Background

U.S. Customs and Border Protection plans to increase its efforts to combat trade-based money laundering in the year ahead, a senior CBP official said recently. Importers can expect greater CBP scrutiny of their trade documentation as part of this effort.

“Trade in goods provides a pretext to wire money to accomplices abroad to pay for goods received,” according to CBP. “Transnational criminal organizations and other bad actors disguise and move illicit profits through various forms of fraud, including importing and exporting goods at above or below market value, insurance fraud, and tax evasion.” Goods such as textiles, electronics, automobiles, and precious metals are commonly used in these schemes.

According to CBP, TBML “is a common thread connecting many forms of illicit trade into a single tapestry.” These include trafficking in drugs, weapons, humans and human organs, cultural property, counterfeit and pirated goods, wildlife, timber, minerals, and ocean resources. CBP notes that laundered profits from these activities often fund violent conflicts around the world, corrupt government regimes, human rights abuses, and environmental degradation.

A report issued by the Government Accountability Office earlier this year said that while the amount of TBML occurring globally is likely substantial, 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. CBP adds that most national governments are still learning to identify and tackle this issue.

CBP said its approach to TBML utilizes an intelligence-driven approach, “looking for a variety of red flags, including payments made to a vendor via wire transfers from unrelated third parties; false reporting, such as commodity misclassification and over- and under-valuation; double invoicing; and packaging abnormalities that are inconsistent with commodity or shipping methods.”

At a recent event in England, Executive Assistant Commissioner AnnMarie Highsmith said CBP will intensify these efforts in fiscal year 2023 because TBML (along with tax evasion) “both represent a growing threat and have massive financial and national security implications.” CBP said it hopes to “leverage its enforcement authorities to prevent these products from reaching our borders.”

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