Compensation as a money laundering technique: Unraveling the ‘Cash Compensation Model’

• In Event: Parallel Economy

Abstract

Criminals are constantly looking for new ways to launder money, both to make their techniques more efficient and to mitigate the risk of detection or to anticipate existing barriers and other interventions. This presentation sets out the results of an empirical study into a money laundering technique known as the ‘Cash Compensation Model’. This technique involves exchanging cash from illegal activities for (or in other words, compensating with) a cashless, business transaction that is legitimized with the help of false invoices. The purpose of this study was to provide insight into the modus operandi by identifying case studies and investigating the extent to which this method occurs in the Netherlands. In addition, the study aimed to identify vulnerabilities and opportunities within various sectors, with the ultimate goal of offering perspectives for action to address them. Based on qualitative interviews with various Dutch investigative services, twelve cases in which this compensation technique was applied were identified. A thorough analysis of these case studies, combined with a study of relevant literature and media, has led to various recommendations for policy and practice. These recommendations focus on prevention as well as on frustrating the criminal business process, detection and investigation. Finally, some broader reflections and avenues for future research are discussed.

Authors

• Thom Snaphaan, Avans University of Applied Sciences & Ghent University

• Sanne Verhoeven, Avans University of Applied Sciences

• Katrien van Bergen, Avans University of Applied Sciences

• Teun van Ruitenburg, Netherlands Institute for the Study of Crime and Law Enforcement (NSCR) / Avans University of Applied Sciences