Money makes the world go around.
The mystery of money originated from its trading purposes. As the importance of money grows, so does the significance of trade. 🚢
In times when money wasn't available, people relied on the barter system to exchange goods such as food, weapons, tea, salt, and more. After the invention of paper money, international trade increased, and coins became too heavy to be transported. To avoid the hassle and added weight of carrying coins, merchants began using receipts for transactions around 900 CE. While the first metal coins date back to the 7th century BCE in Lydia (modern Turkey) and China, it wasn't until the early 20th century that money laundering activities began. âš“
Trade based money laundering falls under the umbrella term 'shadow in the darkness,' akin to a pirate ghost stealing gold from a ship. It includes illicit activities such as the preparation of false invoices, misrepresentation of goods to avoid controls, and involvement in other customs and tax violations. These activities are like ghost pirates—hard to detect and untraceable, mirroring the mystery of money laundering.
TBML scheme involves falsely claiming to send non-existent goods, allowing fake invoices and shipping documents to independently traverse various jurisdictions by sea, air, or road transportation, often for export 🛳 . The lack of transparency and information allows non-existent goods to travel globally, paving the way for trade-based money laundering to continue.
Can you imagine a large shipment of bananas being sent to Colombia with an invoice showing a payment of $1.5 million in cash? This could be a red flag for possible trade-based money laundering.
âš“ The absence of regulations.
âš“ The ability to use numerous financial service providers for multiple imports and exports, as well as multiple invoices.
âš“ An increase in free trade zones, allowing them to transport illegal goods and launder the revenues from their illegal activities.
âš“ Conducting transactions through open accounts typically involves setting up a payment timeframe between 30 and 90 days after the receipt of the shipment.
Of course, criminals use techniques to launder money through trade-based money laundering, including:
âš“ Over and under-invoicing for goods
âš“ Multiple invoicing
âš“ Changing the quantity or weight of the goods to be shipped.
âš“ Representing the goods as expensive when, in reality, they are cheaper.
âš“ Absence of documentation for investigation.
It seems that wherever money is involved, trade tends to be the primary choice for money laundering.