Hundreds of billions of US dollars pass through trade-based money laundering (TBML) schemes each year.
The business body the International Chamber of Commerce (ICC) with the Wolfsberg Group and the Bankers Association for Finance Trade (BAFT) sets guidelines and offers recommendations for governments and the private sector to better combat laundering.
Outside of importers and exporters, no one party has a complete view of trade transactions, with banks providing traditional financing and risk mitigation for no more than 20pc of global trade transactions, it’s estimated. As the volume of these non-traditional ‘open account transactions’ increases, it is becoming harder to monitor transactions. This is due to the fact that transactions facilitated through traditional bank products provide greater visibility of the underlying transactions.
In an effort to shed light on TBML, which is often considered one of the least understood financial crimes, the ICC Banking Commission, the Wolfsberg Group, and BAFT have launched a short awareness video.
Rob Wainwright, Executive Director of EU policing agency Europol, said: “Trade-based money laundering is a highly effective way of mixing large volumes of criminal proceeds with legitimate funds, but also of moving them outside of the country of activity within business transactions. TBML is very attractive to organised crime groups and very hard to identify and investigate because of its transnational nature and complexity. Recent cases have highlighted the sophisticated methods used to exploit the complex supply chains of international trade to launder criminal assets. I welcome this video as a useful tool to raise awareness about this important issue.”
The ICC Banking Commission believes that banks can, and should, remain an important partner for those involved in international trade and should enhance their standards and controls in order to detect and prevent TBML activity. However, in light of the lack of an end-to-end view of the majority of trade transactions, this alone is not likely to have a material impact.
The authorities say mitigation of TBML requires greater collaboration and information sharing between other key international trade players in the public and private sectors. These include shippers, airlines, truckers, port and customs authorities, businesses and law enforcement agencies. Working together to create a complete picture of illicit TBML flows and typologies will ensure that more can be done to disrupt criminals.
Daniel Schmand, Chair of the ICC Banking Commission, said: “While tackling trade-based money laundering is always complex, it is made even more challenging given that the perpetrators recognise and understand bank controls and, therefore, work to ensure that their activities remain undetected. Documentary trade – unlike open account transactions – brings additional transparency to transactions. A collaborative approach in this space is critical for the future of financial crime detection.”
