Transaction laundering (also known as unauthorized aggregation or factoring) is a sophisticated form of digital money laundering. It occurs when an approved, legitimate-looking merchant account processes credit card transactions on behalf of another, unapproved, and typically high-risk or illegal business.
How Transaction Laundering Works
A fraudster creates a "front" company—such as a simple e-commerce website selling low-risk items like clothing or coffee. They apply for a merchant account and easily pass standard, manual underwriting checks. Once approved, the fraudster routes payments from a hidden website (selling illegal drugs, counterfeit goods, or unlicensed gambling) through the approved front company's payment gateway.
Why is it So Dangerous?
Because the transaction appears to come from a clean, low-risk MCC, the acquiring bank processes it without suspicion. When the card networks inevitably catch the illegal activity via BRAM or continuous monitoring, the acquirer faces massive fines and potential loss of processing licenses.
Exposing Hidden Networks with Onlayer
Transaction laundering is nearly impossible to catch manually. Onlayer solves this by mapping merchant presence and operational behavior across the entire web. It instantly flags severe impersonation risks, cloned listings, and unauthorized network linkages, catching deceptive merchants definitively before finalizing the approval process.
