According to the International Narcotics Control Strategy Report (INCSR) hundreds of billions of dollars are laundered annually by way of Trade-Based Money Laundering (TBML). It is one of the most sophisticated methods of cleaning dirty money, and trade-based money laundering red flags are among the hardest to detect.
By definition, TBML is the process by which criminals use a legitimate trade to disguise their criminal proceeds from their unscrupulous sources. The crime involves a number of schemes in order to complicate the documentation of legitimate trade transactions; such actions may include moving illicit goods, falsifying documents, misrepresenting financial transactions, and under- or over-invoicing the value of goods.
The burden falls on compliance officers to stay current on emerging schemes and updated AML technology to detect and prevent criminal activity.
ACAMS is committed to providing the tools and resources for professionals in the field to stay on top of current trends and schemes. Bookmark this page for updated information on best practices, relevant “red flags,” industry guidance, and recent articles and resources covering all angles of TBML.
Trade-Based Money Laundering Examples and Red Flags
There are several red flags indicating potential TBML, according to the U.S. Immigration and Customs Enforcement (ICE):
- Payments to a vendor by unrelated third parties
- False reporting, such as commodity misclassification, commodity over- or under-valuation
- Repeated importation and exportation of the same high-value commodity, known as carousel transactions
- Commodities being traded that do not match the business involved
- Unusual shipping routes or transshipment points
- Packaging inconsistent with the commodity or shipping method
- “U.S. Terror Finance Task Force Hears Talk of Poor Data-Sharing with Banks”
- “Data on Trade Laundering Remains Elusive Despite Signs of Prevalence: Author”
- “From Petroleum to Produce, Commodities Offer Array of Laundering Options, Says HSI Official”
- “How Can Trade Financing Anti-Money Laundering Monitoring be Improved?”
Suggested Reading List
- FATF: Money Laundering Vulnerabilities of Free Trade Zones (2010)
- FATF Report on TBML (June 2006)
- SAR filings lead to BMPE investigation (2001)
- FinCEN Advisory on filing SARs re TBML (2010)
- Wolfsberg: Trade Finance Principles (January 2009)
- “Reaching Beyond Banks: How to Target TBML and Terrorist Financing Through Preventive Measures Outside the Financial Sector”41 Case Western Reserve Journal of International Law 85 (2009)