Why Trade-Based Money Laundering (TBML)?
Due to the fragmented nature of the available information it is virtually impossible to generate TBML signals independently. Investigation depends on private and government parties to detect and identify TBML. The AMLC seeks to facilitate this public-private partnership in order to make the phenomenon readily comprehensible and raise barriers where possible against a form of money laundering which involves large sums of money. In 2018 a public-private partnership was set up whereby the large banks, Customs, tax authorities, FIU and investigative services attempt to gain a clearer picture and better understanding of TBML. This partnership will become more intense and more structured in the course of the coming year.
The AMLC attaches great value to differentiated indicators and for that reason it tries to zoom in on particular products and product groups. One important objective is to contribute, in cooperation with public and private partners, to more efficient indicators and money-laundering typologies. A number of the findings which have resulted from such cooperation are set out below.
The document fraud variants of TBML such as over-invoicing, under-invoicing, over-shipping and under-shipping, have drawn international attention. TBML is a highly adaptive way of laundering money. We have now seen a variant, partly as a result of the cooperation, which does not involve any document fraud at all. This new variant is currently under investigation.
The prices are in line with the market and the right goods are actually transported and correctly invoiced. In such cases it is not possible to search for anomalies, which makes this a particularly challenging variant to distil from the data. We refer to this way of laundering money as ‘cash integration’. The laundering of large amounts of cash in this way is increasingly frequent.
Case-dependent access to information
The biggest challenge for TBML relates to the availability of information, which is different in each case. Do the goods leave Europe? Is the bank involved? Are they consumer goods? Which continent are they exported to? Are financing products deployed? What is the method of payment? Does the Netherlands have access to the relevant information? Is the flow of goods logical? Is the price logical? Et cetera. TBML is an extremely broad concept. This means that as well as cooperation, proper definition and focus are absolutely essential.
Deliberately chosen sectors
The Netherlands is a major player in the field of export and transit of goods. It looks as though criminals deliberately choose a sector whereby the flow of goods is logical and very large. We also see them using flows of goods over which the government has little supervision, and goods flows where (in addition to money laundering) lucrative bonuses can be earned due to tax advantages. Outlets are sought in countries where requests for assistance from the Dutch authorities will not be met, or whereby the shipments in question will be regarded as intra-Community supplies.
The current indicators for TBML (published by FATF, BAFT, Wolfsberg group, HMRC among others) are formulated in such a general way that they are (individually) applicable to every imaginable manner of money laundering. Furthermore not a single authority tells us how many indicators are sufficient to arrive at a suspicion. Nor do they tell us whether combinations of indicators, relating to goods, corporate structures and jurisdictions for example, should be deployed. The indicators are designed to be useful throughout the entire world. But an indicator for the Netherlands is (by definition) not necessarily an indicator for Somalia. Indicators can be very different from continent to continent, and even from country to country. Nor did we encounter any product-specific indicators during our research into these indicators. This is also a point worthy of notice. It goes without saying that an indicator for the trade in luxury handbags is not necessarily an indicator for the trade in cars as well. There appears to be an attempt to contain the TBML process, which can manifest itself in so many diverse forms, in indicators which are too general.