Trade-Based Money Laundering (TBML): How Criminals Exploit International Trade to Launder Illicit Funds

What is Trade-Based Money Laundering?

Trade-Based Money Laundering (TBML) is the process of disguising illegally obtained funds and moving value across borders using trade transactions to legitimize their illicit origin (Trade-Based Money Laundering). In simple terms, instead of moving bags of cash or wiring money through banks, criminals embed dirty money in international trade by manipulating invoices, shipments, and trade documents. The Financial Action Task Force (FATF) — the global anti-money laundering standard-setter — highlights TBML as one of the three primary methods criminals use to launder money (alongside abusing financial institutions and smuggling cash) (Trade-Based Money Laundering). By using the legitimate trade system as cover, TBML schemes allow criminals to transfer value as if they were paying for goods or services, making illicit funds appear as part of normal commerce.

What makes TBML especially insidious is that it often does not involve obvious criminal items like drugs or weapons. Instead, it involves everyday commodities, consumer goods, or even services. The aim is not actually moving the goods, but moving the money. In practice, TBML is carried out by misrepresenting the price, quantity, or quality of imports or exports (Trade-Based Money Laundering). For example, a shipment of goods might be overpriced or underpriced on paper, or described as a completely different item, to justify moving large sums of money between countries. These techniques can be quite complex and are frequently used in combination with other laundering methods (like shell companies or cash smuggling) to further obscure the money trail (Trade-Based Money Laundering).

Over the past decade, regulators and crime experts have realized that while banks and cash couriers were being monitored more closely, trade transactions received relatively less scrutiny, creating a lucrative loophole for laundering (Trade-Based Money Laundering). International trade is enormous and complex, providing thousands of daily transactions in which criminals can hide. As FATF notes, the enormous volume of global trade flows obscures individual transactions, and limited resources of customs agencies make detecting dirty money in trade akin to finding a needle in a haystack (Trade-Based Money Laundering). In short, TBML leverages the complexity and scale of global trade to move illicit wealth undetected.

Why TBML Matters: Scale and Risk

TBML is not a theoretical issue — it is a major driver of illicit financial flows worldwide. Global trade-based schemes are believed to move hundreds of billions, if not trillions, of dollars of dirty money each year, though by their nature exact figures are hard to pin down (GAO-20-333, TRADE-BASED MONEY LAUNDERING: U.S. Government Has Worked with Partners to Combat the Threat, but Could Strengthen Its Efforts). A 2021 study by Global Financial Integrity (GFI) found an estimated US $1.6 trillion in potential trade misinvoicing in just one year (2018) across 134 developing countries (Report Finds Trade Misinvoicing Continues to be a Massive and Persistent Problem – Global Financial Integrity). Of that, about $835 billion was between developing countries and advanced economies (Report Finds Trade Misinvoicing Continues to be a Massive and Persistent Problem – Global Financial Integrity). Trade “misinvoicing” – deliberately falsifying the value of goods on customs invoices – is a core technique of TBML. It allows criminals and shady businesses to illegally move money, evade taxes or customs duties, launder criminal proceeds, circumvent currency controls, and hide profits offshore under the guise of trade (Report Finds Trade Misinvoicing Continues to be a Massive and Persistent Problem – Global Financial Integrity). Such staggering numbers indicate how widespread and lucrative this form of money laundering has become.

Criminal organizations and even terrorist financiers use TBML because it exploits legitimate trade channels, making detection difficult. According to the U.S. Government Accountability Office, TBML is a common form of international money laundering, yet it is one of the most difficult to detect due to the sheer complexity of trade transactions and the massive volume of global trade (GAO-20-333, TRADE-BASED MONEY LAUNDERING: U.S. Government Has Worked with Partners to Combat the Threat, but Could Strengthen Its Efforts). Unlike a suspicious bank transfer that might trigger an alert, an international shipment with seemingly proper documentation doesn’t immediately raise alarms. There are so many variables in trade (pricing, quality, quantity, incoterms, exchange rates, etc.) that identifying an anomaly requires expertise and data that many enforcement agencies or banks might not readily have.

