A key finding of the report is that greater awareness about all aspects of the trade process would likely increase opportunities to detect and disrupt TBML.
The FATF (Financial Action Task Force), in collaboration with Egmont Group, has released a new report to help the public and private sector with the challenges of detecting trade-based money laundering (TBML).
“International trade networks can attract criminals and terrorists financiers who exploit the interconnected supply chains to launder the proceeds of TBML-based money laundering is difficult, particularly when there is a lack of understanding of this technique.”
The report takes stock of current TBML risks and uses case studies from the FATF’s Global Network to explain the ways in which criminals exploit trade transactions to move money, rather than goods.
For example, third-party intermediaries linked to organised crime groups, professional money launderers or terrorist financiers can quickly integrate into transaction chains in the financial settlement process, creating additional distance between their activities and TBML schemes.
“While financial institutions were aware of the risks associated with third-party intermediaries, the report acknowledges that others in the supply chain, such as legitimate importers or exporters, or those with an oversight role, such as auditors or accountants, may not question why an entirely unrelated third-party is involved in the payment settlement process,” the report says.
The report says countries should use national risk assessments and other risk-focused material to raise awareness with the public and private sector entities involved in international trade – including FIUs (financial intelligence units), customs agencies, law enforcement, financial institutions, transport companies, importers and exporters, accountants and auditors.
The report notes the development of additional initiatives, tools and capabilities that are improving efforts to detect and disrupt TBML schemes, including advanced IT and risk assessment systems, and deeper and more systematic co-operation between the public and private sectors.
Key recommendations of the report include improving information-sharing of financial and trade data, and improving cooperation between authorities and private sector, including through public-private partnerships.
A key finding of the report is that greater awareness about all aspects of the trade process, including how different financing processes are managed, would likely increase opportunities to detect and successfully disrupt TBML.
The full report is available here.