Trade-Based Money Laundering

Chapter 9Monitoring Trade

Steps in the International Trade Process

An analyst or investigator charged with identifying TBML is fortunate to be assisted by a wide variety of data and documentation generated throughout the international trade process. (Underground informal value transfer systems are sometimes another story!) Trading parties generally follow identified, accepted, and almost sequential steps that create a data and paper trail that can be used in spotting suspicious behavior and anomalies.

As noted in the preface, this book will not delve into the intricacies of trade finance. This includes the issuance of letters of credit, lending to import–export companies, guarantees and pre-export financing, supporting companies in the process of collections, discounting drafts and acceptances, and offering services such as credit and other information on buyers.¹

The following is a brief overview of a typical trade transaction so the reader can understand where information might be available and the kind of data that are generated for analysis. Of course, the trade process varies, depending on whether it is an arm's-length transaction (as discussed in Chapter 7), and whether they are engaged in an extra-business relationship, have completed previous transactions, or are involved with some sort of trade fraud or TBML conspiracy. The terminology and trading steps also vary somewhat by market. An explanation of additional terms commonly used in the trade process is found in the ...