A few days ago, the Financial Action Task Force (FATF) and the Egmont Group of Financial Intelligence Units collaborated on a new report on trade-based money laundering (TBML). The report updated the prior 2006 FATF report on TBML. I was hoping for insight and a new direction forward. But on the whole I was disappointed. The paper discusses the same tired mantra of a rules based approach dealing primarily with filing Suspicious Activity Reports (SARs) via trade finance. That's probably because the FATF has always focused on financial intelligence as the panacea and also because Egmont helped draft the report. While trade-finance is important, the great majority of international trade is open account and/or between the same multinational group. The money transfers are automatically processed. There is no document review and SARs will not be filed. For example, according to recent numbers released by Treasury's FinCEN, less than 1% of all SARS filed over the last five years have dealt with TBML. In my opinion, the report gave little attention to enforcement. The report did not mention trade transparency units (TTUs). I couldn't find mention of China or India - two of the largest players in TBML. There were some nice case examples but they were from the usual contributors. I don't think any new ground was broken. However, I was pleased to note they did have a short section on Service Based Money Laundering (SBML) - correctly noting that SBML is not TBML. I didn't see anything about a possible FATF recommendation covering TBML. In my opinion, until and unless FATF incorporates a new recommendation devoted specifically to TBML nothing is going to change. In the world of AML/CTF the FATF makes things happen. Unfortunately, the new FATF report will not be the catalyst for needed change. The new FATF TBML report can be found here: www.fatf-gafi.org/publications/methodsandtrends/documents/trade-based-money-laundering-trends-and-developments.html
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On December 9, I was honored to testify before the Cullen Commission. The Commission was established to examine the "Vitoria model" of money laundering in British Columbia. This occurs via capital flight, gaming, trade-based money laundering and value transfer, and underground financial systems. I submitted a written statement. Most of my remarks were focused on trade-based money laundering. My 3.5 hour oral testimony can be found here: cullencommission.ca/webcast-archive/ Click on the December 9, 2020 broadcast.
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AuthorJohn Cassara is a former intelligence officer and Treasury Special Agent. He is a consultant, speaker, and writer on issues related to transnational crime, money laundering, and terror finance. Archives
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