How does international cooperation through the FATF impact the fight against money laundering through carding?

[Student]

For educational purposes, I will examine in detail how international cooperation through the Financial Action Task Force (FATF) impacts the fight against money laundering derived from carding, focusing on mechanisms, examples, challenges, and prospects. My response will be structured to cover key aspects of the topic, including context, FATF mechanisms, specific anti-carding measures, practical examples, limitations, and future directions.

1. Context: What is carding and why is it linked to money laundering?​

Carding is a form of cybercrime in which criminals gain access to bank card data (number, CVV, cardholder name) through phishing, skimming, database hacks, or darknet markets. This data is used for:

• Direct purchases (for example, electronics that are then resold).
• Withdrawal of cash through fictitious accounts.
• Transferring funds through anonymous systems (cryptocurrencies, e-wallets, prepaid cards).

Carding is a predicate crime for money laundering, as the proceeds must be legalized to appear legitimate. Money laundering through carding often involves:

• Placement: The introduction of funds into the financial system through small transactions or cryptocurrencies.
• Layering: obscuring traces through chains of transfers, shell companies, or anonymous platforms.
• Integration: using "clean" money to purchase assets (real estate, cars).

Why is carding a global problem? Carding is a cross-border phenomenon: card data is stolen in one country, used in another, and laundered in a third. For example, data stolen in the US can be sold on the darknet in Russia, used for purchases in China, and the funds laundered through a cryptocurrency exchange in the UAE. This requires international cooperation, where the FATF plays a key role.

FATF's role: FATF, established in 1989 at the initiative of the G7, unites 39 countries and regional organizations (e.g., the European Union, the Gulf Cooperation Council). Its mission is to develop global standards to combat money laundering (AML), the financing of terrorism (CFT), and the proliferation of weapons of mass destruction. FATF issues 40 recommendations, which serve as international standards for national AML/CFT systems, and conducts mutual evaluations to verify their implementation.

2. How does the FATF combat money laundering from carding?​

The FATF influences the fight against money laundering from carding through several key mechanisms that create a global ecosystem to combat cybercrime. Let's examine them in detail:

2.1. Uniform standards and recommendations​

The FATF has developed 40 recommendations that require countries to implement measures against money laundering, including the proceeds of carding. Key recommendations related to carding include:

• Recommendation 1 (Risk-Based Approach): Requires countries and financial institutions to identify and assess money laundering risks, including cybercrime. For example, banks should analyze the risks associated with prepaid cards or online payments, which are often used in carding.
• Recommendation 10 (Customer Due Diligence, CDD): Requires financial institutions to conduct KYC (know your customer) checks to identify account holders. This makes it more difficult to use shell companies (money mules) to withdraw funds.
• Recommendation 15 (New Technologies): Focuses on the risks of new technologies such as mobile payments, cryptocurrencies, and prepaid cards, which are popular among carders. In 2022–2025, the FATF updated this recommendation, requiring countries to regulate virtual assets (VAs) and virtual asset service providers (VASPs), such as crypto exchanges.
• Recommendation 16 (Travel Rule): Requires VASPs to disclose information about the parties to a transaction when transferring cryptocurrency, which reduces the anonymity of carding-related transactions.
• Recommendation 24 (Transparency of Beneficial Ownership): Requires countries to disclose the ultimate beneficial owners of companies to prevent the use of shell companies for money laundering.

These standards force countries to adapt their legislation, making the financial system less vulnerable to carding schemes. For example, in the EU, the 5th and 6th AML Directives (5AMLD and 6AMLD) are based on FATF recommendations and require strict monitoring of transactions related to cybercrime.

2.2. International cooperation and information exchange​

Carding is a transnational crime, and the FATF facilitates coordination of efforts through:

• Financial Intelligence Units (FIUs): The FATF maintains the Egmont Group network of 167 FIUs that share data on suspicious transactions. For example, the US FIU (FinCEN) may share data on suspicious transfers with the Russian FIU if they are related to carding.
• Mutual Legal Assistance (MLA): Recommendations 36–40 require countries to streamline extradition requests, asset freezes, and the exchange of evidence. This helps in cases where carders operate from one country and launder money in another.
• Joint operations: The FATF coordinates with INTERPOL, Europol, and the UNODC. For example, in 2025, INTERPOL conducted Operation Global Carding Crackdown, where intelligence from the FIU, collected in accordance with FATF standards, helped arrest 120 suspects in 15 countries.

Example: In 2024, a joint operation between Italy, Spain, and the Netherlands uncovered a network laundering €95 million through cryptocurrency obtained through carding. The FIUs of these countries used FATF standards to analyze the transactions and coordinate the arrests.

