TBML remains a key concern for US’ transnational crime agency

The US’ Bureau of International Narcotics and Law Enforcement Affairs has published and submitted to Congress its annual International Narcotics Control Strategy Report (INCSR).

Volume II contains a country-by-country analysis of money laundering typologies used to transfer the illegal proceeds of drugs around the world and finds that despite the increasing use of novel techniques, notably those employing virtual currencies, trade-based money laundering (TBML) remains a key concern.

Financial reporting not captured

“TBML, in particular, is a long-standing area of concern,” says the report which explains how trade-based systems act as a kind of parallel method of transferring money and value around the world.

Because systems such as the black market peso exchange (BMPE), and the use of commodities such as gold and diamonds are not captured by many financial reporting requirements, they pose tremendous challenges for law enforcement.

These methods are often based simply on the alteration of shipping documents or invoices, and thus are frequently undetected unless jurisdictions work together to share information and compare documentation.

Pernicious BMPE

“One of the most pernicious money laundering schemes in the Western Hemisphere,” is how the report describes BMPE.

It is also one of the largest, processing billions of US dollars’ worth of drug proceeds a year from Colombia alone via TBML, “smurfing,” cash smuggling, and other schemes according to INCSR, which says BMPE-like methodologies are also found outside the Western Hemisphere.

There are variations on the schemes involved, but generally drug traffickers repatriate and exchange illicit profits obtained in the US without moving funds across borders.

How it works

In a simple BMPE scheme, a money launderer collaborates with a merchant operating in Colombia or Venezuela to provide him, at a discounted rate, US dollars in the US. These funds, usually drug proceeds, are used to purchase merchandise in the US for export to the merchant.

In return, the merchant who imports the goods provides the money launderer with local-denominated funds (pesos) in Colombia or Venezuela. The broker takes a cut and passes along the remainder to the responsible drug cartel.

The US’ Bureau of International Narcotics and Law Enforcement Affairs International Narcotics Control Strategy Report 2021, Volume II can be found here.


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