BA008 · Correspondent Banking

Layering

Layering is the classic middle stage of money laundering: funds already placed into the financial system are pushed through a chain of transfers designed to sever the audit trail from their source before the proceeds are integrated into legitimate-looking assets. Unlike BA004 Circular Funds Flow (engineered to return to the originator), a layering chain has no obligation to close a loop — its only job is to put distance, opacity and jurisdictional friction between the seed account and wherever the funds end up.

The finding lives in four places: how many hops the chain takes before the trail goes cold, how many of those intermediaries are shells or nominees rather than identifiable counterparties, how many secrecy or offshore jurisdictions the chain crosses, and how much the value is split into fragments — and re-merged — along the way to defeat simple amount-matching.

Risk indicators

Chain Depth

• Multiple transfer hops between the seed account and the funds' eventual destination
• A trail that goes cold well before it reaches an identifiable beneficial owner

Intermediary Opacity

• Intermediaries that are shell companies or nominee entities with no independent
• Corporate registries that show recently-formed entities with no verifiable trading history

Jurisdiction Hopping

• Cross-border routing through recognised secrecy or offshore jurisdictions
• Jurisdiction choices inconsistent with the seed account's declared business geography

Value Fragmentation

• The seed amount split into multiple fragments across the chain
• Fragments re-merged downstream in combinations that defeat simple amount-matching

Investigation actions

1. Resolve the seed account and every intermediary in the chain (first hop, second hop,
2. Count the transfer hops (chain depth) the funds pass through before the trail goes cold.
3. Compute the intermediary opacity ratio (opaque/shell intermediaries / total
4. Count the hops that route through a recognised secrecy/offshore jurisdiction.
5. Count the fragments the seed amount is split into along the chain.
6. Score each of the four components against its band cut-lines.
7. Aggregate the weighted exposure score; escalate at or above the threshold.

Detection logic

1. Resolve the seed account and every intermediary in the chain (first hop, second hop, destination). 2. Count the transfer hops (chain depth) the funds pass through before the trail goes cold. 3. Compute the intermediary opacity ratio (opaque/shell intermediaries / total intermediaries). 4. Count the hops that route through a recognised secrecy/offshore jurisdiction. 5. Count the fragments the seed amount is split into along the chain. 6. Score each of the four components against its band cut-lines. 7. Aggregate the weighted exposure score; escalate at or above the threshold.

Related typologies

Curated from fc-06-correspondent-banking-analytics-toolkit/typologies/BA008_Layering.md