How it works
A funnel account receives deposits, usually in cash and often below the reporting threshold, from several people at branches, ATMs or agents in different locations. The funds are then withdrawn or transferred out quickly, often in another city or country. The pattern lets criminal organizations collect proceeds across a wide area and move them to where they are needed without physically carrying cash.
Funnel accounts are associated with drug trafficking and other organized crime, and with trade-based laundering where the outbound leg pays a foreign supplier. The account holder often has no visible connection to the depositors, and the account's stated purpose does not explain why many strangers are paying cash into it.
Branch-level rules see only small local deposits. The funnel becomes visible when deposits are mapped by location and depositor against withdrawals at the other end. In mobile money, the equivalent is a wallet funded through many agents in one region and cashed out or transferred in another.
Red flags
- Cash deposits into one account from many different depositors and locations
- Deposit locations far from where the account holder lives or does business
- Withdrawals or transfers out soon after deposits, leaving a low balance
- Account activity inconsistent with the holder's stated occupation or business
- Outbound payments to suppliers or jurisdictions with no clear link to the depositors
Signals the engine evaluates
- Number of distinct depositors and deposit locations per account within rolling windows
- Distance between deposit locations and the account's home branch or address
- Time from deposit to withdrawal or transfer out, and the share of inflow that leaves
- Depositors who also pay into other accounts under review, found through entity resolution
Investigation and response
- 01Map deposits and withdrawals by location, depositor and time to show the flow through the account.
- 02Identify depositors where possible and check whether they are linked to other accounts under review.
- 03Review the account holder's KYC, stated business and expected activity against the deposit pattern.
- 04Escalate to a case and file a suspicious transaction report with the financial intelligence unit, such as FinCEN in the US or the FIC in South Africa.