Trade-Based Money Laundering and Terrorist Financing
This chapter contributes to the literature on trade-based money laundering and terrorist financing by providing an analysis of previously unused statistical techniques and methodologies as a means of monitoring, detecting and prosecuting criminal money laundering activities. It describes how new statistical profiling methodologies that evaluate transactions contained in a country's international trade database can mitigate the risks associated with trade-based money laundering. The chapter discusses the application of four new trade-based money laundering profiling techniques which focus on country, customs district, product, and transaction price risk characteristics. One of the key findings of the Financial Action Task Force (FATF) report was that trade data analysis is a useful tool for identifying trade anomalies, which may lead to the investigation and prosecution of trade-based money laundering cases. The report explains that money laundering through the over- and underinvoicing of goods and services, is one of the oldest methods of transferring value across borders, and it remains a common practice today.