“Trade-based money laundering is a national security threat,” says US Senator Bill Cassidy in a recently released white paper.

Cassidy raises concerns about the ability of the federal government to combat trade-based money laundering (TBML) and suggests that a public distributed ledger system could be used to prevent such money laundering.

International connectivity

“There needs to be real-time coordination and reviewable connections between the agency handling the manifest information and the agency handling corresponding financial information within the US and between the US and our trading partners,” the white paper states.

“This could be accomplished through a public distributed ledger system. This system would allow all parties to simultaneously follow the transaction and track any changes made to the documents uploaded to the system,” it continues.

Identifying TBML is not part of the US cargo inspection process, which mainly relies on information provided by party manifests, the white paper states.

Lack of tracking

It adds that there is no requirement for manifest information and invoice information to match, resulting in a lack of real-time data tracking necessary to combat TBML, the paper says.

“So, if exported goods move from the US to Country 1, but the invoice is routed through Country 2 and the reported value on the invoice is lowered in Country 2 without the knowledge of parties in the US or Country 1, Country 1 will collect fewer duties upon the imported good,” Cassidy says.

Cassidy’s white paper, Trade-based Money Laundering: An Asymmetric Threat With Ties To Terror And Drugs, can be found here.

Categories: Trade Based Financial crimes News