Purpose – The purpose of this paper is to analyse money laundering and financing terrorism risks of present customer loyalty programs. We try to identify the current state of money laundering and financing of terrorism (ML/FT) risks and detect the vulnerabilities that may be present in loyalty schemes that tend to obtain wider payment functionality. Design/methodology/approach – The paper draws upon the risk matrix developed by the Financial Action Task Force experts for the new payment methods. Each risk factor is analysed against the features of the customer loyalty programs, and the aggregated risks are also reviewed within three stages of money laundering. Findings – The analysis shows that despite the obvious evolution of payment functionality of the customer loyalty awards, businesses have already put in place relevant risk-mitigation measures that support the hypothesis that business practices can effectively mitigate ML/FT risks even without precise regulation. Yet, the paper shows some potential vulnerabilities that are to be monitored in order to prevent the system from abuse by the criminals. Research limitations/implications – The paper shows that loyalty awards share certain characteristics of the centralized private currencies. Hence, researchers are encouraged to look more closely into the potential ML/FT risks posed by the private currencies as well. Practical implications – The paper provides an insight into money laundering and terrorist financing risks that can be relevant for the non-financial products which demonstrate some payment functionality. Originality/value – The paper is one of the first research of the loyalty awards as a quasi-payment tool in the context of the anti-money laundering and combating financing of terrorism (AML/CFT) regime.