What is Trade-Based Money Laundering (TBML)?

With the development of technology, it has become easier to cover up financial crimes. Trade-Based Money Laundering is one of the most commonly used methods of money laundering.

What Are The Trade-Based Money Laundering Processes?

Trade-Based Money Laundering mostly takes advantage of the complexity of trading systems in international contexts. TBML generally involves giving false information on imports and exports. Most common Trade-Based Money Laundering methods: Over-billing, Under-billing, Multiple billing, Over/under shipping, Quality misrepresentation.

How Can Firms Fight with TBML?

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: To mitigate the risks of TBML, firms should coordinate with regulators. İnformation sharing makes it easier to identify global criminal infrastructure and addressing specific examples of TBML.

International Guidance on Trade-Based Money Laundering

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

The FATF provides financial institutions with a list of trade finance AML red flags to consider when managing cross-border transactions; these include:

  • Significant discrepancies between invoices and the description of goods on official documents.
  • Shipments with unusual traffic of goods 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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