Page 27 - Banking Finance November 2021

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the predominant predicate offence in TBML cases whereas locations, location of their suppliers and customers, and
10% of the jurisdictions have reported customs offences as where appropriate, identify key suppliers and
the main predicate offence. Other responses indicate that customers, in order to assess the TBML risks posed by
predicate offences are often related to commercial fraud, these customers and their transactions.
IPR, Narcotics, human trafficking, terrorist financing, Second line of defense: The Compliance team
embezzlement,corruption, organized crime (racketeering), at Controlling officers
dealing in banned goods, conducting illegal business,
speculation etc. One Reporting jurisdiction indicated that The compliance team should have trade finance
ML is considered to bean autonomous offence and there is expertise to review, assess and provide feedback on the
no need to prove the existence or nature of the predicate TBML red flags identified by the front office and trade
offence in order to prosecute hence as a consequence, there processing teams. The Compliance team should perform
is no systemic link between MLcases and other crimes. assurance testing on a regular basis to ensure timely
identification of ineffective TBML controls. Information
Combatting TBML on trade transactions or TBML related escalations,
a) Common steps taken by many countries controls weaknesses and remedial action plans,
together with other issues noted by Compliance should
include:- be regularly reported to senior management for
Y Data Mining of existing customers
effective oversight.
Y Site visits to high transacting customers
Third line of defense - Internal Audit
Y Cross border wire transfer remittances - Analysis As the third and last line of defense, internal audit,
such as [ Many to one, One to Many, top Remitters, should conduct a holistic assessment of the Bank's
top Beneficiaries] framework to combat TBML, including the assessment
Y Effective coordination of all financial crime of adequacy of policies and procedures and
compliance functions within the country - Cyber effectiveness of testing of relevant controls. Internal
security, tax department, customs. audit should design a TBML focused test plan and ensure
Y Artificial Intelligence enabling the bank's systems to that the staff performing the testing have requisite
simulate intelligent behaviour and make well trade finance and AML/CFT skill.
informed decisions with little or no human
intervention Conclusion
Y Example of USA - TRADE TRANSPARENCY UNITS The key finding to above dissection of TBML remain as
greater awareness about all aspects of the trade process,
"In 2004, US (HSI) initiated TTU to dismantle
Transnational Criminal Organisations (TCOs) . TTU including how different financing processes are managed,
partners with customs and financial agencies would likely increase opportunities to detect and successfully
around the world to detect trade discrepancies and disrupt Trade Based Money Laundering. At the same time
violations. TTU focused on sharing of information a risk-based approach support by strong system based checks
by sharing IE declaration of US with counterpart IE is required so that a balance between a need to encourage
legitimate trade and regulate the illegitimate trade is
declaration value thereby enhancing level of
transparency." achieved. Employee training is must as in all the three
defenses of TBML, people play a key role and better updated
b) Adopting a Risk Based Approach as per and equipped they are would go a long way in adding to
Wolfsberg Guidance and creating well robust Anti TBML regime.
equipped and evolving three lines of
Source :
defence as under:
X TBML-Trends & development = EGMONT group of
First line of defense Front office staff
Financial units.
Front Office Staff should have good knowledge of their
customers, including, but not limited to, the customer's X BAFT-Combatting TBML :Rethinking the Approach 2017
business, its trading profile across different X FATF: Document TBML 2006.
geographies, sources of raw materials, manufacturing X APG: TBML Typologies report 2012. T

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