The Financial Action Task Force (FATF) has released a new report – **Trade Based Money Laundering** – that examines ways in which the international trade system can be misused for laundering the proceeds of crime. The report notes a number of money laundering case studies, “red flag” indicators of illegal activity and issues for further consideration and identifies how import and export operations are exploited as a cover for the movement of illicit funds.
A release from the FATF says the report will assist policy makers, law enforcement officials and financial service providers as they attempt to *”plug money-laundering loop-holes in the international trade system.”*
The Executive Summary points out that there are three main methods by which criminal organisations and terrorist financiers move money for the purpose of disguising its origins and integrating it into the formal economy:
• use of the financial system;
• the physical movement of money (e.g. through the use of cash couriers);
• the physical movement of goods through the trade system.
Reportedly, in recent years, the Financial Action Task Force has focused considerable attention on the first two of these methods. By comparison, the scope for abuse of the international trade system has received relatively little attention.
This report is one in a series of thematic studies carried out by the FATF to provide an in-depth look at money laundering and terrorist financing typologies.