Another reason TBML poses a high risk is the global nature of the schemes. They often span multiple jurisdictions, exploiting gaps in oversight. For instance, one country might have weak customs enforcement, another might have lax corporate transparency (allowing anonymous shell companies), and a third might have banks that don’t effectively scrutinize trade finance transactions. Criminals take advantage of these weakest links. A classic example is the use of shell companies in offshore havens or jurisdictions with limited transparency: fraudulent import-export companies are formed in places like free trade zones or countries with relaxed corporate disclosure, solely to conduct bogus trade deals. These companies engage in invoicing games with counterparties in other countries, effectively moving dirty money across borders disguised as payments for goods.

Real-world impact: Trade-based money laundering isn’t just about paper losses — it has real economic and security consequences. Developing countries lose huge tax revenues due to import/export under-invoicing. Local industries can be hurt by the market distortions of fake prices. And law enforcement warns that TBML is used by groups ranging from drug cartels to terrorist organizations to repatriate profits or finance their operations. For example, Latin American drug trafficking rings have infamously used the Black Market Peso Exchange (BMPE) – a complex TBML scheme – to launder narco-dollars by purchasing goods in the U.S. with drug money and shipping those goods to South America, effectively settling drug sales outside the banking system (GAO-20-333, TRADE-BASED MONEY LAUNDERING: U.S. Government Has Worked with Partners to Combat the Threat, but Could Strengthen Its Efforts) (GAO-20-333, TRADE-BASED MONEY LAUNDERING: U.S. Government Has Worked with Partners to Combat the Threat, but Could Strengthen Its Efforts). In other cases, conflict gold, precious stones, or automobiles have been used as the high-value goods of choice in TBML schemes (GAO-20-333, TRADE-BASED MONEY LAUNDERING: U.S. Government Has Worked with Partners to Combat the Threat, but Could Strengthen Its Efforts). All of this means TBML is not a victimless or low-priority crime; it enables corruption, crime, and terrorism to continue by safely moving the money.

Common TBML Techniques and Red Flags

Criminals engaged in TBML have a toolkit of deceptive trade practices. Below are some of the most common techniques used to launder money through trade, along with their tell-tale signs:

• Over-Invoicing of Goods: A company exports a product and invoices the importer at a grossly inflated price. The importer overpays, sending excess funds abroad. The extra money received by the exporter is illicit funds now integrated into the financial system under the pretense of trade revenue. Red flag: The unit price far exceeds market value for that good. For example, invoices show paying \$10,000 per unit for an item that normally costs \$1,000. This often occurs between related companies or through a chain of shell companies to avoid suspicion.
• Under-Invoicing of Goods: The opposite trick – a product is exported at a deliberately low price. The importer pays far less than the goods are worth, effectively transferring value to the importer (who might be laundering money for the exporter or a third party). Later, the importer might sell the goods at market price, gaining “clean” profit. Red flag: Unit prices far below market. For instance, high-end electronics or commodities declared at a small fraction of their known value.
• Multiple Invoicing of the Same Cargo: The same goods are financed or invoiced multiple times. A criminal can launder more money by obtaining several payments or loans using a single shipment as collateral or justification multiple times. Red flag: Repeated trade financing or letters of credit for identical or similar shipments, or redundant shipments that make no economic sense. Banks may catch this if the same bill of lading or purchase order is reused.
• Fictitious or “Phantom” Shipments: No goods are actually shipped at all, despite paperwork. The parties generate fake invoices, shipping documents, or customs declarations for non-existent goods. Money is sent and received as “payment” for these ghost shipments, effectively moving funds with nothing of value exchanged. Red flag: Shipping documents that cannot be verified, or shipments of goods that never physically arrive. Sometimes freight companies or insurers can confirm that a container was booked but never actually moved, etc. Also, improbable trade patterns (e.g. a company suddenly “exporting” large volumes it never dealt with before).
• Misrepresentation of Goods or Quality: The item shipped is real but misclassified to justify price discrepancies. For example, counterfeit or low-quality goods described as premium products, or one type of commodity misdeclared as another. By misclassifying goods (wrong HS codes, description, grade, etc.), criminals can manipulate export/import rules or obscure the value. Red flag: Inconsistency between the goods’ description and their known market price or the importer’s line of business. For instance, documents claim export of expensive industrial equipment, but the package actually contains scrap metal or cheap consumer goods.
• Services and Intangibles: Instead of physical goods, some schemes use services (which are harder to verify). Examples include fake consulting agreements, licensing contracts, or sham service invoices (e.g. “transportation and logistics services” or IT services that were never rendered). These can justify cross-border payments that launder funds. Red flag: A company with little history suddenly pays large sums abroad for “consulting” or other services unrelated to its core business, with minimal documentation.
• Use of Third-Party Intermediaries: Complex TBML schemes often involve third-party payers or beneficiaries. For example, a different company (not the stated trading partner) ends up paying the invoice, or receiving the payment. This can be a sign of a Black Market Peso Exchange-type scheme or use of money brokers. Red flag: Payment for a shipment comes from a third party with no obvious connection, or funds are routed through multiple intermediaries without clear reason. Legitimate trade typically doesn’t have completely unrelated third parties settling payments.

