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#2135753 - 06/26/17 12:48 PM Overpaying Loans AML Risk
JessZ Offline
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Joined: Jun 2017
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Would it be possible for someone to take out a loan, overpay it, and use the refund to launder money? (Not including credit card payments). Doing research for my manager--we both assumed that's a possible scheme, but I can't find anything about it. Also, if yes, is there any regulation of it?
Last edited by JessZ; 06/26/17 12:48 PM.
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#2135768 - 06/26/17 01:27 PM Re: Overpaying Loans AML Risk JessZ
Daisy Doodle Offline
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Joined: Feb 2014
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Southern U.S.
I think a lot of systems prevent or restrict credit balances on loan or credit card accounts. For AML and operational reasons.

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#2135799 - 06/26/17 03:26 PM Re: Overpaying Loans AML Risk JessZ
one deer Offline
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Any where but work
On our system it is unlikely/impossible as we have set a $3 variance above or below the actual payoff amount; you cannot even post the payoff to the loan if out of variance it rejects immediately.

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#2135872 - 06/26/17 07:08 PM Re: Overpaying Loans AML Risk JessZ
fmissle Offline
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Posts: 955
Pac NW
Our system will not allow a paymen to a loan (closed or open ended) which would make the principal less than 0.00.

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#2135921 - 06/26/17 08:48 PM Re: Overpaying Loans AML Risk JessZ
Princess Romeo Offline

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IMHO - it would have to be a heck of an overpayment in order to be money laundering - OR, there would have to be a LOT of loans with similar ties that have overpayments. Otherwise, if someone overpays a loan by, lets say, $200 - that is not a very efficient way of laundering money. Now if they overpaid it by $20,000, then you have something to look into.

I accidently overpaid a revolving card balance (I had automatic bill pay set up on my end and didn't stop it in time after the balance was reduced to zero), so there could be a number of reasons why an account overpaid.
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#2135959 - 06/27/17 01:08 PM Re: Overpaying Loans AML Risk JessZ
PrimeTime Offline
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I'd also look into the method of overpayment -- specifically if the loan were overpaid with cash, the individual would receive a clean check back from the institution for the overpayment, successfully washing the funds.

Like Princess Romeo mentioned though, it would have to be a rather significant volume to be efficient laundering.
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#2135968 - 06/27/17 01:27 PM Re: Overpaying Loans AML Risk JessZ
rlcarey Offline
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Galveston, TX
Typically, money laundering is completed through the use of an open-end account - large purchases and cash payments. Closed-end, as others have said, would be pretty tough.
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#2136032 - 06/27/17 04:32 PM Re: Overpaying Loans AML Risk JessZ
JessZ Offline
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Thanks everyone!

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