Common economic sectors and products at risk of trade-based money laundering (TBML) are examined in a list contained in the new report released by the Financial Action Task Force (FATF) in collaboration with Egmont Group to help the public and private sector with the challenges of detecting TBML (Trade-based Financial Crime, 11 December 2020).
The authors of Trade-Based Money Laundering, Trends and Developments say the sector and product list should not be considered a definitive list and point out that one private sector source consulted for the report noted that criminals will exploit any sectors, products, or businesses prone to gaps in anti-money laundering (AML) measures.
Gold and precious metals
The exploitation of gold and other precious metals and minerals is often a factor in TBML schemes according to the report, which explains that gold is not just a commodity to exploit in moving value, it is also used as a proxy for cash.
Associations of gold and precious metals with illegal mining activity creates additional issues to TBML cases the report says.
Auto-parts and vehicles
Several TBML schemes in the report described the exploitation of auto-parts or vehicles, including trade in second-hand cars and luxury vehicles.
One scheme included the transportation of damaged cars from one jurisdiction to another, with a legitimate market in place for onward sale, following repair of the vehicle.
Luxury goods, art and artefacts feature amongst the high value items employed in TBML operations while the report also focuses on the use of low-value, high-volume products that may also be employed, notably foodstuffs, clothing and second-hand textiles.
Low-value goods are often found in extended supply chains, making them attractive for exploitation in TBML schemes while their extreme price variability makes them attractive because they are relatively easy to mis-describe or wrongly price in misdeclaration- or misinvoicing-based money laundering operations.
Portable or handheld electronics such as mobiles and laptops are also attractive in TBML schemes as they can be deliberately misrepresented and incorrectly valued, increasing the opportunity to move significant criminal proceeds according to the report.
Other sectors and products where it says TBML exploitation can be clearly seen occur in transactions featuring construction materials, plant and machinery, scrap metal, fuel and energy products, and alcoholic or soft drinks.
Categories: Trade Based Financial crimes News