This is a specific, proprietary analytical lens that Northrop applies as a standard workstream in every forensic engagement. It is not a standard audit test listed in any assurance framework. It is a behavioural observation about how money moves through legitimate versus illegitimate channels, developed from Northrop’s forensic experience across bank-directed mandates.
The behavioural premise
A payment intended for a genuine business purpose stays at its destination. When a manufacturer pays Rs 30 lakh to a genuine raw material supplier, the Rs 30 lakh lands in the supplier’s bank account and remains there, drawn down gradually over the following weeks as the supplier pays its own obligations: raw material purchases from its own suppliers, monthly salaries, factory rent, utility bills, GST payments, TDS remittances.
The supplier’s bank account, viewed over a month following the receipt, shows diverse, regular, small-to-medium debits consistent with the operations of a functioning business. The Rs 30 lakh is absorbed into the supplier’s operating cash flow. It does not move as a lump sum. It disperses through the supplier’s cost structure.
A payment intended for diversion behaves differently. The Rs 30 lakh arrives at the recipient’s account on Monday. By Wednesday, Rs 27 lakh has been transferred to another account. The recipient’s account, viewed over the same month, shows: one large credit (from the borrower), one large debit (to the onward destination), and minimal other activity. No salaries. No utility bills. No supplier payments. No GST remittances. The account is not an operating business account. It is a transit account.
The speed of onward transfer is inversely proportional to the legitimacy of the underlying transaction. A genuine vendor has no reason to forward the full payment within 48 hours because the vendor needs the cash to fund its own operations over the coming weeks. A pass-through entity has every reason to forward the payment quickly because its only function is to move the money from Point A to Point B, and any delay increases the risk that the money will be noticed.
The analytical method
For every payment above a defined threshold (typically Rs 5 lakh or 1% of the facility, whichever is lower), the 48-Hour Money Test examines what happens in the recipient’s bank account during the 48 hours following the payment’s arrival.
Category A: Payment stayed. The payment is still substantially in the recipient’s account on Day 3. Drawdown, if any, consists of small operating debits consistent with a functioning business. Conclusion: the payment behaves like a genuine commercial transaction. No further investigation required at this stage.
Category B: Payment moved, commercially consistent. The recipient transferred a significant portion to a known sub-supplier within 48 hours. The sub-supplier is an identified entity in the recipient’s supply chain (appears in the recipient’s prior bank statements as a regular payee). The transfer amount is consistent with the recipient’s own procurement cost for the goods supplied to the borrower. Conclusion: the onward transfer is commercially explicable. Note the pattern. No immediate escalation, but include in the ongoing monitoring.
Category C: Payment moved, commercially inconsistent. Eighty percent or more of the payment was transferred within 48 hours to: a personal account of any individual, an entity with no apparent relationship to the recipient’s stated business, an entity that itself shows the pass-through pattern (immediate onward transfer with minimal operating activity), a connected party of the borrower (identified through the twelve-layer independence verification) or a destination that cannot be explained by the stated purpose of the original payment.
Category C is the finding. The payment to the vendor was not a commercial transaction. It was a transfer disguised as a commercial transaction, with the vendor serving as the first hop in a multi-hop chain.
The pass-through entity profile
A pass-through entity’s bank account has a distinctive profile that the 48-Hour Test identifies systematically:
Large, infrequent credits from the borrower (the facility funds arriving at irregular intervals, typically aligned to the borrower’s disbursement schedule). Immediate large debits to other entities (the funds being forwarded, typically within 24 to 72 hours of receipt). Minimal operating activity between the large transactions (no regular salary payments, no monthly utility bills, no tax deductions, no small vendor payments, no the-kind-of-activity-a-real-business-generates). Low average daily balance (the account functions as a transit point, not as a working capital reservoir). Limited transaction diversity (the account has one or two payers and one or two payees, not the dozens of counterparties a genuine business transacts with).
The profile, once defined, becomes an automated screen. Every vendor in the borrower’s payment records is assessed against the pass-through profile. Vendors whose accounts match the profile are flagged for investigation, regardless of whether any other test has identified them.
What makes this test distinctive in Northrop’s methodology
Most fund-flow analysis is hypothesis-driven: the investigation team suspects diversion to a specific entity and traces the money to confirm or deny the hypothesis. The 48-Hour Money Test is hypothesis-free. It does not start with a suspect. It starts with an observation: what happens to every large payment in the first 48 hours? The behaviour of the money generates the hypothesis.
This makes the test particularly effective at detecting diversion mechanisms that the investigation team has not anticipated. The team’s prior intelligence may point to Vendor A as the suspected conduit. The 48-Hour Test, applied to all vendors without discrimination, may reveal that Vendor B, which appeared genuine on every documentary test, is actually the more significant pass-through because its account shows the transit pattern while Vendor A’s account shows genuine operating activity.
The test follows the money’s behaviour, not the investigator’s theory. The money does not know it is being watched. Its behaviour is the evidence.
Northrop applies this test as a standard analytical workstream in every forensic engagement. Business@NorthropIndia.com | +91 92899 25657.