What is Trade-Based Money Laundering (TBML)?

It has become easier to cover up financial crimes with the help of advanced technology. Trade-Based Money Laundering is one of the most commonly used methods to launder money.

How Do Criminals Use Trade-Based Money Laundering Processes?

Trade-Based Money Laundering methods take advantage of the complexity of trading systems on international stages. TBML generally involves giving false information on imports and exports. The most common Trade-Based Money Laundering methods are:

  • Over-billing
  • Under-billing
  • Multiple billing
  • Over/under shipping
  • Quality misrepresentation

How Can Firms Fight Against Trade-Based Money Laundering?

To combat TBML, companies must strengthen their AML/CFT operations and act in a planned manner. Irregular AML Controls easily increase the risk of money laundering. The fact that TBML is a method used in many different organizations makes it difficult for companies to reduce risks. At this point, information sharing has a very important place.

Information Sharing: Firms should coordinate with regulators to reduce Trade-Based Money Laundering risks. Information sharing creates a network between organizations and makes it easier to identify global criminal infrastructure and address specific examples of TBML.

International Guidance on Trade-Based Money Laundering

The wider the scope of TBML regulators, the easier it is for individuals and companies to prevent TBML. International authorities issue various regulations to block TBML.

The FATF provides financial institutions with a list of AML red flags related to trade to consider when managing global transactions; these include:

  • Significant discrepancies between invoices and the description of goods on official documents.
  • Shipments with unusual traffic of goods are handled by a particular importer or exporter.
  • Payment methods are inconsistent with the level of risk presented by the transaction.
  • Transport of goods entering or leaving countries that are considered to be at high risk of money laundering.

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