Page 22 - Banking Finance November 2021

COVER STORY

TBML- GROWING

COHERENCE &

MISUSE OF

INTERNATIONAL

TRADE

T BML was defined by the FATF in 2006 as 'the risk mitigation and settlement of payment for cross-border

transactions. A number of international entities and National
process of disguising the proceeds of crime and
regulators including the Financial Action Task Force (FATF),
moving value through the use of trade
transactions in an attempt to legitimize their
Group have all drawn attention to the misuse of Trade
illicit origins.' TBML and terrorist financing the UK Financial Conduct Authority (FCA) and the Wolfsberg
(TBML/FT) refer to the process of disguising the proceeds Finance as one of the ways that criminal organizations and
of crime and moving value through the use of trade terrorist financiers move money to disguise its origins and
transactions in an attempt to legitimise their illegal origin integrate it into the legitimate economy.
or finance their activities."
Key characteristics of Global trade that
The crime involves a number of schemes in order to
complicate the documentation of legitimate trade makes it more vulnerable for Money
transactions; such actions may include moving illicit goods, Laundering
falsifying documents, misrepresenting financial transactions, 4 Cross border transactions provide opportunities to take
and under- or over-invoicing the value of goods. The primary advantage of differences in legal systems of various
role of banks in international trade is to provide financing, jurisdictions.
4 TBML necessarily requires intermingling of the trade
About the author sector with the finance sector. Criminals take advantage

Sheetal Sharma of vulnerabilities of both the sectors. Merely having an
Chief Manager & Faculty AML regime for the finance sector becomes inadequate
Bank of Baroda unless such a regime effectively covers the
Baroda Academy New Delhi corresponding trade sector.

22 | 2021 | NOVEMBER | BANKING FINANCE