9 December 2020 – International trade networks can attract criminals and terrorists financiers who exploit the interconnected supply chains to launder the proceeds of crime or finance terrorism. Recognising trade-based money laundering is difficult, particularly when there is a lack of understanding of this technique.
A new FATF-Egmont Group report aims to help public and private sector with the challenges of detecting trade-based money laundering. Using numerous case studies from around the FATF’s Global Network, it explains the ways in which criminals exploit trade transactions to move money, rather than goods.
It highlights recommendations to address the trade-based money laundering risks. Countries should use national risk assessments and other risk-focused material to raise awareness with the public and private sector entities involved in international trade. These include financial intelligence units, customs agencies, law enforcement, financial institutions, transport companies, importers and exporters, accountants and auditors.
The report also recommends improving information-sharing of financial and trade data, and improving co-operation between authorities and private sector, including through public-private partnerships.
Given the diversity of tradable goods, the involvement of multiple parties, and the speed of trade transactions, trade-based money laundering remains a significant risk. This report aims to help public and private sector understand these risks so that they can take action when it occurs.
The FATF and the Egmont Group will continue to work together to develop risk indicators which will make it easier to recognise use of trade mechanisms for money laundering.