According to the FATF and Edgmont Group study, TBML is “one of the primary means that criminal organizations use to launder illicit proceeds.”Īs the U.S. and globally – because it facilitates and disguises the proceeds of crime, can alter markets, and have broader implications on financial systems. Money laundering continues to be a significant concern – both in the U.S. More recently, the G7’s Financial Action Task Force (FATF) and the Egmont Group released a joint study which recognizes the criminal abuse present in trade transactions while raising the understanding of trade-based money laundering. The GAO Study goes on to say that “In addition to TBML, criminal organizations may also be involved in other trade-facilitated criminal activity, such as customs fraud, trafficking in counterfeit goods, or tax evasion.” Criminal organizations (from organized criminal groups to professional money launderers and terrorist financing networks) utilize TBML to disguise the origin of criminal proceeds by “integrating it into the formal economy” through trade transactions. Department of Treasury report entitled the 2018 National Money Laundering Risk Assessment, identify TBML not only as one of the most used, but also as one of the most difficult to detect methods of money laundering. Efforts to Combat Trade-Based Money Laundering”. Government Accountability Office (GAO) published the results of a study on trade-based money laundering entitled “Countering Illicit Finance and Trade: U.S. Two recent studies have provided a more in-depth analysis of the problem. TBML schemes vary in complexity but typically involve misrepresentation of the price, quantity, or quality of imports or exports. TBML involves the exploitation of the international trade system for the purpose of transferring value and obscuring the true origins of illicit wealth. In its simplest definition, trade-based money laundering is the process of disguising the proceeds of crime and moving value (i.e., movement of money) using trade transactions to legitimize their illicit origins. However to set a context, we must first answer the question – what is trade-based money laundering? In this two-part series, we will explore some recent studies on TBML, the challenges faced in countering this kind of money laundering and some industry trends. Trade-based money laundering (TBML) is a growing risk, as seemingly legitimate transactions are exploited by criminal groups to launder funds and finance terrorist activity.
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