BAFT Releases Guidance on Trade-Based Money Laundering

by Blair Bernstein | Sep 08, 2017
WASHINGTON — BAFT, the leading global financial services association for international transaction banking, today released Combatting Trade Based Money Laundering – Rethinking the Approach, a paper that proposes alternative, collaborative approaches to solving the problem of trade based money laundering by increasing the public and private sector partnership.

 

WASHINGTON — BAFT, the leading global financial services association for international transaction banking, today released Combatting Trade Based Money Laundering – Rethinking the Approach, a paper that proposes alternative, collaborative approaches to solving the problem of trade based money laundering by increasing the public and private sector partnership.  

Trade based money laundering is the process of disguising the proceeds of crime and moving value through the use of trade transactions in an attempt to legitimize their illegal origins. A study by Global Financial Integrity estimates that trade based money laundering to and from developing and emerging economies was between 14 and 24 percent of their total trade from 2005 to 2014. That makes it more than a trillion dollar problem - not counting the potential damage done by the use of the illicit funds.

The paper’s objective is to clarify bank-intermediated trade and banks’ ability to intercept illicit activity, and to explore ways that broader international trade stakeholders from both the private and public sectors can better align to help reduce trade based money laundering and terrorist financing without hindering international commerce and economic growth.

“Some have likened trade based money laundering not to looking for a needle in a haystack, but rather, looking for the bad needle in a stack of needles,” said Tod Burwell, president and CEO of BAFT. “That’s why it is so important to get all stakeholders involved in international trade working together to thwart financial crime.”

The BAFT working group that developed the paper includes compliance, risk and product management experts from14 financial institutions from the U.S., Canada, Europe and Asia.

View BAFT’s paper on trade based money laundering.

           
BAFT, the leading global financial services association for international transaction banking, helps bridge solutions across financial institutions, service providers and the regulatory community that promote sound financial practices enabling innovation, efficiency, and commercial growth. BAFT engages on a wide range of topics affecting transaction banking, including trade finance, payments, and compliance. The association website is www.baft.org.

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