Trade Based Money Laundering: An emerging threat. 11 May 2016 Henry Balani Global Head of Strategic Affairs

Transcription

1 Trade Based Money Laundering: An emerging threat 11 May 2016 Henry Balani Global Head of Strategic Affairs

2 Agenda 1. Current regulations around the world 2. Identifying red flags best practices to reduce trade based money laundering 3. Case study shipment from China to Dubai

3 Current Regulatory Landscape

4 Trade-based money laundering is a serious issue around the world Anything that can be priced can be mispriced, and false pricing is done every day, in every jurisdiction, on a large percentage of import and export transactions. TBML is the most commonly used technique for generating and transferring dirty money money that breaks laws in its origin, movement and use. Asia Pacific Group on Money Laundering Trade finance is a key component in maintaining a competitive and productive economy UK Financial Conduct Authority #AccuityTradeFinance

5 The UK HMT recently published a National Risk Assessment that highlighted TBML as an issue #AccuityTradeFinance

6 Regulators are also concerned with trade finance policies & procedures #AccuityTradeFinance

7 The recent OFAC enforcement action against a major European bank highlights trade finance as a key money laundering concern and negotiated a variety of trade finance instruments on behalf of or that involved parties subject to U.S. sanctions on Sudan, Iran, Cuba and Burma #AccuityTradeFinance

8 Identifying Red Flags Best Practices to reduce TBML

9 There are many sources that highlight best practices in regards to TBML

10 The customer engages in transactions that are inconsistent with the customer s business strategy or profile, or make no economic sense* *BAFT Guidance for Identifying Potentially Suspicious Activity in Letters of Credit and Documentary Collections e.g. an agricultural company that starts dealing in paper products Sources: FATF, FCA, FFIEC, Wolfsberg #AccuityTradeFinance

11 Customer conducts business in jurisdictions that are at higher risk for money laundering, terrorist financing or other financial crimes Sources: FATF, FCA, FFIEC #AccuityTradeFinance

12 The transaction appears to involve the use of front or shell companies for the purpose of hiding the true parties involved Sources: FATF, FCA #AccuityTradeFinance

13 Customer shipping items to, through, or from higher money laundering risk jurisdictions, including countries identified by FATF as noncooperative jurisdictions Sources: FATF, FCA, FFIEC #AccuityTradeFinance

14 Transactions that involve obvious dual use goods Sources: FCA #AccuityTradeFinance 14

15 Dual use goods include a wide range of goods that are designed for commercial applications but can have military applications or potentially be used as precursors or components of Weapons of Mass Destruction (WMDs) Strategic Goods Control, Singapore Customs #AccuityTradeFinance

16 Obvious over or under pricing goods Sources: FATF, FFIEC Sources: FATF, FFIEC #AccuityTradeFinance

17 How does trade based money laundering occur? Moving money from the US to Mexico through trade Mexico Goods: $ 1 Million USA Exporter Importer Payments: $ 10 Million $ 9 Million moved from US to Mexico Goods are over invoiced Goods actual value is $ 1 per unit Goods invoiced at $ 10 per unit Both Exporter and Importer are colluding!

18 Real examples of over/under invoicing from/to the USA Imports of Metal tweezers from Japan to the USA 4,303/unit Source:

19 Real examples of over/under invoicing from/to the USA Imports of Camshafts from Saudi Arabia to the USA 13,359/unit Source:

20 Real examples of over/under invoicing from/to the USA Imports of Plastic buckets from Czech Republic to the USA 854/unit Source:

21 Real examples of over/under invoicing from/to the USA Exports of Radial truck tires from the USA to the UK 10.32/unit Source:

22 Real examples of over/under invoicing from/to the USA Exports of Toilet Bowls from the USA to Hong Kong 1.54/unit Source:

23 Real examples of over/under invoicing from/to the USA Exports of Prefabricated Building from the USA to Trinidad 1.05/unit Source:

24 Case Study

25 Shipment of graphite from Hong Kong to Dubai #AccuityTradeFinance 25

26 Examples of Bills of Lading

27 Examples of Bills of Lading

28 How many Red Flags are there in this shipment? #AccuityTradeFinance 28

29 Did you spot 8? #AccuityTradeFinance 29

30 Screening the transaction through a single source database highlights all the risky elements in one step #AccuityTradeFinance 30

31 Let s also dig down into the possible connections Al Mataf Shipping Mataf Star CKLBCNBJ Graphite #AccuityTradeFinance 31

32 Mataf Star is a sanctioned entity because of it s links to Iran 32

33 #AccuityTradeFinance 33

34 SCT (aka Sorinet Commercial Trust) is also a sanctioned entity due to links with Iran #AccuityTradeFinance 34

35 Both SCT and Hong Kong Intertrade Company are linked to the National Iranian Oil Company #AccuityTradeFinance 35

36 It looks like both shipper and consignee have the same ultimate beneficial owner 36

37 Also, we cannot forget what they are shipping Picture of Pripyat near Chernobyl, a graphite moderated nuclear power plant #AccuityTradeFinance 37

38 Contact Henry Balani Global Head of Strategic #AccuityHenry Henry Balani