Legal expert says beware of several TBML risks heightened during pandemic

As the coronavirus pandemic continues to disrupt global trade, heightened scrutiny should be exercised by financial institutions and other entities subject to anti-money laundering and counter financing of terrorism (AML/CFT) measures to prevent trade-based money laundering (TBML) according to an associate in the white collar investigations practice of the Paris office of law firm White & Case.

Charlotte Gunka says focus should particularly fall on cash-intensive businesses in the retail sector, companies involved in international trade and shell companies, which, despite the absence of real economic activity, will keep similar volume of financial flows.

Her views contrast with some commentators who say TBML flows are decreasing due to the impacts of the pandemic.

Beware no change

In an article published by the International Bar Association, Gunka says that companies that – unusually in these times of disrupted trade – continue to receive and transfer high level amounts of money should be able to explain and justify with relevant documentation the origin of the funds and the economic rationale behind each transaction.

She also suggests keeping a close eye on trade in gold because prices have jumped exponentially since the beginning of the pandemic and trade in the precious metal is seen as a common method for laundering criminal proceeds from illegally mined gold, drug trafficking or other illicit activities.

Contrasting views

Some analysts have suggested that chaos in the illegal narcotics trade’s supply chains and financing operations due to coronavirus pandemic impacts may push drug barons towards trade-based money laundering (TBML) operations (Trade-based Financial Crime, 24 April 2020).

But data recently released suggests that the proceeds of illicit drugs that are accumulating in major US cities and along the border with Mexico show that the impacts of the coronavirus have actually curtailed TBML operations (Trade-based Financial Crime, 27 May 2020).

Charlotte Gunka’s analysis, Fighting corruption in times of Covid-19: look out for money laundering, can be found here.



Categories: Trade Based Financial crimes News

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