Financial Crime Risk in Trade Finance
Financial Crime Risk in Trade Finance
The Financial Action Task Force (FATF) has identified three main financial crime risks in trade finance: money laundering, terrorist financing (including fraud), and sanctions and proliferation financing. These risks occur when illegal funds or value are hidden through misrepresentations in trade transactions, facilitated by collusion between the buyer and seller. This can be achieved through techniques such as over- or under-invoicing to misrepresent the price of goods, short- or over-shipping to misrepresent quantity or quality, and phantom shipping, where all documentation is completely falsified and there is no shipment of goods. The FATF aims to combat these risks through its regulatory framework and guidelines.
Our Key Experts are Specialized in Financial Crime Risk Assessment in Trade Finance, including:
Conducting AML/CFT risk assessments in the trade finance sector
Advising on measures to prevent and detect illicit financial flows in trade finance transactions
Assessing sanctions and proliferation financing risks in trade finance activities
Designing and implementing risk assessment methodologies that cover data collection and analysis
Advocating for a risk-based approach to supervision in trade finance, including the development of risk mitigation strategies
Assisting in the drafting and review of relevant legislation, regulations, policies, and supervisory manuals
Ensuring compliance with reporting requirements for banks and non-bank financial institutions in the trade finance sector
Providing training and guidance to stakeholders on financial crime risks in trade finance and the measures required to address them.