VIDEO: Trade Based Money Laundering
In this 4th annual Halloween special Compliance Clip (video), Adam talks about trade-based money laundering and environmental money laundering. This is a BSA topic.
Video Transcript
The following is a transcript of this video.
Welcome to our fourth annual Halloween Compliance Clip special where I dress up for Halloween and do a Compliance Clip. This year, I dressed up as a lumberjack, so I had to figure out what the heck I was gonna talk about, and I decided to talk about trade-based money laundering and really environmental money laundering. So this Compliance Clip is gonna be a BSA topic.
What is trade-based money laundering? Well, trade-based money laundering is utilizing physical products in some sort of trade to help launder money, sometimes across the border, typically across the border, so that money can get back into the financial system. Now, of course, money laundering is trying to take cash and get it into the financial system without being caught. So in trade-based money laundering, we may have an instance where a drug lord partners with a lumberjack. Lumberjack goes out and cuts down a bunch of big trees. They take those trees, they ship the raw lumber, the big logs down to Mexico, it goes through customs and gets into Mexico. Then those logs that have been purchased with illegal illicit cash in the United States get into Mexico or South America, where those logs then are sold to legitimate lumber yards who pay money through their bank by sending wire transfers. The money then goes into the drug lord's accounts and looking like it was a legitimate transaction that took place.
Essentially you have dirty money and cash that buys some goods like lumber. The lumber shipped across the border, the lumber sold. That money looks legitimate because it's bought by legitimate businesses and then the money goes back to the drug lords in South America. That's an example of trade-based money laundering.
If we talk about environmental laundering, this is a hot topic that's been coming up with the Financial Action Task Force. Not as much FinCEN in the United States, but the Financial Action Task Force is the group of nations that come together and really kind of give FinCEN some of their guidance. They've been talking about environmental money laundering and warning countries, financial institutions, and regulators to watch out for environmental fraud and environmental money laundering.
Sometimes we're seeing things like gold being shipped across borders to countries that wouldn't have as much gold, illegal shipments across borders of different things. In the United States, we may experience things like dumping - illegally dumping when things should be recycled. I remember reading stories about that. You may have illegal lumberjacks knocking down trees that were in a forest that are not supposed to, but they're using these funds from the environment to launder their money. So money laundering is a growing trend in the environmental world and trade based money laundering is a real thing.
Hopefully that's something new for you. That's all I have for you for this Compliance Clip.