MuchBetter – The Payout Merchant scheme explained! [Part II]

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In the MuchBetter ecosystem, some merchants use their solution as a payment option for their clients. These are mainly gambling providers. Then there are Payout Merchants, which use MuchBetter not as a payment option on their websites or online stores but as a shadow banking system for downstream payments to their employees, affiliates, and partners. Payout Merchants received the money from their customers or victims via other payment processors in the first place. It is dark to dirty money. These Payout Merchants pose a problem for MuchBetter‘s compliance department.

Key data

Legal entitiesMIR Limited UK Ltd, UAB MIR Lithuania (together “MIR Group“)
Related individualsIsrael Rosenthal, Christian Mark Sperring,
PartnerPayrNet UAB d/b/a railsbank, Valyuz UAB, Railsbank Technology Ltd, TrustPay a.s.
RegulatorsFCA, Bank of Lithuania, Romanian National Office for Gambling
ClientsKlodan Ltd, Venus Innovations Ltd, CySEC-regulated Investment firms

Focus on Cyprus

It comes as no surprise that Cyprus is one of the most important markets for MuchBetter. Some of the CySEC-regulated investment firms are large Payout Merchants deploying MuchBetter for paying their employees, managers, beneficial owners, and affiliates; and for intercompany payments.

MuchBetter’s big business clients also include consulting firms in Limassol. These firms provide corporate services to their clients, including structuring and processing payments, i.e. they use the Payout Merchant scheme for their clients. MuchBetter plays a significant role in this. According to our information, the payment volume handled by these Cyprus consulting companies is substantial and questionable. MuchBetter’s Lithuanian banking partner Valyuz allegedly refuses to process payments some clients because of money laundering suspicions.

How the Payout Merchant scheme works

Payout merchants upload Excel files with the detailed information of each transaction to MuchBetter for batch processing. In the first step, MuchBetter credits the merchant account with the total amount; the boiler room managers receive the funds to their e-wallets. In a Peer-2-Peer (P2P) chain, the boiler room managers then transfer the funds to their agents’ or other individuals’ (Peers) MuchBetter e-wallet.

Notably, the boiler room agents’ commissions are paid out through the MuchBetter shadow banking system. Since these commissions frequently come from stolen or illegally acquired funds, they should not show up directly on the agent’s bank account and be traceable.

The directors and beneficial owners (UBOs) of the boiler room operators and scams also have their share of the loot (the money stolen from customers) transferred to their e-Wallets in this manner.

How MuchBetter Payout Merchant scheme works with MasterCard debit card

How to spend the money!

MuchBetter e-wallet owners can spend their money via a MasterCard Debit card linked to the e-wallet. With it, they can pay anywhere MasterCard is accepted. They can also withdraw cash from ATMs. Until the funds are used to make payments or withdrawals via the MuchBetter MasterCard, they reside outside the traditional banking system in MuchBetter‘s shadow banking system.

The MuchBetter MasterCards are issued by Railsbank, which took over this business segment from the collapsed Wirecard.

We opened an account with MuchBetter as a private customer and downloaded the app. One of the top-up options is bank transfer to a MuchBetter account at the Slovakian TrustPay. Alternatively, we could instantly receive funds from another MuchBetter e-wallet holder.

Peer-2-Peer Handling Fees

The MuchBetter P2P system is used to send payments through various peers to ultimate recipients, usually a director or UBO. The peers involved receiving a portion of the money as a handling fee of up to 20%. Depending on the number of peers in between, the ultimate recipient receives 40-50% of the original amount as “clean money.” It sounds like systematic money laundering, doesn’t it?

It is common for deposits to a payout merchant account to come from one company but withdrawals to be made to individuals associated with another company, we learned.

Share information

MuchBetter is just one way boiler room operators and scammers use to distribute and launder illicit proceeds. We would like to know more about MuchBetter and other payout schemes. If you have any information regarding this, please share it with us through our whistleblower system Whistle42.

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