FROM DETECTION TO EVIDENCE IN TRADE-RELATED MONEY LAUNDERING INVESTIGATIONS: A CONCEPT PAPER

Abstract

Trade-based money laundering (TBML) poses a serious risk to financial integrity because illicit value can be hidden, moved or made to appear legitimate through ordinary-looking import and export transactions. This paper analyses the gap between identifying a suspicious trade transaction and developing enough evidence to support a potential money laundering case. For example, unusual prices, inconsistent documents, misclassified goods and suspicious shipments may point to trade manipulation, but these signs alone are not enough to establish money laundering. Drawing on academic literature, legal materials and institutional reports, the paper explains the distinction between ordinary trade-related fraud and TBML. It shows that investigators need to do more than identify trade irregularities. They must identify the relevant predicate offence, trace the suspected proceeds of unlawful activity, determine the beneficial owners and controlling persons, and explain how the trade transaction was used to hide, move, convert or legitimise those proceeds. To explain this process, the paper proposes a three-stage framework covering trade irregularity indicators, evidence-building requirements and possible investigative outcomes. The paper concludes that TBML is not only a detection or compliance issue, but also a challenge of building strong evidence. Improving TBML investigations therefore requires better sharing and use of trade and financial information, easier access to beneficial ownership information, clearer investigation procedures and earlier cooperation among relevant authorities.