UK’s new National Risk Assessment focuses on TBML challenges

The UK has published its 2020 National Risk Assessment (NRA), the third comprehensive assessment of money laundering and terrorist financing risk in the country.

It has a clear focus on the increasing risk of trade-based money laundering (TBML) and identifies the sectors and jurisdictions most likely to be found in illegal operations involving UK-based participants in money laundering and terrorist financing.

TBML risk increasing

The NRA says organised criminal gangs often use the services of professional money laundering networks who pool criminal proceeds from various areas and who employ sometimes very sophisticated TBML techniques.

The complexity, anonymity and scale of global trade makes TBML a favoured money laundering technique, which has increased since 2017 according to the UK’s assessment.

It underlines that TBML schemes can enable the movement of any amount of criminal proceeds between entities and jurisdictions, including amounts larger than might otherwise be possible in cash-based money laundering. Entities involved are often shelf companies, or businesses where scrutiny and beneficial ownership transparency is avoided.

Old and new techniques

Traditional TBML techniques such as ‘ghost’ or ‘phantom’ shipping and misrepresentation of the price, quantity and quality of goods, continue to be employed by criminals according to the NRA.

But it underlines growing concern about the criminal infiltration of legitimate supply chains not reliant on any form of misrepresentation of price, quantity or quality of goods. This emerging risk creates even greater challenges in successfully detecting TBML the NRA concludes.

Commodities, services and coronavirus

A range of commodities and services continue to be used as cover for TBML, including used cars and clothing, construction and gold.

In the context of the coronavirus crisis, pharmaceuticals, textiles and personal protective equipment are increasingly likely to be used.

High-risk TBML jurisdictions

China is included in the list of jurisdictions assessed to be particularly relevant to the cross-border money laundering risks faced and posed by the UK.

Hong Kong, Pakistan, Russia and the UAE along with the UK’s own Crown Dependencies and its Overseas Territories are also listed.

The UK’s National Risk Assessment of Money Laundering and Terrorist Financing 2020 can be found here.

Categories: Trade Based Financial crimes News

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