Often, multiple techniques are combined to make detection harder. Shell companies play a big role – layers of offshore companies or companies formed in trade-friendly jurisdictions (like free zones) are used as exporters, importers, or middlemen. These firms typically have no real business operations (earning the nickname “公司-пустышки” or shell companies in Russian sources) and are controlled by the launderers (10 лет отмывания денег через торговлю между Россией и Великобританией). By operating such entities in different countries, criminals can generate paperwork for complex chains of trades that ultimately move illicit money into safer havens.

Both financial institutions and customs authorities have developed red flag indicators to spot TBML. Some common red flags include: significant discrepancies between invoice values and fair market values of goods (Report Finds Trade Misinvoicing Continues to be a Massive and Persistent Problem – Global Financial Integrity); vague or conflicting commodity descriptions; inconsistencies in trade documents (e.g., weights, volumes, or commodity codes not matching the goods); unusual shipping routes or transshipment through unrelated third countries; involvement of jurisdictions known for lax oversight or secrecy; and customers reluctant to provide documentation or who use unusual payment methods (like advance payments that are later canceled and refunded to a different entity). Any one of these might be explainable, but patterns of such red flags typically warrant a closer look for TBML.

Real-World Examples of TBML in Action

Because TBML schemes are deliberately covert, they rarely come to light until investigated. However, investigative reports and court cases have revealed how these schemes operate. Here are a few anonymized examples drawn from real cases and studies:

