The Times Malta recently published an article highlighting the "veil of international trade" in particular, the misuse of the trade system in a scheme known as trade-based money laundering.
According to illicit finance experts, it is one of the largest forms of money laundering affecting global financial institutions, causing serious financial, legal and reputational harm. Research conducted by the Global Financial Integrity reported that, in 2017, the value gap for trade in goods totaled US$ 817.6 billion.
As 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.
With such increased focused, in March 2021 the Financial Action Task Force (FATF) and Egmont Group published a joint report on trade-based money laundering (TBML) risk indicators. This follows on from a report published in December 2020 highlighting pertinent trends and developments with respect to TBML for market participants to be aware of. The FATF and Egmont Group encourage the market to read both reports in conjunction with each other.
Furthermore in May 2021, the Joint Money Laundering Steering Group published provisional updates to its Part II Guidance Trade Finance chapter (chapter 15). A number of the proposed changes clarify the definition of trade finance products/services, and how these can be used to facilitate global trade.
Ince has launched an enhanced specialist sanctions compliance solution through a co-operation agreement with Windward, the Predictive Intelligence company applying AI to transform global maritime trade. This new proposition will enable charterers, insurers, owners, investors, brokers, ship operators, financial institutions and defence agencies to benefit from a smarter, faster and forward-looking approach to risk mitigation. Ince's collaboration is supported with New York based law firm, Seward & Kissel LLP, to enable clients to obtain sanctions legal advice covering the EU, England & Wales and U.S. sanctions applications, together with the new best risk analysis and reporting tools available, all under one roof.
The misuse of the trade system to obscure the illegal movement of funds, usually includes methods to misrepresent the price, quality or quantity of goods. For criminals looking to launder illicit funds through trade-based money laundering, the payment is the most important piece of the puzzle. The trade transaction is used as an additional cover to avoid detection and to mask the movement of illicit funds.