Page 49 - Banking Finance July 2024

ARTICLE

TACKLING TRADE-

BASED MONEY

LAUNDERING IN

THE MODERN

FINANCIAL

LANDSCAPE

I f we inquire informally among a group of bankers challenging position. This article provides a comprehensive
analysis of trade-based money laundering (TBML), delving
about familiarity with terms like a Letter of Credit (L/
into its mechanisms, implications, and countermeasures.
C), Bill of entry (BoE), or Buyer's Credit, only a few
might possess this knowledge. This introduces us to
the intricate world of trade finance-a realm filled with TBML involves the exploitation of international trade
unique terminologies and practices, characterized by its transactions to transfer value and obscure the origins of illicit
complexity and specialization. proceeds. While international trade promotes economic
growth around the world, international trade transactions
It involves numerous parties, including intermediaries, face a range of risks and are vulnerable to abuse by criminal
banks, and a vast array of goods, commodities, and services and terrorist organizations. Transnational criminal
that are part of the countless trade transactions banks organizations and terrorist organizations use a variety of
process every day. money laundering schemes to disguise the origin and
destination of their illicit proceeds and integrate their assets
The combination of escalating regulatory demands and the in legitimate financial entities.
inherent complexity of trade has placed bankers in a
Black Market Peso Exchange, a well-known TBML scheme
About the author involves merchants who-wittingly or not-accept payment in
illicitly derived funds, often from third parties to a trade
Partha Sarathi Nayak transaction, for exports of goods. Various observers have
Chief Manager, Faculty noted that although TBML is a common form of international
Union Bank of India
money laundering, it is also one of the least understood and
Union Learning Academy, Hyderabad
most difficult to detect because of its complexity.
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