Rise of trade-based money laundering impacts on non-financial organisations

Non-financial organisations should be increasingly aware of the rise of trade-based money laundering (TBML) according to a lawyer at Norton Rose Fulbright.

Kimberly Caine argues that since the banking system, which she describes as the front door of money laundering, is being closed by regulators, so money launderers are increasingly using the back door by channelling money illicitly via international trade.

Stages of TBML

Caine describes the three stages in TBML. At the placement stage, the offender transforms illicit proceeds into a transferable asset by purchasing goods for example.

At the layering stage, the offender attempts to obscure the link between the illicit proceeds and their criminal source, typically by trading the goods across borders.

At the integration stage, the offender re-introduces the illicit proceeds into the legitimate economy, usually through resale of the goods.

Basic methods

The lawyer also outlines the four basic TBML methods of over- and under-invoicing; over- and under-shipments; falsely describing goods or services, and multiple invoicing of goods or services.

Caine describes the various stages and methods of TBML in some detail as well as the legislation that particularly impacts on US-based international traders.

AML compliance

She concludes by suggesting that nonfinancial businesses involved in international trade should be acutely aware of these red flags.

Recognising that most non-financial businesses are not presently required to implement an anti-money laundering compliance programme, she concludes that doing so may go a long way towards mitigating TBML risk.

The full article by Kimberly Caine of Norton Rose Fulbright can be found here.

Categories: Trade Based Financial crimes News

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