Increased Focus on Trade-Based Money Laundering

Trade Update • November 3, 2022

BP will be placing a greater focus on the issue of trade-based money laundering and tax evasion in Fiscal Year 2023, since both represent a growing threat and have great financial and national security implications. This was announced by CBP’s Executive Assistant Commissioner, AnnMarie Highsmith, during her participation and speech at the International Symposium on Crime in Cambridge, England.

It is well established that illicit actors use trade-based money laundering to disguise profits from illicit trade activity that endangers local, national, and global economies, the environment, and human lives. Illegal logging is the most profitable environmental crime, with a retail value of up to $157 billion annually. Illegal mining has a retail value of up to $48 billion, while illegal, unregulated, and unreported (IUU) fishing has a retail value of up to $36.4 billion annually. Illegal wildlife trade generates up to $23 billion in illicit funds.

Trade-Based Money Laundering

The most common form of trade-based money laundering is through the deliberate and inaccurate description on customs declarations to artificially raise or lower the value of goods declared on import or export. 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.

To address these challenges, CBP uses an intelligence-driven approach that looks for various red flags, including payments to a vendor via wire transfers from unrelated third parties, false reporting, double invoicing, and packaging abnormalities that are inconsistent with commodity or shipping methods.