HOW CRIMINALS MOVE MONEY THROUGH WORLD TRADE

On 17th May, Trade Vistas published an article which opens by saying that monitoring payments to spot “trade-based money laundering” has been a lesser priority for private banks within the larger world of financial crime prevention – but also saying that trade-based money laundering has become the weakest link in AML initiatives, so banks and government officials are strengthening international collaboration to crack down on criminals who hide and launder their dirty money in global trade transactions.  Trade financing to support payments include a suite of services such as bank guarantees, document collection, import/export loans, pre-shipment loans, trust receipts, warehouse financing, and structured trade financing.  Financial institutions have common guidance provided by trade sector organisations on red flags and ways to comply with KYC legal requirements for trade finance transactions.  However, it cautions that banks only have sufficient visibility into trade transactions that require documentation on the underlying transaction but 80% of world trade is “open account”, where banks may have little direct involvement, or may provide pre-shipment financing, without information about the nature of the shipment itself.  The article, which highlights the involvement of the fraud in dealings with developing countries, concludes by saying that both government-to-government collaboration and the deployment of innovative technologies to analyse big data and predict illicit behaviour will be key ingredients to staying ahead of this trend and enabling unimpeded growth of legitimate businesses engaging in global trade.

https://tradevistas.org/how-criminals-move-money-global-trade

Estimated-North-South-Illicit-Flows-1500x1063

Author: raytodd2017

Chartered Legal Executive and former senior manager with Isle of Man Customs and Excise, where I was (amongst other things) Sanctions Officer (for UN/EU sanctions), Export Licensing Officer and Manager of the Legal-Library & Collectorate Support Section

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