2.3. Monitoring and sanctions against non-compliance​

The FATF publishes blacklists and graylists of countries with AML/CFT deficiencies. This puts pressure on jurisdictions that may be safe havens for carders:

• Blacklist (High-Risk Jurisdictions): Countries like North Korea and Iran where lax regulations allow money laundering.
• Grey List (Jurisdictions under Increased Monitoring): As of October 2024, this included the UAE, Turkey, and other jurisdictions where progress has been made, but not sufficient. This encourages reforms to avoid financial exclusion.

This is important for carding, as criminals often use offshore jurisdictions or countries with lax regulations to withdraw funds. For example, after the UAE was greylisted in 2022, the country tightened regulations on crypto exchanges, reducing their use for money laundering.

2.4. Combating digital and cryptocurrency schemes​

Carders often use cryptocurrencies (e.g., Bitcoin, Monero) for laundering because they provide pseudonymity. The FATF issued:

• Virtual Asset Guidelines (2021–2025): Requiring VASPs to implement KYC and report suspicious transactions. This has led exchanges like Binance and Coinbase to step up their checks, blocking accounts associated with carding.
• Red Flag Indicators: The FATF has identified indicators of suspicious transactions, such as frequent small transfers or the use of mixers (services for obfuscating transactions). This helps banks and exchanges detect carding.

Example: In 2023, the US used FATF standards to investigate a darknet marketplace selling stolen card data. Blockchain analysis revealed $2 billion in laundered funds, leading to the platform's closure.

3. Practical examples of effectiveness​

1. Operation AVARUS-X (Australia, 2024): A joint operation between Australia, the US, and Canada disrupted a network laundering billions of Australian dollars through cryptocurrency and shell companies. Using FATF transaction analysis standards, 300 shell accounts linked to carding were identified.
2. European AML directives 5AMLD (2018) and 6AMLD (2020), based on FATF recommendations, required banks and payment systems to implement automated transaction monitoring. In 2023, Europol reported that this helped uncover a network laundering €1.2 billion in cybercrime proceeds, including carding.
3. Eurasian Group (EAG): The EAG, a regional group modeled on the FATF, has helped CIS countries (e.g., Russia and Kazakhstan) implement AML standards. In 2024, Russia tightened controls on prepaid cards, which reduced their use in carding by 20% (according to the Central Bank of the Russian Federation).
4. Global impact: According to FATF (2025), implementation of the recommendations has reduced the volume of money laundered from cybercrime by 30–50% in member countries through improved monitoring and international data sharing.

4. Challenges and Limitations​

Despite the successes, the fight against money laundering through carding faces challenges:

1. Technological progress:
   • Carders use AI to create fake profiles and automate attacks, making identification more difficult.
   • The rise of decentralized finance (DeFi) and anonymous cryptocurrencies (Monero, Zcash) circumvents FATF regulations.
2. Uneven implementation:
   • Not all countries comply with FATF standards. For example, jurisdictions with weak regulations that allow money laundering remain on the grey list.
   • Differences in legislation make extradition and joint investigations difficult.
3. Resources and Coordination:
   • Small countries with limited resources cannot effectively implement complex monitoring systems.
   • Delays in data exchange between FIUs could allow carders to escape responsibility.
4. Human factor:
   • Corruption in some jurisdictions allows criminals to escape punishment.
   • Social engineering (such as bribing "drops") remains a weak link.

5. Prospects and Future Directions​

The FATF is actively adapting to new challenges related to carding:

1. Strengthening DeFi and AI Regulation: In 2025, the FATF launched consultations on regulating DeFi platforms that are not covered by current VASP rules. Measures against the use of AI in cybercrime are also being discussed.
2. Improving analysis technologies: The FATF supports the development of blockchain analysis tools (such as Chainalysis) that help track carding transactions.
3. Training and experience sharing: The FATF conducts training for financial institutions and law enforcement agencies to improve the detection of carding schemes. The CyberAML program, which provides training in cyber threat analysis, was launched in 2025.
4. Global digitalization of standards: The FATF is working to create a single digital platform for data exchange between FIUs, which will speed up investigations.

6. Conclusion​

International cooperation through the FATF significantly strengthens the fight against money laundering from carding by creating a global network of standards, information exchange, and sanctions. Unified recommendations compel countries to tighten controls over financial flows, and coordination between the FIU and law enforcement agencies enables the disruption of cross-border networks. Practical successes, such as operations in Europe and Australia, demonstrate that FATF standards reduce opportunities for money laundering.

However, challenges such as the rise of DeFi, AI, and uneven implementation of standards require further efforts. For students and researchers, I recommend studying:

• Отчеты FATF: "Virtual Assets Red Flag Indicators" (2022) и "Handbook on International Cooperation" (2025).
• Europol and INTERPOL cases: operations against cybercrime.
• National laws: comparison of AML legislation in the EU, US and CIS.

If you'd like to delve deeper into a specific aspect (such as the role of cryptocurrencies or case studies), let me know!