Introduction
Introductory information on trade-based money laundering (TBML).
The Financial Action Task Force (FATF) defines TBML as ‘the process of disguising the proceeds of crime and moving value through the use of trade transactions in an attempt to legitimise their illicit origins’.
That is a very technical definition, in very simple terms, TBML is an effective method of hiding and moving criminal monies within the ‘white noise’ of the billions of international trade transactions taking place across the globe on a daily basis.
Unlike other trade related predicate offences (like smuggling prohibited goods such as drugs), the primary aim of TBML is the movement of money or value which is disguised as trade in legitimate goods. This could be through the falsification of price, quantity and quality of the good, or the falsification of invoices or supporting shipment documents.
To explain the TBML methodology in more simplistic terms, Commodity A is legitimately valued at £1 per unit, however a criminal group claims Commodity A is valued at £10 per unit. If they ‘sell’ 100,000 units to a co-conspirator, they can easily launder £900,000 through one transaction whilst no actual movement of goods even needing to take place. Now imagine doing that several times a week or hundreds of times a year and you can see how easy it can be to launder the proceeds of crime though the trade system.
Other areas which are similar but with differences are Criminal Diagou and Service Based Money Laundering (SBML). Criminal Diagou is where individuals or networks of shoppers purchase desired goods on behalf of others, ostensibly to circumvent customs controls or other forms of tariff restrictions. SBML is similar to TBML but revolves around invoice fraud and manipulations with services rather than goods.