US report highlights challenges of TBML schemes

A new report from the US Drug Enforcement Administration (DEA) has highlighted that trade-based money laundering (TBML) schemes are a persistent challenge for authorities seeking to curb or close down transnational criminal organisations involved in the illegal drugs trade.

The 2017 National Drug Threat Assessment provides an overview of US efforts to police the illicit drug trade.

Low risk

Published by the Department of Justice, the report says that TBML persists as a highly favoured method to transport and launder illicit proceeds.

It is attractive to money launderers because it offers a low risk of detection by authorities and can result in high profits.

L/Cs employed

The DEA notes that some money launderers are learning to leverage letters of credit (L/Cs) to further a wide array of TBML schemes and to circumvent increased regulatory and law enforcement vigilance.

Money launderers are finding that L/Cs grant the appearance of legitimacy to trade transactions and serve to convince regulatory and law enforcement entities – including exporters’ banks and customs officials – that legitimate funds were used to pay for trade goods.

The report says that free trade zones (FTZs) are often involved in TBML schemes because they offer opportunities for cash to be channelled into the financial system in exchange for consumer goods.

Chinese connections

The report says that recent information indicates Asian-American organised crime groups are increasingly involved in illicit bulk cash pickups in the US. It is likely much of this bulk cash is collected as part of larger TBML schemes involving the export of Chinese merchandise to Latin America.

The closer involvement of these Asian-connected money laundering organisations may represent a streamlining of the money laundering cycle through TBML the report says.

It concludes that this may also suggest that traditional Latin American money laundering organisations, which previously acted as middlemen, are being cut out of the cycle.

The 2017 National Drug Threat Assessment can be found here.



Categories: Trade Based Financial crimes News