The US treasury department’s Financial Crimes Enforcement Network (FinCEN) has announced coordinated actions to bring additional financial pressure on those who manufacture, sell, or distribute synthetic opioids or their precursor chemicals.

US law enforcement suspects that whilst bulk currency smuggling has been the traditional way illegal drug proceeds are moved, drug traffickers are increasingly moving towards “less conspicuous” alternatives, including trade-based money laundering (TBML) schemes.

TBML concerns

FinCEN says TBML often involves using illicit proceeds to buy goods for export, as the subsequent sale of the goods effectively launders the proceeds.

The Financial Action Task Force (FATF) defines TBML as, “the process of disguising the proceeds of crime and moving value through the use of trade transactions in an attempt to legitimise their illicit origins.”

Laundering typologies

In practice, this can be achieved through the misrepresentation of the price, quantity or quality of imports or exports according to FinCEN.

It adds that TBML techniques vary in complexity and are frequently used
in combination with other money laundering techniques to further obscure the money trail.

Practical examples

In this context, TBML often involves converting physical banknotes into a commodity and then exporting or importing the commodity, without physical cross-border movement of the underlying currency.

For example, drug traffickers will convert the monetary value of banknotes into goods with an equivalent monetary value, such as smartphones, automobiles, or jewellery.

The FinCEN advisory, Advisory to Financial Institutions on Illicit Financial Schemes and Methods Related to the Trafficking of Fentanyl and Other Synthetic Opioids, can be found here.

Categories: Trade Based Financial crimes News