Trade-Based Money Laundering (TBML) Flashcards

Which document is most commonly manipulated in a TBML scheme?

Answer: Commercial invoice

The commercial invoice is the most commonly manipulated document in TBML because it states the price and description of goods, making it central to over/under-invoicing schemes.

Under-invoicing in a TBML scheme primarily benefits which party?

Answer: The importer

Under-invoicing benefits the importer, who pays less than market value, receiving excess value in the form of goods while transferring the value difference to the exporting country.

A compliance officer reviewing trade finance should be most concerned when the price of exported goods is compared to what?

Answer: International commodity prices or trade databases

Comparing invoice prices against international commodity databases or trade pricing benchmarks helps detect over/under-invoicing indicative of TBML.

Which financial product is most frequently exploited in TBML schemes due to its document-based nature?

Answer: Letters of credit

Letters of credit are document-based instruments where banks rely on presented paperwork rather than physical inspection, making them vulnerable to TBML through falsified trade documents.

Which US agency publishes advisories and red flag indicators specifically related to TBML for financial institutions?

Answer: Financial Crimes Enforcement Network (FinCEN)

FinCEN issues advisories and guidance to US financial institutions on TBML red flags, typologies, and regulatory expectations.

What is 'round-tripping' in the context of TBML?

Answer: Sending funds overseas and repatriating them as foreign investment or trade proceeds

Round-tripping involves moving money out of a country and bringing it back disguised as legitimate foreign investment or export proceeds to give illicit funds a lawful appearance.