Financial safety

Trade-based money laundering a growing risk, US government told

The amount of illicit money being laundered through seemingly legitimate trade transactions is “large and growing”, according to new research carried out on behalf of the US government.

A report produced by the US Government Accountability Office (GAO), a self-styled “congressional watchdog” that provides nonpartisan advice to federal officials, suggests tougher regulations in other areas of the financial sector have meant organised criminal groups are increasingly turning to trade as a means to hide payments.

It says trade-based money laundering (TBML), an umbrella term for moving criminal funds through trade transactions in order to disguise their origins, is now “one of the primary means that criminal organisations use to launder illicit proceeds”. The most common form of TBML is believed to be under or over-invoicing for shipments of goods.

“According to Treasury, since 2013 there has been a consistent decrease in bulk cash seizures reported by agencies throughout the United States that suggests that transnational criminal organisations may be increasing their use of international funds transfers to wire money across borders as part of TBML schemes,” says the report, which was sent to a trio of senators in December but only made public in late January.