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Trade Based Money Laundering Risk Indicators

Recently the Egmont, along with FATF, released a paper on Trade-Based Money Laundering Risk IndicatorsThe document outlines a range of different potential red flags, making it an excellent resource for potential transaction monitoring rule reviews, risk assessment refreshes and general training or awareness for customer or transaction facing employees. However, if you want a broader understanding of Trade-Based Money Laundering (TBML), they also published Trade-Based ML trends and developments report in 2020. There are also a host of other great resources that would be worth checking out too.

 

The indicators (red flags) have been grouped into categories to help you associate indicators with potentially problematic:

– Business Structures

– Trade Activity

– Trade Documentation / Underlying Commodities

– Accounts / Transactions

 

It is important to remember that the presence of one or more indicators may not necessarily mean TBML is taking place. Equally – it can be occurring in the absence of any indicators. They are just there to guide the types of activity or behaviours that you should be alert for and investigating if they appear in your business.

 

Overall, we think this is a helpful publication, especially if you’re a Reporting Entity who:

– has a trade finance product/service offering

– has customers who import/export goods

– offer hedging solutions to trade customers

– have retail, agricultural or wholesale customers

 

Trade finance still features heavily in ML typologies, though, so it’s worth taking note.

 

It would be a good idea to add the Egmont group as part of your regulatory feedback register – you can refer to them in your annual risk refresh or conduct a change risk assessment if they specifically impact your current risk profile.

 

 

Why is the Egmont important?

The Egmont Group is 166 of the world’s Financial Intelligence Units (FIUs). Operating a bit like a global Fintel Alliance, they joined together in 1995 to provide a platform for secure exchange of expertise and intelligence to combat ML/TF. There are 9 geographical regions in the group. AUSTRAC attends as one of 28 FIU members in the Asia Pacific region. Our very own Chris Collett (deputy CEO of AUSTRAC) is one (of the two) regional representative.

 

When you submit an SMR/ IFTIS and TTRS to AUSTRAC, they use that information to identify transactions linked to criminal behaviour and activities. They also share that information (where legal) with other FIUs to find and prevent global financial crime and identify trends to be used in resources like the paper referred to above.

 

This paper gives you an excellent opportunity to update your Regulatory feedback register and your customer risk indicators/red flag activity register to ensure it includes some of the indicators that affect your organisation.

 

If you need any help regarding your regulatory feedback/ red flag register, please reach out for assistance.

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