Trade-based money laundering

In 2013 the UK’s Financial Conduct Authority (FCA) produced a report that looked at banks’ control of financial crime in trade finance.

It highlighted the existence of some unflattering training and awareness practices in banks, including:

• providing only generic training that does not take account of trade-specific risks (for example Financial Action Task Force/Wolfsberg red flags)
• failing to roll out trade-specific financial crime training to all relevant staff engaged in trade finance activity, wherever located
• relying on “experienced” trade processing staff who have received no specific training on financial crime risk.

Equally concerning was the report’s finding that a number of trade finance staff had passed a globally recognised professional qualification, specifically for international trade finance practitioners, which “did not cover, in any detail, the financial crime risks in trade finance business”.

This is concerning because trade finance is an area that the Financial Action Task Force (FATF) has identified as being exposed to a wide range of risks and vulnerabilities that can be exploited by criminal organisations and terrorist financiers.

One of the reasons for this is the sheer volume of trade that takes place annually (around US$ 19 trillion), as well as the limited resources available to most customs agencies, which means that only about 2 per cent of the 500 million containers moved globally each year have their contents screened.

Clearly, effective training is much needed in this sector and, following the above-mentioned FCA report from 2013, the International Compliance Association (ICA) developed a training programme to address the specific financial crime risks that exist in this sector.

The course looks at some of the common methods (known as typologies) used by criminals, such as undervaluing imports and overvaluing exports.

The ICA Certificate in Trade-Based Money Laundering is aimed at practitioners and operational staff working in international trade, as well as compliance professionals whose responsibilities extend to trade-based activities.

The course continues to attract a healthy number of participants, many of whom have provided positive feedback on the course content, materials and relevance to today’s environment. Indeed, feedback from the most recent intake found that 100 per cent of respondents would recommend the course to others.