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FROM A
DIFFERENT ANGLE by Kenneth Rijock
DIFFERENT ANGLE by Kenneth Rijock
Financial Crime Consultant, for World-Check
The Four Variations of Trade-Based Money Laundering
25 November 2007
There has been an increasing amount of interest of late in trade-based money laundering, and we thought it might be useful to discuss the more common variations, so that our readers can better recognise them on a real-time basis. Whilst we have covered the subject generally in the past, understanding the permutations and combinations employed by money launderers is a critical prerequisite to interdiction of trade-based money laundering operations.
We will keep the summaries short and to the point:
These examples are but a snapshot of the intricacies of these complex methods. For further information and for methods of detection and interdiction, our readers are invited to attend presentations of the 2007-2008 World Tour when it next appears in your area. For example, we will be covering this topic on 14 December in London, in January in Germany and Austria, and in February in Sydney.
Watch the World Tour page for details.
- Over- and Under-Invoicing of Goods and Services - The operator misrepresents the price of the goods or services in order to transfer additional value between the importer and exporter. By over-invoicing far beyond the fair market value of the goods, large amounts of funds come into the country. Through under-invoicing, goods worth far more than are paid for are exported abroad.
- Multiple Invoicing of Goods and Services - The money launderer issues more than one invoice for the same trade transaction, allowing multiple payments for the same goods and services. Of course, different financial institutions are employed to ensure that this technique is not discovered.
- Over- and Under-Shipments of Goods and Services - The quantity of goods being shipped, or services being provided is either over-stated or under-stated, depending upon whether funds must be exported or imported. In some cases, no goods at all are shipped, notwithstanding the processing of invoices and customs documents. This is sometimes known as a Phantom Shipment.
- Falsely Described Goods and Services - The money launderer misrepresents the quality or type of goods or services. This method demands more than the usual amount of artful deceit, for accidental discovery of the discrepancy can occur more commonly than with the other methods. Money launderers utilising this method are generally quite careful not to leave incriminating tracks when they dispose of the valuable but misrepresented goods, or move the funds paid for inflated swervices.
These examples are but a snapshot of the intricacies of these complex methods. For further information and for methods of detection and interdiction, our readers are invited to attend presentations of the 2007-2008 World Tour when it next appears in your area. For example, we will be covering this topic on 14 December in London, in January in Germany and Austria, and in February in Sydney.
Watch the World Tour page for details.
The facts and opinions stated in this article are those of the author and not those of World-Check. World-Check does not warrant the accuracy of any facts and opinions stated in this article, does not endorse them, and accepts no responsibility for them.
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