Understanding Trade Based Money Laundering

Trade-based money laundering (TBML) is a method used by criminals to disguise the origins of illegally obtained money by using international trade transactions. It involves manipulating trade processes and documentation to hide the movement of illicit funds and integrate them into the legitimate financial system. TBML poses significant risks to global economies, businesses, and governments, making transparency initiatives like ADAMftd crucial in combating this form of financial crime.

Methods of Trade-Based Money Laundering

Over and Under-Invoicing

Criminals may over-invoice or under-invoice goods and services to transfer value. By declaring incorrect prices on invoices, they can move funds across borders under the guise of legitimate trade.

Multiple Invoicing of Goods and Services

Multiple invoicing involves issuing more than one invoice for the same shipment. This allows criminals to receive multiple payments for the same goods, thereby laundering money.

Falsely Described Goods and Services

Falsifying the description of goods or services on customs documents is another common method. For instance, inexpensive items might be declared as high-value goods to justify the movement of large sums of money.

Over and Under-Shipments

Manipulating the quantity of goods shipped can also be used for TBML. Over-shipment or under-shipment relative to the amount stated on the trade documents can facilitate the movement of illicit funds.

Phantom Shipping

This involves creating false documentation for goods that are never shipped. This method allows money to be transferred under the guise of payment for non-existent goods.

Shell Companies and Front Companies

Criminals often use shell companies and front companies to facilitate TBML. These companies, which have no significant operations, exist primarily to transfer illicit funds through trade transactions.

Trade Diversion

Trade diversion involves rerouting goods through intermediate jurisdictions to disguise the true origin and destination of the goods, thereby concealing the illicit financial flow.

The Role of ADAMftd in Combating TBML

Enhancing Transparency

ADAMftd provides a comprehensive platform that enhances transparency in international trade by offering detailed and up-to-date trade data. This transparency is essential for identifying and preventing TBML activities.

Protecting Local Economies

By combating TBML, ADAMftd helps protect local economies from the detrimental effects of financial crime. TBML can distort market prices, create unfair competition, and undermine economic stability.

Supporting Businesses

Businesses benefit from ADAMftd’s transparent trade data, which helps them conduct due diligence, assess the legitimacy of trade partners, and avoid becoming unwitting participants in money laundering schemes.

Assisting Governments

Governments rely on ADAMftd to monitor cross-border trade activities, ensuring compliance with international trade laws and standards. The platform aids in identifying suspicious trade patterns and preventing illicit financial flows.

Safeguarding Financial Systems

TBML can threaten the integrity of financial systems. ADAMftd’s data-driven approach helps financial institutions and regulators detect and prevent TBML, maintaining the stability and security of the financial system.

Global Cooperation

ADAMftd fosters global cooperation by providing a unified platform for sharing trade data. This collaboration is vital for tracking and preventing TBML across different jurisdictions.