In this chapter of The International Comparative Guide to: Anti-Money Laundering 2018, Alma Angotti and Robert Dedman explore how trade-based money laundering (TBML) poses challenges for financial institutions.
"Through a Mirror, Darkly: AML Risk in Trade Finance"
International trade is the lifeblood of the world economy. However, financing — or passing through funds from — international trade transactions places financial institutions at significant risk of being used as conduits for a variety of financial crime, including TBML, terrorist financing, and certain forms of predicate criminality. And the financial value of such illicit flows of funds is potentially significant: Global Financial Integrity (GFI) estimated in a report published in April 2017 that in developing and emerging economies, illicit inflows and outflows accounted for between 14% and 24% of their total trade in the years between 2005 and 2014. To give an idea of scale, the GFI report estimates that, in dollar terms, illicit inflows and outflows accounted for between US$620 billion and US$970 billion in 2014 alone. Read the full chapter to learn more.