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Trade-based money laundering on the radar in new financial crime guide

A new financial crime guide released by AUSTRAC today will help financial service providers identify and report suspicious transactions indicative of criminals engaging in trade-based money laundering.

Trade-based money laundering is the process of disguising the proceeds of crime by moving funds through trade transactions, in an attempt to legitimise their illegal origin or finance illegal activities.

AUSTRAC recognises that most trade is the legitimate movement of goods, however AUSTRAC intelligence indicates that criminals are increasingly employing sophisticated methods to integrate illicit funds into the financial system.

International trade is an attractive avenue for the movement of proceeds of crime, given the multiple points of vulnerabilities that can be exploited by criminals.

This guide was developed by AUSTRAC’s Fintel Alliance in partnership with the Australian Border Force to help businesses identify criminals targeting their services for trade-based money laundering and understand when to submit a suspicious matter report to AUSTRAC.

AUSTRAC National Manager, Law Enforcement and Industry, Jon Brewer, said it was imperative that financial service providers remain vigilant in their efforts to combat trade-based money laundering.

“The information shared by the financial services sector through suspicious matter reports is critical in helping AUSTRAC and its partners identify and dismantle criminal networks, stopping the flow of illicit funds from proceeds of crime from entering and moving through the Australian financial system,” he said.

“Financial service providers, particularly those engaged in trade financing, should assess and understand the risks associated with the services they offer, and have appropriate risk-based systems and controls in place to identify suspicious activity.”

Australian Border Force Commander, Customs Group, Brett Cox, said “This guide on preventing trade-based money laundering is a timely contribution to countering the exploitation of the trade system as a means for financial crime. It will be beneficial in gaining an understanding of this activity for anyone in the trading community, and help Government agencies in their efforts to identify, prevent and disrupt organised criminality through trade.”

Indicators of trade-based money laundering include: customers suddenly being involved in the import/export of goods; customers who appear to conduct business exclusively with a single counterpart; an unexplained change in transaction volume and/or value; evidence of consistent and significant cash payments, including to previously unknown third-parties.

Download the Preventing Trade-based money laundering in Australia financial crime guide (PDF, 1.88 MB)