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Research briefs

How trade-based laundering is actually detected

Working notes on typologies, red flags, regulation and detection, written for people who have to reconcile a trade and then defend the conclusion. Each brief cites the primary sources it rests on.

An aerial view of a loaded container ship under way at sea, with a tug alongside.

  1. Typologies

    5 min read

    Over- and under-shipment: reconciling what was billed against what was carried

    Quantity manipulation needs no price anomaly to work, which is why price benchmarking alone will never surface it. The reconciliation that does surface it uses weight, freight charges and container capacity to make the document set contradict itself.

    typologiesquantityshipmentreconciliation

  2. Red Flags

    2 min read

    The Wolfsberg Group's Role in Shaping Financial Crime Standards

    The Wolfsberg Group is an association of banks focused on developing frameworks and guidance to combat financial crime. The Wolfsberg Group established and maintains a global framework for correspondent banking due diligence and payment transparency.

    red-flagsletter-of-creditdocumentary

  3. Typologies

    2 min read

    Double Invoicing and the Limits of Document-Based Trade Review

    FinCEN identifies double invoicing—invoicing the same goods or services more than once—as a basic trade-based money laundering typology.

    typologiesphantom-shipment

  4. Sanctions

    2 min read

    OFAC's Sanctions Architecture: What Trade-Finance Teams Should Know

    OFAC administers multiple distinct sanctions programs targeting specific countries and activities, including a dedicated Non-Proliferation Sanctions program relevant to dual-use export controls.

    sanctionsdual-useexport-controls

  5. Red Flags

    2 min read

    Wolfsberg Group's Framework and Its Bearing on Counterparty Diligence

    The Wolfsberg Group is a body of banks focused on developing frameworks and guidance to combat financial crime.

    red-flagskycdiligence

  6. Explainer

    2 min read

    The Wolfsberg Group's Role in Correspondent Banking Transparency

    The Wolfsberg Group established and maintains the global framework for correspondent banking due diligence and payment transparency. The Wolfsberg Group publishes guidance specifically addressing roles and responsibilities for payment transparency.

    explainercorrespondent-bankingvisibility

  7. Regulation

    2 min read

    FinCEN's 2010 Advisory: A Lasting Template for TBML Reporting

    FinCEN issued Advisory FIN-2010-A001 on February 18, 2010 to help financial institutions report suspected trade-based money laundering via SARs.

    regulationfincenadvisory

  8. Case Study

    2 min read

    The Black Market Peso Exchange: A Case Study in Complex TBML

    The Colombian Black Market Peso Exchange originated from Colombia's restrictive currency exchange policies, which drove businesses to use black market peso brokers to bypass government levies.

    case-studybmpetypologies

  9. Technology

    2 min read

    Wolfsberg Group Sets Direction on Monitoring, AI and Payment Transparency

    The Wolfsberg Group is a body of banks focused on combatting financial crime and setting global standards.

    technologyanalyticsmonitoring

  10. Red Flags

    2 min read

    Duty-Free Trade Zones and the Limits of Document-Based Detection

    FinCEN warns that shipments of high-dollar merchandise like electronics, auto parts, and precious metals and gems to duty-free trade zones such as Panama's Colon Free Trade Zone can indicate trade-based money laundering when combined with other red flags.

    free-trade-zonesred-flags

  11. Regulation

    2 min read

    Wolfsberg Group Restates Its Role in Shaping Financial Crime Standards

    The Wolfsberg Group describes itself as the leading voice in banking committed to combatting financial crime.

    regulationwolfsbergcontrols

  12. Regulation

    2 min read

    The Egmont Group: The Backbone of FIU Information Sharing

    The Egmont Group is a global organization that facilitates and prompts the exchange of information, knowledge, and cooperation among member financial intelligence units.

    regulationfiuinformation-sharing

  13. Technology

    2 min read

    Trade Misinvoicing: A Low-Risk Mechanism for Moving Illicit Value

    Trade misinvoicing involves the deliberate falsification of the value, volume, and/or type of commodity in an international commercial transaction by at least one party involved.

    technologyprice-datadetection

  14. Typologies

    2 min read

    Why HS Misclassification Sits at the Heart of TBML Risk

    The Harmonized System (HS) is an international product nomenclature that classifies goods using a six-digit code arranged in a legal and logical structure.

    typologiesmisdescriptionhs-codes

  15. Red Flags

    2 min read

    Reading the Signals: Core Red Flags in Trade-Based Money Laundering

    A key red flag of trade-based money laundering is a U.S. company operating out of a foreign country where it is difficult or impossible to determine ownership or controlling persons, or where the business purpose is unclear.

    red-flagsshell-companybeneficial-ownership

  16. Explainer

    2 min read

    Trade Misinvoicing: The Mechanics Behind Illicit Flows

    Trade misinvoicing involves the deliberate falsification of the value, volume, and/or type of commodity in an international transaction by at least one party involved.

    explainerillicit-flowsmis-invoicing

  17. Sanctions

    2 min read

    OFAC's Sanctions Architecture and Its Relevance to Trade-Based Risk

    OFAC is the U.S. Treasury office that administers sanctions programs and maintains country-specific sanctions information. OFAC sanctions programs can be either comprehensive or selective in scope.

    sanctionstransshipmentevasion

  18. Typologies

    5 min read

    Multiple invoicing: the anomaly that exists only between two files

    One genuine shipment, billed more than once, usually through different banks. No individual payment is anomalous, which is the point: the discrepancy exists only in a comparison nobody is assigned to make.

    typologiesmultiple-invoicingmis-invoicingdocumentary-credit

  19. Red Flags

    5 min read

    Over- and under-invoicing: what a price benchmark has to control for

    A unit price is only high or low relative to a comparison. Most price-variance findings collapse because the benchmark ignored the incoterm, the quantity, the HS level, or the period, not because the price turned out to be defensible.

    red-flagsmis-invoicingpricingincoterms

  20. Explainer

    6 min read

    What is trade-based money laundering, and why it evades traditional controls

    Trade-based money laundering settles a real payment against a misstated fact. Every control in the chain can work exactly as designed and still not see the transfer, because no single control holds both records.

    fundamentalstypologiestrade-financedocumentary-credit