The federal government should foster greater information sharing and data analysis if it wants to make more headway against trade-based money laundering, a recent Government Accountability Office report states.
According to the GAO, different types of criminal and terrorist organizations use TBML to disguise the origins of their illicit proceeds and fund their operations. TBML schemes can rely on misrepresenting the price, quantity, or type of goods in trade transactions; e.g., by under- or over-invoicing or falsely describing the types of goods or services provided. TBML schemes commonly use goods such as textiles, electronics, automobiles, and precious metals. Available evidence indicates that the amount of TBML occurring globally is likely substantial, but it is one of the most difficult forms of money laundering to detect due to the complexities of trade transactions and the sheer volume of international trade, particularly e-commerce.
The GAO report finds that while TBML schemes often involve many types of illicit activity that cut across multiple agencies’ roles and responsibilities, current federal collaborative efforts to combat TBML do not include some key agencies involved in overseeing trade. For example, the Treasury Department’s national strategy for combating money laundering does not incorporate the views and perspectives of several agencies positioned to identify illicit trade (such as the Office of the U.S. Trade Representative) as well as private-sector entities such as customs brokers and freight forwarders. There is also no formal collaboration mechanism focused on combating TBML among federal agencies with anti-money laundering and trade enforcement responsibilities.
Further, the report states, information on suspicious financial and trade activity is siloed among different agencies and is not widely shared. For example, USTR officials said they do not know the types of data shared between U.S. Customs and Border Protection and the Treasury Department’s Trade Transparency Unit and their foreign partners, nor do they have a full understanding of the customs mutual assistance agreements that CBP enters with other countries. Similarly, Maritime Administration officials said they do not receive all the available information CBP collects on ships and shipping transactions and do not have a mechanism to share information on potentially suspicious activity with relevant agencies.
According to the report, private-sector entities said they also have information that could aid TBML efforts but are unsure how to share it. For example, a large customs broker said it has a good understanding of its customers’ patterns of activity (e.g., to whom manufacturers generally sell their goods and who their suppliers are) that could be useful for identifying anomalous or suspicious behavior but has no way to share that information with CBP or other agencies. An ocean shipping company added that the data it collects from its customers give it full visibility into their supply chains that is “more comprehensive than what customs agencies generally collect for purposes of importing and exporting goods.”
Finally, the report points out that the data that is available to federal agencies is not analyzed to identify emerging trends or patterns of activity that could be relevant for identifying TBML-related risks or other illicit activity such as trafficking in counterfeit goods or sanctions evasion. Problems include the inability of the Data Analysis and Research for Trade Transparency System to match imports into the U.S. with exports from other countries without a common identifier and the TTU’s limited resources for conducting more robust analysis of the trade data in DARTTS. The report states that one possible solution would be for the TTU to share this data with other agencies like CBP that have more analytical resources and more sophisticated data analysis and targeting systems. However, TTU officials said agreements with partner countries for sharing trade data preclude them from sharing it with other U.S. agencies.
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