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Anti-Money Laundering Traditional Finance

Trade-Based Laundering

Exploiting international trade transactions to transfer value and disguise the origins of criminal proceeds.

1 Introduction

Trade-Based Money Laundering (TBML) exploits international trade to transfer value and disguise the origins of criminal proceeds. By over-invoicing, under-invoicing, phantom shipments, or multiple invoicing of goods, criminals can move billions across borders under the guise of legitimate commerce. FATF considers TBML one of the most complex and underreported laundering methods.

$2T+

Estimated annual TBML flows (global)

80%

Of illicit financial flows are trade-related

<1%

Of trade invoices are inspected

2 Trade Misinvoicing Simulator

$300K
$800K

Laundered Amount

$500K

Invoice Discrepancy

167%

Detection Risk

Medium

3 Detailed Analysis

TBML Techniques

Over-Invoicing Exports

Goods worth $300K are invoiced at $800K. The difference ($500K) is laundered through the excess payment.

Under-Invoicing Imports

Goods worth $800K are invoiced at $300K. The importer transfers the $500K difference through informal channels.

Phantom Shipments

No goods are shipped at all. Fake invoices and shipping documents justify wire transfers between colluding parties.

Multiple Invoicing

The same shipment is invoiced multiple times to different banks, generating excess payments that layer criminal proceeds.

Red Flags

  • Invoice prices significantly deviating from global commodity benchmarks
  • Shipments routed through high-risk jurisdictions with no commercial rationale
  • Trading companies with no physical infrastructure or warehouse capacity
  • Payments from unrelated third parties not named on the invoice

Related Fraud Types

Shell Companies

Using corporate entities with no real operations to obscure the ownership and movement of illicit funds.

Structuring (Smurfing)

Breaking large transactions into smaller amounts to avoid regulatory reporting thresholds.

Chain Hopping

Moving funds across multiple blockchains to obscure the transaction trail and evade detection.