Glossary term
Funnel Account
Subject: Financial Crime, Money Laundering, Typologies and Asset Recovery
Also known as: Pass-Through Account
A funnel account is a bank account that collects deposits from many people or places, often far from where the account is held, and from which the money is quickly moved on to another destination.
Explanation
Funnel accounts turn up in mule networks, drug trafficking and fraud rings. A criminal group asks mules to open accounts, or takes over genuine ones, so that cash or transfers can be paid in at many branches or from many senders. The money is then withdrawn or sent on within hours or days, usually to a person or account that is not visible to the original depositors. The pattern breaks the link between the source and the final holder and spreads the activity across many people so that each deposit looks small. Banks notice accounts with deposits from distant locations, many unrelated payers, very little balance left at day end and activity that does not match the holder's job or stated income. Funnel accounts are a common route for drug proceeds and scam payments. Closing a funnel account removes one node only, so investigators use its inflows and outflows to map the people behind it.
Example
A student account opened with a normal balance suddenly receives cash deposits in 15 cities over two days, each below 5,000. By the next afternoon, all of it has been moved by transfer to two accounts abroad. The bank freezes the account on suspicion, contacts the student and learns he lent his debit card to a person he met online.
Not to be confused with
- Payable-Through Account (PTA)
- A payable-through account lets a foreign bank's customers use a correspondent's account directly. A funnel account is a criminal collection point for deposits.