US task force concludes trade-based money laundering is a major problem in terrorist financing

The US House Financial Services Committee’s Task Force to Investigate Terrorism Financing has released a report detailing the results of its two-year investigation into terror financing.

The report, entitled Stopping Terror Finance: Securing the US Financial Sector, draws attention to trade-based money laundering (TBML), which the report describes as “one of the most widespread, pernicious and least understood forms of money laundering.”

Key points summarised

The report aims to serve as a useful summary of the key points illuminated by task force hearings regarding terrorist financing threats, the necessary components of an effective strategy to address such financing activity, and current efforts to combat it.

The report cites the financing of Lebanon-based Hezbollah in which the Lebanese Canadian Bank facilitated the laundering of South American drug proceeds through the Lebanese financial system via trade-based schemes involving used cars and consumer goods.

TBML potential

The report disagrees with a 2015 report by the US Treasury Department, which deemed TBML is not a dominant method of terrorist financing.

The task force heard from former US intelligence officer, John Cassara, who maintains that TBML “is a major problem” in certain areas of the world, adding that there is a vast potential for terrorist groups to exploit the international trade system.

As well as TBML, the task force also took a granular look at the use of individual and corporate charitable foundations; drug trafficking, and the plundering of arts and antiquities by terrorists, especially by so-called ISIS.

The report, Stopping Terror Finance: Securing the US Financial Sector can be found here.

Categories: Trade Based Financial crimes News

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