Summary
This FATF analysis highlights how criminal organizations increasingly exploit international trade systems to move and launder illicit funds. The report outlines emerging typologies and red flags in trade-based money laundering (TBML), including complex corporate structures, trade mispricing, and the abuse of free trade zones.
Analysis
The scale and sophistication of modern TBML operations pose an unprecedented threat to global financial integrity, with criminal networks exploiting regulatory gaps between jurisdictions and the inherent complexity of international trade. The report reveals critical vulnerabilities in trade finance systems, particularly around document verification and valuation controls. Of particular concern is the growing use of professional enablers and shell companies to create layers of legitimacy around suspicious transactions.
These developments matter because they undermine fair competition and market integrity while enabling criminal enterprises to infiltrate legitimate supply chains. The report exposes how traditional transaction monitoring approaches struggle to detect evolving TBML techniques, especially when criminals manipulate trade documentation and employ multiple jurisdictions to obscure money flows.
The systemic impact extends beyond immediate financial losses – it distorts markets, enables tax evasion, and weakens the credibility of trade finance instruments. Banks and regulators face mounting pressure to enhance due diligence without impeding legitimate trade, while the increasing digitalization of trade finance creates new vulnerabilities alongside opportunities for improved detection.
This analysis suggests current anti-TBML frameworks require significant strengthening, particularly around cross-border information sharing and the integration of trade data analytics. Without coordinated international action, sophisticated TBML schemes will continue to exploit the regulatory blind spots between national jurisdictions.
Source: www.fatf-gafi.org