detection and punishment. ↩︎
