Trade-based money laundering (TBML) is commonly used by migrant smugglers to disguise their criminal proceeds according to a new report published by the Financial Action Task Force (FATF).
The proceeds generated by migrant smuggling are estimated to exceed US$10 billion per year according to Money Laundering and Terrorist Financing Risks Arising from Migrant Smuggling, which analyses the money laundering and terrorist financing risks associated with migrant smuggling.
The report identifies the most common methods used to transfer and launder the proceeds of migrant smuggling, from hawala money exchanges, integration of proceeds into legitimate business such as shops, travel agencies and transport companies, including through TBML operations, and the increasing use of professional money launderers.
The report highlights the need for countries to understand the money laundering risks they face from migrant smuggling and the FATF calls on countries to proactively follow the money linked to migrant smuggling, including by strengthening institutional, international and regional cooperation.
Proceeds of migrant smuggling are ultimately integrated in financial systems using a variety of techniques and TBML is commonly used to do this the report says.
Migrant smugglers use legal businesses such as retail outlets, wholesalers, car dealerships, financial intermediation services, food premises, travel agencies, telephony services, internet points, internet cafés and transport companies as well as real estate to hide and invest illicit proceeds as if they are legitimate income.
So-called straw men and third parties, mainly relatives, are also recruited in order to run or work in these businesses.
TBML case study
The report contains a case study in which the accused regularly bought vehicles in Germany, exporting them to Lebanon, supposedly to be sold for a profit. But investigations revealed that the prices of the cars were two or three times larger than their market value.
This led investigators to suspect TBML activity through the accused’s car dealing business, with services offered to both the smuggling network and other organised crime groups. Cash declarations presented by his lawyer also implied more than €300,000 (US$331,000) in cash was laundered over time.
The FATF report, Money Laundering and Terrorist Financing Risks Arising from Migrant Smuggling, can be found here
Categories: Trade Based Financial crimes News