Financial Crime World

Waking the Sleeping Giant: Trade-Based Money Laundering Threatens Global Economy

In the shadows of the global economy, a new and complex form of money laundering is on the rise. Trade-based money laundering (TBML) is a process that disguises the proceeds of crime through cross-border trade transactions, becoming one of the most significant threats to the financial system.

The Rise of Trade-Based Money Laundering

According to the [Financial Action Task Force (FATF)], TBML is the “attempt to legitimize the illicit origins of proceeds of crime through trade.” [1] It is often achieved by misreporting the price, quality, or quantity of goods in international transactions.

  • Challenging the regulated channels: As regulated channels for traditional money laundering and terrorism financing have grown increasingly difficult to exploit, criminals have turned to trade as a more sophisticated and complex means of washing their illicit gains.
  • UNwitting tools: Financial institutions engaged in global trade become the unwitting tools in the hands of illicit actors to move substantial funds across jurisdictions.

Consequences of Ignoring TBML

The consequences of facilitating money laundering or terrorism finance can be grave:

  • Regulatory penalties: Stiff legal repercussions, including fines and sanctions, for aiding illicit activities.
  • Reputational damage: Damage to business reputation and potentially losing correspondent banking relationships.

Building a Robust Control Framework

In response to TBML, financial institutions are being urged to build robust control frameworks to protect their institutions and comply with anti-money laundering and counter-terrorism financing regulations.

  • Gain the necessary skills and knowledge: The [World Bank’s Open Learning Campus] offers a comprehensive course designed for trade finance and other banking professionals to:
    • Recognize, assess, and report suspicious transactions.
    • Develop policies, procedures, and controls to mitigate the risks of TBML.
    • Upon completion, obtain a certificate of completion to showcase expertise.

[1]: Financial Action Task Force (FATF), “Trade-Based Money Laundering,” [accessed 2021-07-12]. Available from: https://www.fatf-gafi.org/topics/methods-and-techniques/related-articles/tbml/

As the global economy continues to grow, so does the threat of TBML. Armed with the right knowledge and tools, financial institutions can stay one step ahead of criminals and safeguard their reputation and financial integrity.