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Trade-based money laundering should be better coordinated according to the US government


 

At the request of elected officials, the US Government Accountability Office audits governments. It stated that it had recommended that the US Department of Homeland Security increase data sharing from the country's Trade Transparency Units (TTU) and the US Department of Homeland Security.

The TTU collects US financial data and custom data to detect suspicious trade transactions.

GAO discovered that the TTU was "... lacking opportunities to better analyze and distribute information from US Customs Data, which could assist enforcement agencies in identifying suspect activities.

Laundering or over-invoicing is often used to launder trade-based money. Banks can't always access open-account trades. They don't have the ability to keep up with all goods' true market value.

Global Financial Integrity is a think tank based in America. It recently estimated that invoice mistakes between developing countries, and their trading partners, totaled US$1.6tn.

The watchdog says that TTU data will not be available to law enforcement agencies or government agencies that investigate trade-based money laundering. This will make it impossible for them to identify and detect new risks and illicit schemes.

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GTR reached out to the Department of Homeland Security for comments. GTR reached out to the Department of Homeland Security for comments.

GAO thinks that the department might have misunderstood this report. GAO points out that the US government has limited data sharing capabilities via information-sharing agreements with international partners.


GAO ICE reports that they are developing a strategy plan to guide their efforts to improve cooperation with partner countries to combat trade-based cash laundering.

The US Treasury should establish an "interagency cooperation mechanism" to facilitate information sharing between government agencies and private sector firms.

GTR asked for comments from the Treasury Department. GTR informed the Treasury Department that additional trade data should be made accessible to the Department of Homeland Security in order to facilitate coordination among the various government branches.

Four senators, three Republicans, and one Democrat asked that the GAO examine the government's coordination. They requested that the GAO review the 2018 government approach to fighting trade-based money laundering.

GAO reports from June 2020 and February 2020 revealed that this method is increasing the amount of money being laundered. GAO reports revealed that TTU models don't work in certain countries due to a lack of funding and follow-up.

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This information was sought by Senator Sheldon Whitehouse. He said that drug traffickers and other kleptocrats use sophisticated trade money laundering strategies to conceal their illicit gains.

Marco Rubio, Senator requested the GAO Report. He said that money laundering remains a lucrative business for criminal organizations. We welcome the GAO Report so that legislators can better deal with these criminal organisations.

"It is crucial that US agencies collaborate to reduce this criminal activity. My colleagues and me look forward to working together in combating trade-based money laundering.

Misinvoicing: A trillion-dollar problem

Global Financial Integrity (GFI), an American think tank, published a report last week that revealed that criminal gains from misinvoicing global trading have exceeded US$1tn annually since 2010. 2018 was the most recent year that it had sufficient data.

This group reviews and makes recommendations about policy regarding financial crime. To calculate total receipts, they added all exports from each country.

GFI said that while there is reason to expect some discrepancy between the reported international trade data from any two countries in a given year, it believes most figures are indicative trade invoice activity.

China had the largest trade deficit of all 136 countries with a US$305bn value gap. Next came India, Russia, and Malaysia.

GFI estimates that misinvoicing could cause developing countries to lose significant customs revenue and taxes. GFI conducted a survey of 170 countries and found that The Gambia had a value gap of 45%. It was the largest among all developing nations.

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