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June 14, 2017

Each year, hundreds of billions of illicit dollars are laundered through various Trade Based Money Laundering (TBML) schemes which has led to increased regulation and lost revenue. These schemes are pervasive through the financial system and leave banks, money remitters, and payment service businesses open to regulatory and reputational risk.

In 2006, the Financial Action Task Force (FATF) said “The international trade system is subject to a wide range of risks and vulnerabilities that can be exploited by criminal organizations and terrorist financiers. In part, these arise from the enormous volume of trade flows, which obscures individual transactions; the complexities associated with the use of multiple foreign exchange transactions and diverse trade financing arrangements; the commingling of legitimate and illicit funds; and the limited resources that most customs agencies have available to detect suspicious trade transactions.”

In addition to TBML being employed by narco-trafficking and terrorist organizations, it has also been a means of facilitating trade-based commercial fraud, placing a great strain on economies, especially in developing countries. 

TBML Overview

Simply, TBML takes place by falsifying the price, quantity, or quality of goods shipped or services provided.

Implementing the appropriate controls to reduce TBML risk exposure can be complex within AML programs due to the wide range of jurisdictions, third parties and carriers, varied methods of payments, customer and business types, and phasing of trade transactions. However, applying sound AML principles and practices can serve to develop an effective program to limit risk.  Once established, any effective AML program requires periodic assessment, modification, and testing to ensure its proper utilization. 

How to Comply

  • Establish and employ an evidence-based risk assessment
  • Implement comprehensive AML policies and procedures that’s inclusive of TBML risk mitigation
  • Train teams using a “Three Lines of Defense” model emphasizing comprehensive, integrated compliance measures
  • Scheduling regular customer profile and activity reviews
  • Utilize a pro-active compliance model that is overseen by an experienced compliance officer to increase your culture of compliance

The A&M Approach

A&M can customize and scale services to client needs utilizing and promoting an evidence-based risk analysis protocol.  At A&M, we believe that employing an evidence-based risk assessment and focusing on risk surrounding clients, transaction patterns, goods, and services provides our clients with the most effective approach toward mitigating and managing risk.  Our approach manages reputational risk, builds multiple proactive layers of detection, improves efficiency through the integration of human and technological solutions, and enables a culture of compliance. 

Ultimately, we help you navigate risk and build sustainability while finding ways to lower program costs through:

  • Evidence-based risk assessments of your compliance program and business units
  • Reviewing compliance with all current regulatory laws and best practices with a focus on BSA/AML requirements within your current AML framework
  • Customer, third party, and carrier due diligence
  • Unit/bulk shipment price analysis
  • Automated document scanning, aggregation, and analysis solutions
  • International trade and country profile analysis
  • Mapping BSA/AML risks to your products, services, and customers
  • Utilizing BSA/AML detection scenarios that are based on your institution’s risk assessment
  • Implementing technology and/or best practices that mitigate reputational and regulatory risk
  • End-to-end, pre-and post-implementation testing
  • AML/TBML program development that establishes multiple lines of defense
  • Development and implementation of an effective training curriculum that empowers compliance personnel

 

A&M Solutions To...

Technology

Leveraging proprietary and complex compliance and investigative tools and through statistical data validation and analytics, we perform comprehensive assessments of transaction monitoring and interdiction systems allowing us to vet the integrity and accuracy of existing technology.

Data Management

A&M's data risk and compliance team excels in executing end-to-end reconciliations from source, core systems to AML transaction monitoring systems, which includes a unique view at controls, gaps for improvement, and persistent post project operational improvements.

Operations

A&M's comprehensive approach to compliance operations enables us to deliver effective solutions for all parts of your AML program, including people, processes, systems, tools, training, industry best practices, and regulations.

Documentation

A&M provides an assessment package that maps all activities, with supporting documentation that clients can deliver to the regulators upon request.