Former US treasury official says public-private partnership is needed to address TBML

Global Financial Integrity (GFI) has published an opinion piece entitled Why a Public-Private Partnership is Urgently Needed to Combat Trade-Based Money Laundering.

The Washington-based think tank that researches and lobbies against illicit financial flows (IFFs) says it was written by a former US Treasury official who requested anonymity.

Shell companies

What is urgently needed is to address the problem of trade-based money laundering (TBML) is a public-private partnership that seamlessly works alongside law enforcement to tackle IFFs according to the opinion piece.

The partnership would tackle a series of issues to address TBML, the first of which is shell companies, which are routinely used to bypass financial regulations and they are unfortunately very easy to create according to the author. 

The former treasury official suggests that delving into a suspected shell company’s business model is needed during onboarding and when suspected money laundering activity is spotted. The opinion piece questions whether any legitimate trade transaction needs the anonymity of a shell company.

Payment and receipt irregularities

The author also says an understanding of a trading business’ payments and receipts structure is important and mechanisms to identify unusual bank account transactions are needed.

If substantial irregularities are detected, the author asks who should be responsible for disrupting criminal actors and networks and points out that financial institutions are commercial enterprises not law enforcement entities.

Global partnership

Meanwhile financial regulators and ant-money laundering departments are not resource-equipped to inspect potentially hundreds of TBML-facilitating businesses, determine their compliance adequacy, and refer these anomalies to law enforcement agencies.

The piece therefore suggests that a public-private partnership on a global scale could be a step in the right direction.

The opinion piece, Why a Public-Private Partnership is Urgently Needed to Combat Trade-Based Money Laundering, can be found here.

Categories: Trade Based Financial crimes News

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