Gift Cards and Loyalty Programs: The Growing Tools of Global Money Laundering

What were once viewed as simple conveniences—gift cards and loyalty programs—are now emerging as major avenues for laundering billions of dollars in illicit funds, as criminals increasingly exploit their flexibility, speed, and lack of transparency. With their ability to cross borders with minimal oversight and obscure the origin of dirty money, gift cards and loyalty points have evolved into potent instruments for international money launderers.

Criminal organizations have taken full advantage of the growing digital economy, using these systems to quietly move money through legitimate financial channels. From gift cards issued by major retail brands to loyalty points offered by airlines, credit cards, and hotels, the once-benign consumer benefits are now integral to sophisticated laundering networks. Reports estimate that around $2 trillion in illicit funds are funneled into the global financial system each year, with a significant portion channeled through these digital reward mechanisms.

Gift cards are particularly popular due to their anonymity and liquidity. They can be bought with little or no identification—especially in small amounts or online—making them an ideal tool for discreetly moving funds. Once obtained, these cards can be resold online, exchanged for merchandise, or used directly to purchase goods, which are then resold to generate clean cash. Their global acceptance allows criminals to move funds across international borders without relying on traditional banking institutions.

A notable example of this trend came in 2019, when U.S. authorities seized millions of dollars in gift cards tied to a money laundering ring. The group had used the cards to convert the proceeds of fraud into easily transferable assets, underscoring the growing role gift cards now play in large-scale laundering operations.

Loyalty programs, offering rewards such as airline miles and retail points, are also proving to be fertile ground for illicit finance. By using stolen or illegal funds to make purchases that generate loyalty points, criminals are able to "clean" their money through a system that often lacks regulatory transparency. Those points can then be redeemed for travel, luxury items, or hotel stays—many of which can be resold or exchanged, effectively transforming dirty money into legitimate-looking revenue.

In some cases, criminals go a step further and sell off loyalty points to third parties in exchange for cash or goods, thus introducing yet another layer of obfuscation. In a 2020 case, one criminal network exploited stolen credit card data to accumulate loyalty points, which were then used to book travel and accommodations. These bookings were resold at a discount, allowing the group to convert fraudulent gains into legitimate revenue.

Gift cards and loyalty points are particularly effective during the layering stage of the money laundering process—the phase where illicit funds are repeatedly moved through various channels to obscure their origins. In the placement stage, criminals use the proceeds of illegal activity to purchase cards or earn points. During layering, these are redeemed, sold, or exchanged to further distance the money from its source. Finally, in the integration phase, the cleaned money re-enters the economy through the sale of goods or services obtained with those points or cards.

In 2021, investigators uncovered a sprawling criminal network that used both gift cards and loyalty points to launder millions. Funds were shifted through various platforms and jurisdictions before being used to buy and sell high-value items, successfully masking the money’s origin and completing the laundering process.

Detecting and preventing the misuse of these tools requires vigilance from both businesses and financial institutions. Certain red flags can help signal suspicious behavior. These include large or frequent gift card purchases—especially when multiple payment methods are used—sudden spikes in point redemptions for expensive goods or services, rapid resale of cards and points at discounted rates, and cross-border activity that deviates from normal patterns.

To combat these risks, institutions can adopt several measures. Enhanced Know Your Customer (KYC) procedures and stronger anti-money laundering (AML) screening are essential for flagging unusual purchases and high-risk customer behavior. Advanced transaction monitoring systems can detect irregular patterns, while setting limits on gift card or points redemptions can prevent large-scale abuses. Most critically, employees should be trained to recognize and report signs of potential laundering activity.

“Gift cards and loyalty programs, once thought to be innocent consumer perks, have become crucial tools in the world of money laundering,” the article concludes. Their ease of use and minimal regulation make them attractive to criminals seeking to mask the origins of their funds. With technological innovation continuously reshaping the financial landscape, businesses must stay one step ahead of bad actors to preserve the integrity of the financial system.

By fLEXI tEAM