Inside the Minds of Serial Transaction Launderers: How They Evade Detection and What You Can Do About It

1. What Is Transaction Laundering, Really?

Transaction laundering is a form of fraud meant to trick payment processors into granting merchant accounts under false pretenses. It occurs when a merchant uses a seemingly innocuous front website to process payments for a violative business. There are several laundering models:

• Do-it-yourself shell sites: This is when the operator of the illicit business applies for a merchant account under false pretenses.
• Laundering as a service: Some fraudsters obtain merchant accounts under false pretenses and then sell access to their processing capabilities.
• Offline and obscure sites: These are typically websites that barely function publicly but funnel payments behind the scenes.

2. Motivation and Tactics of Reoffenders

Why do they keep coming back? Because they have to. These bad actors need to accept card payments to survive. And when caught, they adapt, learning from mistakes and returning with new names, domains, and shell websites.

The investment in transaction laundering varies, often based on the type of illicit business:

• Sophisticated, high-investment operations: Rogue internet pharmacies and illicit gambling rings tend to invest in more sophisticated laundering, with vast networks of merchants accounts for load balancing and techniques to deter detection, such as mandatory customer logins.  
• Brute force, low-investment setups: Other businesses, commonly IPTV services and psychoactive “high” products, rely on volume over stealth. They are easily caught but reappear like weeds.

3. Catching the Launderers: Key Red Flags

Spotting laundering isn’t always straightforward, but there are clues to assessing a merchant website:

• Incoherent or suspiciously template-heavy websites
• Broken links, typos, or nonexistent product info
• Missing privacy or return policies
• Websites that actively block crawlers or lack web presence
• Mismatched business names, obviously wrong MCC codes, or reused IP addresses

Although traditional front websites often looked poorly designed, that isn’t always the case. Sophisticated transaction launderers can copy the design of real websites or use AI-powered web design platforms to create sleek-looking websites.

4. Common Shell Website Businesses

Launderers often use “generic” front businesses:

• Web hosting, graphic design, or AI photo editing “services”
• Drop-shipping stores with erratic pricing or fast-changing catalogs
• Supplement or skincare shops that seem … just a bit too vague

5. Network Mapping: Your Secret Weapon

One of the most powerful tools in the fight is network analysis — using shared data points like email addresses, naming patterns, and registrar info to connect shell sites across a broader laundering operation.

In one case study, LegitScript analysts tracked a peptide-selling operation across clothing, gift card, and horse pharmaceutical fronts — thanks to data breadcrumbs and sharp analyst instincts. One front website led to dozens of violative websites over multiple networks.

6. Why Strong Data & Analyst Expertise Matter

Catching a launderer is the start — not the end. The real power comes from tracking, mapping, and anticipating their next move. That means robust data systems, good recordkeeping, and sharp human review.

LegitScript’s monitoring tools and new AI-powered onboarding solution help do exactly that — faster and smarter.

Conclusion

Transaction laundering isn’t going away — but with better tools, smarter detection, and expert analysts, it’s a battle risk teams can win. Stay vigilant, trust your instincts, and never underestimate the value of one suspicious shell site — it might just be the thread that unravels an entire network.

To learn more, get your copy of our guide Transaction Laundering: Typologies and Methodologies.