The principal vulnerability to trade-based money laundering (TBML) in the Latin America and the Caribbean (LAC) region is that it is not well understood, even by financial crime experts according to Global Financial Integrity (GFI).
For its latest survey, Financial Crime in Latin America and the Caribbean: Understanding Country Challenges and Designing Effective Technical Responses, the Washington-based non-profit focused on illicit financial flows canvassed 250 financial crime experts in the region.
Even some of their responses falsely conflated TBML with the use of trade misinvoicing or the smuggling of legal goods such as cigarettes to evade customs duties and taxes.
Lack of understanding
Other experts talked in essence about TBML – specifically, using criminal proceeds to purchase legal goods that were smuggled cross-border and sold as a mechanism to legitimise the funds – but did not specifically use the term or seem to understand they were describing TBML according to the survey.
It says that among financial crime experts, there was an overall consensus that TBML was a very prominent money laundering methodology in the LAC region.
But many could not speak to specifics, such as the magnitude, actors involved, common typologies, and other impacted jurisdictions. The only concrete information was that the proceeds from drug trafficking represented the majority of funds laundered through TBML.
Cash smuggling replacement
Some experts felt that the reported decrease in bulk cash smuggling, particularly between the US and Mexico, may be the result of transnational criminal organisations turning to more sophisticated methods such as TBML.
Corruption is the most prevalent financial crime affecting the LAC region, followed by money laundering, TBML and terrorism financing according to GFI’s latest survey (Trade-based Financial Crime, 18 October 2021).
Financial Crime in Latin America and the Caribbean: Understanding Country Challenges and Designing Effective Technical Responses can be found here.
Categories: Trade Based Financial crimes News