• Overvalued Exports from Country A to Country B: A company in Country A that is controlled by criminal interests “sells” a batch of ordinary commodities (for instance, scrap metal or second-hand machinery) to a partner company in Country B for an exorbitant price, say $5 million – far above the true market value of maybe $500,000. The importer in Country B (controlled by the same criminals) dutifully pays the $5 million, allowing $4.5 million of illicit funds to be transferred out of Country A under cover of a trade payment. The customs paperwork in Country A just shows an export of goods (often with some fake quality certification to justify the high price), so it appears legitimate. This over-invoicing method was seen in multiple cases analyzed by Transparency International, which found that criminals in Russia moved huge sums abroad by artificially inflating the prices of exports to shell companies. In one analysis of Russian court cases, about 10% of illegal fund outflows over a decade were achieved via such fake trade deals and inflated invoices, amounting to at least 20 billion rubles (around $150 million) laundered through shell firms abroad (10 лет отмывания денег через торговлю между Россией и Великобританией). The credibility of the scheme relies on plausible (if exaggerated) documentation: as long as banks and customs accept the paperwork, the criminals succeed in laundering funds.
• Phantom Import of Electronics: In another scenario, a shell import company in Country X claims to be buying a large shipment of electronics from a supplier in Country Y. An order is placed for 1,000 units of high-end laptops, supposedly worth $2,000 each, for a total of $2 million. Country X’s bank is given invoices, contracts, and even a fake bill of lading showing the goods in transit. They process the payment of $2 million to the supplier’s bank account in Country Y. However, no actual goods are shipped – the container never existed, or it might be filled with worthless items to spoof an inspection. The $2 million, less some fees, represents dirty money that has now been transferred to the account in Country Y (which the criminals control). Later, to close the loop, the shell importer in Country X may declare the goods “lost” or simply no one questions it if customs paperwork was never thoroughly checked. This kind of fake import/export scheme using phantom shipments has been used to launder money and also to fraudulently claim tax benefits like VAT refunds. Real case parallel: Authorities in Europe uncovered schemes where clothing or electronics were ostensibly traded internationally on paper, but the shipments were fictitious – merely a cover to move funds and sometimes to exploit tax loopholes.
• Misclassification and High-Value Commodities: A transnational crime group launders illicit profits by trading high-value commodities like gold and diamonds. They might buy gold in a country with illicit cash, smuggle or export it as “scrap metal” or low-grade jewelry (to avoid export restrictions or taxes), then import it in another country as pure gold and sell it, receiving clean payment. Conversely, they can over-invoice low-grade ore as if it were high-purity gold. In one complex TBML scheme involving precious metals, gold was repeatedly sold back-and-forth between collaborators in different countries with paperwork each time misrepresenting the purity and value, thereby transferring millions in illicit value while also laundering money through the appearances of a legitimate gold export business. Jewels, precious stones, and metals are attractive for TBML because they carry high value in small volumes and their pricing can be subjective or fluctuating, which criminals exploit. Authorities and organizations like the United Nations Office on Drugs and Crime (UNODC) have noted that trade-based schemes involving falsified invoices and misrepresented goods (for example, disguising shipments of precious metals or even waste products) enable criminals to move money worldwide under the guise of legitimate trade ().
• Integration with Underground Banking: Sometimes TBML is one layer in an even more elaborate laundering system. For example, in South Asia and the Middle East, hawala networks (informal money brokers) and trade-based schemes have merged. A criminal in one country deposits illicit cash with a local hawala broker; that broker might then arrange for an equivalent value of goods (textiles, electronics, etc.) to be shipped by an associate company to the criminal’s desired destination country. The sale of those goods in the destination produces “clean” money for the criminal (this is a variation of the Black Market Peso Exchange concept, adapted to different regions). The trade transaction settles the debt between brokers without money ever directly crossing borders. Such cases have been documented by enforcement agencies and often involve multiple countries (for instance, a broker in Dubai working with brokers in India and Europe, all settling accounts via trade shipments and payments). Red flag: These schemes can be hard to identify, but often the companies involved have intertwined ownership and the trades have no legitimate business purpose other than balancing books between brokers.

Storytelling note: All these examples share a common narrative: money moves, but goods either do not move or move in a distorted way. For businesses unaware of these schemes, they might unwittingly get caught as part of a chain (for instance, a legitimate business might sell goods to a buyer who is actually laundering funds, and receive payment from a third-party entity). Thus, even honest import-export companies need to be vigilant about unusual requests, as they could be tangentially roped into a TBML network.

International Standards and Responses to TBML

The international community has recognized TBML as a serious threat and has been developing standards, guidance, and cooperative efforts to combat it. A multi-faceted approach is emerging, involving government authorities, international organizations, and the private sector. Below are key pillars of the global response:

