Countering Trade-Based Money Laundering: A New Data Mining Frontier


Trade-based money laundering defined

The Financial Action Task Force (FATF) defines trade-based money laundering as the “process of disguising the proceeds of crime and moving value through the use of trade transactions in an attempt to legitimize their illicit origins.” According to the US Department of State, this practice has reached “staggering” proportions in recent years. As a global problem, it is difficult to quantify, but some experts believe the majority of US money laundering is moved out of the country via undervalued exports. The US Department of Treasury estimates that the Black Market Peso Exchange alone, a TBML methodology found in the Western hemisphere, launders billions of drug dollars every year.

Criminal and terrorist groups that abuse trade are assisted by a number of factors:

  • The massive amount of global trade that takes place daily;
  • Financial diversity (i.e. the wide variety of financial controls found in different countries, the diverse financial arrangements made between governments, and the innumerable different types of financial deals found in international commerce);
  • The co-mingling of legal and illicit funds and trade items;
  • The low risk of detection; and
  • Limited government understanding and resources to detect suspect trade transactions

Detailed report link: here