Peer-to-peer lending platforms are increasingly being seen as a target for money launderers, as platforms are warned to take extra measures to protect themselves from the risk of fraud.
According to the National Crime Agency (NCA), P2P lenders are the number two target for fraudsters, second only to payment service providers.
“Money laundering crooks do a lot of research on how to integrate money, and they’re looking for a soft target,” explained John Derry-Collins, director at compliance specialists I-fact.
“P2P platforms don’t tend to ask where the money is coming from – they might check that deposits are coming from a UK bank account holder, but it’s not difficult to open one of those.”
Derry-Collins has worked with the NCA on anti-fraud measures, and he has outlined three key stages of money laundering.
“The first part is to get the money into the system, then the second part is layering as many deals as you can in between the crime and taking the money for your own,” he told Peer2Peer Finance News. “The third stage is integration where you accept the money and use it.”
He pointed out that the P2P model lends itself particularly well to this type of transaction, and the size of the P2P industry means that criminals can scale up these transactions by using a number of different accounts and platforms.
Read more: New regtech tool targets lending fraud
While this kind of activity is difficult to spot, there are ways to uncover links between potentially fraudulent accounts.
“You are looking for the unusual activity,” said Derry-Collins.
“Almost always a money laundering event is a significant event and it is recognised as being something out of the ordinary – something suspicious.”
He advised platforms to act quickly when suspicious account activity is noticed, and alert the NCA, in order to avoid culpability.