TRADE-BASED MONEY LAUNDERING: BANKS HAVE ‘LIMITED VISIBILITY’ INTO 80% OF TRADE TRANSACTIONS

On 29 January, the US Government Accountability Office released a report which says that whilst trade-based money laundering is believed to be on the rise, financial institutions charged with flagging payments linked to it often have little insight into the nature of the deals.  In the report, “open-account” trade is described as “one of the primary vulnerabilities of the US financial and trade systems”.  Most international trading is done using open-account, as opposed to “documentary transactions”, in which banks review related documentation (bills of lading, invoices, packing lists etc) and so can mitigate the risks of providing letters of credit or other financing and potentially detect or prevent money laundering.  The GAO cites a claim by the Wolfsberg Group of leading banks that 80% of world trade is carried out using open-account trading.

https://www.gao.gov/products/GAO-20-314R

GAO

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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