Contributor Perspectives

Tariffs, Sanctions and the Problem of Trade-Based Money Laundering

Clay R. Fuller
Board of Contributors
Nov 29, 2019 | 09:30 GMT
In this photo, authorities raid a fashion storefront in downtown Los Angeles on Sept. 10, 2014, as part of an investigation into the alleged laundering of narcotics profits by Mexican drug cartels.

Federal agents and local police officers raid a business in Los Angeles' fashion district on Sept. 10, 2014, as part of an investigation into alleged 'trade-based money laundering' by Mexican drug cartels. Authorities say the cartels use businesses to convert their narcotics profits into pesos.

(AL SEIB/Los Angeles Times via Getty Images)

"Value touches everything," an anti-money laundering specialist once said. This motto conveys the nuanced interconnectivity of supply chains, finance and politics. The "anti" in anti-money laundering is somewhat misleading as simple prohibitions in this area, for the most part, do not work. After all, liquidity often follows the path of least resistance, making a world of dams impractical. Trade-based money laundering (TBML) exploits the fungibility of value in something often referred to as an art form by investigators. TBML schemes can involve misrepresentations of prices, quality or quantity in trade invoices. TBML designs use any good with any value and typically incorporate traditional money laundering methods, such as structured payments, or common laundry tools like shell companies. The challenge of anti-TBML is so widespread and common that some describe it as searching for a needle in a haystack....

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