The FATF and the Egmont Group have published a list of risk indicators related to Trade-Based Money Laundering (TBML). The list aims to improve the ability of public and private entities, including financial institutions, designated non-financial businesses, and small and medium-sized businesses and large corporations, to identify TBML-related suspicious activity.
The FATF’s list identifies four categories of risk indicators: structural, trade activity, trade document and commodity, and account and transaction activity. Structural risk indicators include observations such as an unusually complex and illogical corporate structure, or the registration of an entity in a jurisdiction with poor AML/CFT compliance. They could also include registration of an entity at an address that is likely to be incompatible with the nature of the trade activity or is a mass registration address. Lack of any or trade-consistent online presence and a past or recent history of financial crimes such as money laundering, fraud, tax evasion, etc. are other possible structural risk indicators.
Trade activity risk indicators include observations such as inconsistency of trade activity with the stated line of business, maintenance of unreasonably low profit margins, etc. Trade document and commodity risk indicators could include inconsistencies across contracts, invoices or other trade documents, or vague descriptions of the traded commodities on these documents. Import of commodities into a country temporarily and subsequent export with falsified documents is another document and commodity risk indicator. Similarly, another indicator is routing of shipments through many jurisdictions without economic or commercial justification.
Account and transaction activity risk indicators include unexpectedly high volume or amounts of transactions for the stated business activity, or sudden rise and fall of transaction volumes within a short time period. Another indicator is circular multinational payments, sent from and received in the same country, but after passing through other jurisdictions.
Source: FATF