The U.S. Government Accountability Office (GAO) released a report outlining the need for better information sharing and collaboration to combat trade-based money laundering (TBML).
TBML is the system criminal organizations use to hijack international trade markets to launder money through rule-of-law countries. The practice involves transferring funds through thousands of shell companies using fake or inflated invoices, making it extremely difficult to differentiate from legitimate trade.
The report identifies a lack of coordination and information sharing among different U.S. agencies involved in the identification of illicit trade for the purposes of money laundering. It makes several recommendations, including one that says the Treasury Department should establish an interagency information sharing and data analysis program. GAO also recommended that the Department of Homeland Security (DHS) begin sharing Trade Transparency Unit (TTU) data, which is data used to identify suspicious transactions, with relevant agencies.
The GAO was recommended to study the matter by U.S. Sens. Sheldon Whitehouse (D-RI) and Bill Cassidy (R-LA) back in 2018.
“Kleptocrats, drug traffickers, and other bad actors rely on sophisticated trade-based money laundering schemes to hide their ill-gotten gains. To fight back, our law enforcement experts, the private sector, and our global partners need to work closely together,” Whitehouse said. “This report sets out smart recommendations for harmonizing federal agencies’ anti-money laundering efforts, particularly information sharing.”
The report also found that current efforts to combat TBML exclude some key agencies involved in overseeing trade, and information on suspicious financial and trade activity is siloed among different agencies.
“Transnational criminal organizations are getting more advanced to evade enforcement and finance their crimes,” Cassidy said. “The findings of this report will be critical in our efforts to deny drug cartels and terrorist groups the ability to launder their money through international trade.”
U.S. Sens. Marco Rubio (R-FL) and Chuck Grassley (R-IA) also support the findings.
“As criminal organizations continue to illegally enrich themselves through money laundering, I welcome the GAO report so legislators can better respond to nefarious organizations. It’s essential U.S. agencies work together in order to reduce this criminal activity and I look forward to working with my colleagues to further combat trade-based money laundering,” Rubio said.