• FATF Recommendations and Guidance: The FATF includes trade-based money laundering risks as part of its global AML/CFT standards. While there isn’t a separate FATF Recommendation solely for TBML, Recommendations on customer due diligence, record-keeping, reporting suspicious transactions, and international cooperation all apply to trade transactions. FATF has also issued Best Practices Papers and, together with the Egmont Group (a global network of Financial Intelligence Units), an in-depth 2020 report on TBML trends and case studies (FATF/Egmont Trade-based Money Laundering: Trends and Developments) (FATF/Egmont Trade-based Money Laundering: Trends and Developments). These reports provide red flag indicators and stress the importance of information sharing. FATF urges countries to include trade-based money laundering in their national risk assessments and to raise awareness among all stakeholders involved in trade – from banks and customs agencies to import/export businesses (FATF/Egmont Trade-based Money Laundering: Trends and Developments). One clear recommendation is to improve information-sharing between government authorities and the private sector, including through public-private partnerships (FATF/Egmont Trade-based Money Laundering: Trends and Developments). In fact, FATF and Egmont are working on developing more refined risk indicators to help both officials and banks recognize TBML schemes more easily (FATF/Egmont Trade-based Money Laundering: Trends and Developments).
• Customs and Trade Data Analytics: Because TBML straddles the line between finance and trade, collaboration between customs authorities and financial regulators is crucial. Some countries have established Trade Transparency Units (TTUs) – specialized teams that compare trade data between countries to spot anomalies. For example, the U.S. Department of Homeland Security has partnered with at least 17 countries to share detailed import/export data through TTUs, looking for suspicious “value gaps” (where, say, Country A reports exporting \$100 million of goods to Country B, but Country B records only \$50 million of imports from Country A – a discrepancy possibly indicating misinvoicing) (GAO-20-333, TRADE-BASED MONEY LAUNDERING: U.S. Government Has Worked with Partners to Combat the Threat, but Could Strengthen Its Efforts). These units have had success in uncovering TBML schemes, though a GAO review noted challenges such as data-sharing bottlenecks and the need for better coordination (GAO-20-333, TRADE-BASED MONEY LAUNDERING: U.S. Government Has Worked with Partners to Combat the Threat, but Could Strengthen Its Efforts). Meanwhile, organizations like the World Customs Organization (WCO) and World Bank have promoted the use of data analytics to detect trade-fraud and TBML. Modern software can automatically flag unusual trade pricing by comparing declared values against databases of market prices. Some governments are now leveraging big data, AI, and machine learning to analyze trade and financial data together – for instance, cross-referencing STRs (Suspicious Transaction Reports from banks) with customs declarations to find matches or inconsistencies that human analysts might miss () ().
• Banking Sector Controls and ICC Guidelines: Banks play a key role since they process trade finance instruments (like letters of credit, bills of exchange, wire transfers for imports/exports). Regulators expect banks to exercise due diligence in trade finance similar to any other banking activity. This is challenging, as banks often have limited ability to physically inspect goods and must rely on documents. The International Chamber of Commerce (ICC), along with bodies like the Wolfsberg Group and BAFT (Bankers Association for Finance and Trade), has issued guidelines to help banks detect red flags in trade finance. One focus area is price verification: banks are encouraged to assess whether the pricing of goods in an L/C (letter of credit) seems reasonable to mitigate price misrepresentation risk. The ICC has acknowledged the misuse of trade finance for illicit purposes and emphasizes robust controls to identify and mitigate risks such as price manipulation in trade transactions (Financial crime risk controls – Price checking of goods and services in trade transactions – ICC – International Chamber of Commerce). Trade finance-specific red flags (outlined in various industry papers) include things like freight costs disproportionate to cargo, documents with alterations, inconsistent shipment routes, etc. Banks are also improving staff training on TBML and investing in compliance technology that screens trade transactions.
• Compliance Standards (ISO and Others): At the organizational level, adherence to international compliance standards can indirectly strengthen defenses against TBML. For example, ISO 37301 (Compliance Management Systems) provides a framework for companies and financial institutions to implement effective compliance controls and risk management processes (ISO 37301 CMS Implementation and Certification in AML/CFT Landscape – Governance | Risk | Compliance | Anti-Bribery). By following such standards, companies are better equipped to detect anomalies in their operations, including suspicious trade dealings. While ISO standards are not specific to TBML, they encourage a culture of diligence and accountability. Moreover, ISO 20022, a global standard for electronic payment messaging, is being adopted by banks to include richer data in payment instructions (ISO 20022 101 for AML and Sanctions Screening Professionals). This can aid AML efforts by carrying more detailed information about trade payments, making it easier to identify who’s ultimately paying whom and for what. In short, robust internal controls and data standards help “follow the money” even when it’s hidden in trade flows.
• UN Conventions and Global Cooperation: Money laundering, including TBML, is addressed at the highest international levels. The United Nations Convention against Transnational Organized Crime (UNTOC) and the UN Convention against Corruption (UNCAC) both require member states to criminalize money laundering in all forms and to cooperate internationally to tackle it. UNODC’s Global Programme against Money Laundering helps countries build capacity to detect and prosecute laundering, and this extends to trade-based methods. For example, UNODC has developed training modules and case studies on TBML for law enforcement and customs officers (Trade Based Money Laundering – UNODC e-learning Modules). Workshops by UNODC and regional bodies (like the Asia/Pacific Group on Money Laundering) often include simulations of TBML cases to improve inter-agency understanding. A key message is that no single agency can combat TBML alone – it requires coordinated action by customs, financial intelligence units (FIUs), police, and prosecutors across borders. Increasingly, we see multi-country investigations and intelligence sharing. Agencies share trade data, suspicious transaction reports, and typology trends through platforms like the Egmont Secure Web. Interpol and other law enforcement networks also assist in tracing and seizing assets linked to TBML schemes.
• Public-Private Partnerships and Awareness: Recognizing that private companies (banks, freight forwarders, import/export firms) are on the front lines of TBML detection, many countries are fostering public-private information exchange. This might involve regular briefings to banks about current TBML typologies, or customs authorities alerting industry associations about specific scams (for instance, a notice to car exporters if vehicles are being used in laundering schemes). The goal is to raise awareness so that suspicious patterns are caught and reported. Training is also crucial: banks now train trade finance officers to look beyond just document checklist compliance and actually question the economic logic of transactions. Likewise, corporates engaged in international trade are encouraged to know their partners and watch for abnormal requests. The ICC and other trade organizations have been disseminating red flag lists and case studies to their members. In some jurisdictions, trade-based money laundering has been specifically mentioned in regulations and guidelines, making it clear that filing a Suspicious Activity Report (SAR) is required if such activity is suspected.

