US particularly vulnerable to TBML says senior Federal Reserve Bank of New York lawyer

The US is particularly vulnerable to trade-based money laundering (TBML) according to executive vice president of the legal group of the Federal Reserve Bank of New York, Michael Held.

In a keynote address to the 1LoD Summit in New York earlier this month Held said he was less concerned about money laundering threats posed buy digital currencies and far more worried about traditional money laundering typologies, highlighting TBML as a prime example but one that gains very little press coverage.

US vulnerability

The US is particularly vulnerable to TBML because more than half of the world’s trade is denominated in US dollars says Held.

He underlined this point by reminding that the department of homeland security and the Drug Enforcement Administration have warned for years that a large amount of illicit narcotic payments occur through low-tech TBML solutions like over- or under-invoicing of goods, false documentation, or phantom shipping.

“These methods give illegitimate transfers the appearance of ordinary transactions,” he said.

FinCEN warning

Held also reminded that the US treasury’s Financial Crimes Enforcement Network (FinCEN) has warned against the use of “funnel accounts” to facilitate trade-based money laundering of narcotics proceeds, and has provided the industry with a list of red flags associated with such activity.

“TBML can also be used to evade sanctions regimes, sometimes through money service businesses or general trading companies,” he concluded.

The full text of Michael Held’s keynote address at the 1LoD Summit in New York City can be found here.


Categories: Trade Based Financial crimes News

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