A specific focus on trade-based terrorist financing (TBTF) features in the new report released by the Financial Action Task Force (FATF) in collaboration with the Egmont Group to help the public and private sector with the challenges of detecting trade-based money laundering TBML (Trade-based Financial Crime, 11 December 2020).
Trade-Based Money Laundering, Trends and Developments points out that TBTF schemes can and do rely on common TBML techniques. They can also feature legitimate firms and transactions right through the supply chain, until the funds are eventually diverted to terrorist organisations.
Supply chain infiltration
The report features a case study showing how terrorists used an existing supply chain to move funds from one country to another, avoiding making direct payments to each other and using a commodity as a means of moving value.
An importer in country A wanted to purchase goods from a supplier in country B as part of the ongoing legitimate trade between them. But payment for the goods was made by a terrorist organisation located in country C.
Commodity not cash used
Once the supplier received the payment, the goods were shipped to the importer. After receiving the shipment, the importer paid the value of the goods in cash to operatives of the same terrorist organisation located in Country A.
In this way, the terrorist organisation was able to transfer cash from country C to country A through the legitimate trade system by using commodity as currency. The goods were detected by the Israeli Customs
The FATF report notes that only a handful of contributors to Trade-Based Money Laundering, Trends and Developments specifically referenced TBTF, particularly as a consideration when developing their National Risk Assessments, which FATF sees as the central element of countries’ risk-based AML framework.
FATF’s Trade-Based Money Laundering: Trends and Developments report can be found here.
Categories: Trade Based Financial crimes News
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