How it works
Round-tripping sends money away from its owner and brings it back in a different form. Funds leave as a supplier payment, a loan to an offshore company or an investment, pass through one or more intermediaries, and return as foreign investment, a loan repayment, export proceeds or a capital injection. The owner ends up with the same money, now carrying an apparently legitimate explanation.
It is used to launder proceeds, to disguise who really owns an investment, to inflate turnover, and to claim incentives meant for foreign investors. In markets with capital controls it is also used to evade exchange-control rules.
Each leg on its own is an ordinary payment, often between different banks and jurisdictions, so single-institution rules rarely see the cycle. Detection depends on following funds across several hops and recognizing that the ultimate sender and receiver are the same party or closely connected parties.
Red flags
- Outbound payments followed by inbound payments of similar value from a different counterparty
- Counterparties that share directors, addresses or beneficial owners with the customer
- Shell companies or entities in secrecy jurisdictions with no visible operations
- Trade or loan documents that do not match the timing, value or nature of the payments
- Funds that return soon after leaving, slightly reduced by fees, with no visible economic purpose
Signals the engine evaluates
- Closed payment loops between an entity and its counterparties across multiple hops
- Similarity in value and timing between outbound and inbound legs, allowing for fees and exchange-rate differences
- Shared directors, addresses, phones or beneficial owners between the customer and its counterparties, found through entity resolution
- Counterparty jurisdiction risk, and sanctions and watchlist matches on intermediaries
Investigation and response
- 01Map the full flow of funds, including legs held at other institutions where information-sharing arrangements allow.
- 02Review beneficial ownership and the stated commercial reason for each counterparty, requesting contracts or invoices where needed.
- 03Screen every intermediary against sanctions and watchlists, and check for links to politically exposed persons.
- 04Escalate to a case and file a suspicious transaction report with the financial intelligence unit, naming the related parties and jurisdictions involved.