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Banks should include all forms of TBML in compliance processes says new NGO

By Mark Ford on June 15, 2022

Financial institutions should include all forms of trade-based money laundering (TBML) in their standard due diligence, record keeping, and financial intelligence reporting according to a new report by a recently formed national security non-governmental organisation (NGO) based in Washington.

The report by the International Coalition Against Illicit Economies (ICAIE), which focuses particularly on the use and abuse of free trade zones (FTZs), financial havens and TBML in the Americas, says public-private partnerships can be a powerful tool to counter illicit trade and trade-based financial crime.

It also highlights the importance of leveraging strategic intelligence, network analytics, and pattern-of-life forensics to disrupt the logistics, financial wherewithal, and corruptive influence of criminals and their complicit enablers across borders, trade hubs, illicit economies, FTZs and vulnerable ports.

Recommendations for financial institutions

The report recommends that financial institutions, non-bank financial institutions, designated non-financial businesses and professions, and money service businesses, should be encouraged to include all forms of TBML in their standard due diligence, record keeping, and financial intelligence reporting.

The ICAIE also wants to see the Financial Action Task Force (FATF) working with member countries’ customs services as well as the World Customs Organisation to research what tools, data, analytic systems and regulatory and investigative authorities are needed to better detect trade fraud and TBML.

New FATF recommendation

The research findings should be incorporated into the creation of FATF recommendation 41 that will specifically focus on countering TBML the report suggests.

The new FATF recommendation 41 should also encourage reporting entities to also focus on service-based money laundering in their anti-money laundering and counter financing of terrorism due diligence, record keeping, and reporting obligations the report concludes.

Further details on the ICAIE report, The Dark Side of Illicit Economies and TBML: Free Trade Zones, Ports, and Financial Safe Havens, can be found here, from where the report can also be downloaded.