Best Practices of AML Audit of Trade Finance in Singapore
Author: Henry Lim, CAMS-Audit
Trade-based money laundering/terrorist financing(TBML/TF”) is a complex money laundering methodology that operates across international and national borders, and is often combined with other money laundering methods such as the layering of financial transactions, use of shell companies, bulk cash and hawala underground remittance systems. Therefore, it is very difficult for banks to distinguish TBML/TF from legitimate activities of international trade by checking paperwork.
Referencing Singapore Central Bank and the Monetary Authority of Singapore’s (MAS) Guidance on AML/CTF in trade finance and correspondent banking, issued on October 22, 2015, (Guideline), this white paper will explore best practices of internal audit (IA) function’s review of front to back customer due diligence (CDD) processes to gain assurance of the authenticity of trade-based transactions and by close relation, the legitimacy of the underlying trades.