Follow the money: Countering trade-based money laundering (SAS)


What is trade-based money laundering?

The Financial Action Task Force (FATF) defines trade-based money laundering (TBML) as the “process of disguising the proceeds of crime and moving value through the use of trade transactions in an attempt to legitimize their illicit origins.” According to the U.S. State Department, this practice has reached “staggering” proportions in recent years. As a global problem, it is difficult to quantify, but some experts believe the majority of US money being laundered abroad is moved out of the country via undervalued exports. The US Department of Treasury estimates that the Black Market Peso Exchange, a TBML methodology found in the Western hemisphere, launders billions of drug dollars every year.

Criminal and terrorist groups that abuse trade are assisted by a number of factors:

  • The massive amount of global trade that takes place daily.
  • Financial diversity (i.e. the wide variety of financial controls found in different countries, the diverse financial arrangements made between governments, and the innumerable types of financial deals found in international commerce).
  • The co-mingling of legal and illicit funds and trade items.
  • A low risk of detection.
  • Limited government understanding and resources .

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