In summary, the fight against TBML is advancing on many fronts: tightening regulations and standards, improving interagency and cross-border collaboration, leveraging technology and data, and fostering a more vigilant private sector. However, challenges remain significant due to the adaptive and international nature of these schemes.

Challenges in Detection and Enforcement

Despite the progress in awareness and standards, detecting and prosecuting TBML remains very challenging. Some of the ongoing issues include:

• Complexity and Expertise Gaps: To recognize a TBML scheme, investigators often need expertise in international trade regulations, pricing benchmarks, shipping logistics, and finance – a combination that is not common. A customs officer might spot a valuation issue but not know the finance side, while a bank officer might sense something odd financially but has no way to inspect the goods. Bridging this knowledge gap requires joint training and multidisciplinary teams. Many countries are still building this capacity.
• Data Silos: A TBML trail may be apparent only when piecing together data from customs declarations, bank wire transfers, and corporate registries to see who owns the companies involved. This data is typically held by different authorities that may not routinely share information. Legal barriers (like strict data privacy or bank secrecy laws) can hinder sharing. Efforts like the TTUs and FIU-to-customs partnerships aim to break down these silos, but not all countries have such mechanisms in place. Enhanced data sharing is vital — for example, customs agencies could benefit from feedback when a bank files an STR on a trader, and vice versa (FATF/Egmont Trade-based Money Laundering: Trends and Developments).
• Legitimate Trade Volume: The sheer scale of legitimate trade provides cover. Global merchandise trade was over \$20 trillion in recent years, encompassing billions of individual shipments. Identifying a handful of laundered transactions among these is truly a needle-in-haystack problem. If authorities tried to manually scrutinize every trade transaction, it would paralyze commerce. Thus, they must strike a balance, using risk-based targeting. Launderers take advantage of this by keeping their transactions low-profile enough not to trigger alarm, or by splitting into many small transactions (smurfing via trade).
• Rapid Adaptation and Innovation: As authorities close one loophole, criminals find new ones. For instance, if certain commodities or trade corridors become known high-risk routes, criminals may shift to different products or intermediaries. Recently, experts noted that stricter financial sanctions on certain countries led to increased TBML-like activity to evade those sanctions, often using the same shell company networks that launderers use (Санкционный ландромат: инфраструктура, созданная для отмывания денег, используется также для обхода санкций, предупреждают эксперты). This cat-and-mouse dynamic means enforcement must continuously adapt. Research by groups like FATF, GFI, and UNODC is ongoing to track these evolutions (for example, the rise of using digital trade platforms or cryptocurrency in conjunction with trade deals could be the next frontier).
• Legal and Jurisdictional Hurdles: Even when a TBML scheme is identified, prosecuting it is tough. The evidence might be scattered across countries. One country has the incriminating invoices; another has the witnesses or bank records. Mutual legal assistance can be slow and complicated. Additionally, what law to charge under can be an issue: Is it fraud? Money laundering? Customs violation? Often, prosecutors pursue simpler charges like customs fraud or tax evasion, because proving the intent to launder money specifically (i.e., linking it to underlying criminal proceeds) is harder. Strengthening legal frameworks to explicitly criminalize trade-based laundering (many countries do this under general money laundering laws) and to allow greater asset seizure and evidence sharing in such cases is an area of focus.

