The US Government Accountability Office (GAO) has released findings based on a study of data from 17 countries in partnership with the Immigration and Customs Enforcement’s Trade Transparency Unit together with an extensive literature review. It is a must-read for practitioners in this space.
Trade based money laundering (TBML) is commonly used by criminal and Terrorist organisations to disguise their proceeds and fund their operations. It is very difficult to detect due to complexities in trade transactions together with the sheer volume of trade. The GAO estimates that TBML may be up to hundreds of billions globally every year.
Common schemes include misrepresentating the price, quantity or type of goods and services in trade transactions. The report includes a useful illustration of the operation of misrepresentation-based TBML and of the "Black Market Peso Exchange" scheme used by Colombian drug cartels. It’s important to note that many participants in the schemes, such as banks and professional advisers, are unaware of the underlying wrongdoing given the complexity of these transactions.
The report also includes a useful summary of literature on TBML and international bodies involved in counter-TBML efforts.
Some of the recommendations for countries to combat TBML include:
- partnering with the private sector
- domestic information sharing
- international cooperation
- further research
U.S. officials and other sources have identified a number of countries as being at particular risk for TBML schemes. Available evidence indicates that the amount of TBML occurring globally is likely substantial.