A specific focus on financial intelligence units (FIUs) features in the new Financial Action Task Force (FATF) report, Trade-Based Money Laundering, Trends and Developments (Trade-based Financial Crime, 11 December 2020).
The FATF prepared the report for the first time in collaboration with the Egmont Group of Financial Intelligence Units and provides some useful insights into how FIU’s work.
The “classic” approach of FIUs relies on comparisons between trade and financial data to detect possible anomalies. This seems to be the most common way for the units to identify trade-based money laundering (TBML) cases but some FIUs also have experience in identifying possible TBML schemes by approaching this issue from another angle.
This approach involves the analysis of corporate structures, registration details, alleged company purposes, corporate banking profiles, and the relationship between corporate networks, such as common representatives, overlapping ownership structures, identical registration addresses and joint bank accounts.
By determining with some certainty that an “international trading corporation” was nothing more than a complex set of shell companies, FIUs may be able to assume that the various trade transactions conducted between these companies are fictitious.
Based on these initial findings, authorities can launch an investigation into the TBML scheme. This “reverse” approach underscores the importance of collecting and joining different pieces of financial intelligence and other available data, and shows that the analysis and detection of TBML does not necessarily require supporting trade documentation in all instances.
Categories: Trade Based Financial crimes News