Despite these challenges, there have been successful cases. International operations have dismantled TBML networks dealing in everything from textiles to gold to agricultural products. In some instances, task forces following the money across borders were able to arrest the perpetrators and seize assets. These successes often result from the very interagency cooperation that experts recommend – for example, a bank’s tip to an FIU, passed to a customs investigation, coordinated with foreign FIUs through the Egmont Group, culminating in joint law enforcement action.

Conclusion: Staying Ahead of Trade-Based Laundering

Trade-Based Money Laundering is a sophisticated form of financial crime that will likely persist as long as there are discrepancies between countries’ systems and a chance to profit from those gaps. However, awareness of TBML is at an all-time high, and global efforts to combat it are intensifying. Businesses involved in international trade should educate themselves on TBML typologies to avoid unwitting involvement or to spot when something isn’t right. Financial institutions must continue enhancing their due diligence in trade finance, leveraging intelligence and technology to flag suspect dealings.

On the policy side, fostering collaboration is key. As multiple agencies and international bodies have urged, public-private partnerships, training, better data sharing, and stronger international cooperation form the recipe for tackling TBML (GAO-20-333, TRADE-BASED MONEY LAUNDERING: U.S. Government Has Worked with Partners to Combat the Threat, but Could Strengthen Its Efforts) (GAO-20-333, TRADE-BASED MONEY LAUNDERING: U.S. Government Has Worked with Partners to Combat the Threat, but Could Strengthen Its Efforts). No single actor has the full picture; only by connecting the dots between trade and finance can we intercept the illicit flows. Encouragingly, initiatives like information portals, joint analytical teams, and compliance standards are creating a more hostile environment for trade-based criminals.

For compliance professionals and an international business audience, the takeaway is that TBML is not an abstract risk — it could be happening in the supply chains and trade deals you oversee. Robust internal controls, knowing your customers and partners, and staying alert to anomalies are crucial. By adhering to global best practices (from FATF guidance to ICC controls and ISO compliance frameworks) and engaging with authorities when something looks fishy, legitimate businesses become an active part of the solution.

In the future, as technology develops, we may see better tools that can instantly verify invoice legitimacy or flag mismatched trade data across borders. Governments are also moving toward greater beneficial ownership transparency (so shell companies aren’t so opaque) which will help unravel TBML networks.

Trade is the lifeblood of the global economy, and it must not be poisoned by illicit finance. By shining a light on trade-based money laundering and implementing smart safeguards, the international community aims to ensure that trade flows remain as clean and transparent as possible. The continued collaboration of all stakeholders — from international organizations like FATF and UNODC to national governments, banks, and businesses — will determine how effectively we can stamp out TBML in the years ahead.

---

Compliance and trade professionals should consult resources like the FATF’s TBML reports, the UNODC’s reports on money laundering, and Global Financial Integrity’s studies on trade misinvoicing for further reading and detailed case examples. Strengthening the integrity of trade not only fights financial crime but also promotes fairness and security in global markets. (Trade-Based Money Laundering) (Report Finds Trade Misinvoicing Continues to be a Massive and Persistent Problem – Global Financial Integrity)