WASHINGTON – U.S. Senators Bill Cassidy, M.D. (R-LA), Sheldon Whitehouse (D-RI), Chuck Grassley (R-IA) and Marco Rubio (R-FL) announced the release of a Government Accountability Office (GAO) report outlining the need for better information sharing and collaboration to address Trade Based Money Laundering (TBML), 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.
Cassidy and Whitehouse requested the report in 2018 as part of the ongoing effort to combat TBML.
“Transnational criminal organizations are getting more advanced to evade enforcement and finance their crimes,” said Dr. Cassidy. “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.”
“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,” said Senator Whitehouse. “This report sets out smart recommendations for harmonizing federal agencies’ anti-money laundering efforts, particularly information-sharing. Thank you to the GAO for such a thorough report, and to Sen. Cassidy for joining me in this bipartisan effort. Now, I urge the Treasury and Homeland Security Departments to act on the report’s recommendation to ease data sharing between agencies.”
“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,” said Senator Rubio.
“One of the most effective methods of combating international criminal organizations is to go after the money. Criminals are constantly developing new ways to conceal their cash flow, including by exploiting weaknesses in legitimate financial systems. This report shines a light on these tactics so that we can better detect and prevent trade-based money laundering,” said Senator Grassley.
The report recommends the Treasury Department establish an interagency information sharing and data analysis program and that the Department of Homeland Security (DHS) begin sharing Trade Transparency Unit (TTU) data, data used to identify suspicious transactions, with relevant agencies.
Cassidy and Whitehouse requested the GAO review to identify weaknesses in U.S. efforts to combat TBML. 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.
This report is the latest in Cassidy and Whitehouse’s efforts to counter money laundering efforts by our adversaries.
Key Findings
The report concluded that TBML is one of the primary mechanisms criminal organizations and others use to launder illicit proceeds, and the basic techniques involve the mis-invoicing of goods and services, such as through over- and under-invoicing. For most trade transactions, financial institutions lack the tools to identify suspicious activity. Criminal organizations exploit these vulnerabilities for other trade-related financial crimes, such as customs fraud, trafficking in counterfeit goods, and sanctions evasion.
DHS established the TTU to combat TBML through the analysis of financial and trade data, including import and export data exchanged with partner countries. That data is not sufficiently shared among government agencies.
The report also found that current federal 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.
Read the full report here.
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