Friday September 29, 2023
Taipei, (CNA) Taiwan and Nicaragua signed an anti-money laundering pact in Taipei Thursday which both countries expect to be beneficial in curbing international money laundering and major financial crime operations.
The cooperative pact also aims to end funding for terrorists and for the proliferation of weapons of mass destruction.
The agreement was signed by Wang Chung-yi, chief of the Ministry of Justice's Investigation Bureau, and Denis Membreno Rivas, chief of Nicaragua's Financial Analysis Unit.
The signing of the pact could expand Taiwan's international cooperative network to fight money laundering and terrorism and strengthen diplomatic ties with the Central American ally, the Investigation Bureau said.
This is Taiwan's 34th pact or memorandum on fighting money laundering and the seventh signed this year.
“Geographic Targeting Order” and Guidance Issued to Guard against Misuse of Armored Cars
WASHINGTON, D.C. – The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN), in close coordination with its Mexican counterpart, the Unidad de Inteligencia Financiera (UIF), announced a series of reporting initiatives designed to greatly improve the transparency of cross-border cash movements. To address U.S. and Mexican law enforcement’s concerns about potential misuse of exemptions and incomplete or inaccurate reports filed by armored car services (ACS) and other common carriers of currency, FinCEN has issued a Geographic Targeting Order (GTO) that requires enhanced cash reporting by these businesses at the San Ysidro and Otay Mesa Ports of Entry in California. FinCEN also issued updated guidance concerning detailed and proper filing of Currency and Monetary Instruments Reports (CMIRs), which are filed when $10,000 or more in currency is moved across the U.S. border.
“Drug trafficking organizations and other criminal enterprises thrive when their cash movements are hidden from view,” said FinCEN Director Jennifer Shasky Calvery. “FinCEN is committed to working closely with our Mexican counterparts, law enforcement, and industry partners to bring greater transparency along our border and safeguarding the integrity of our financial systems.”
“The actions taken by FinCEN address an important issue that was identified ointly by U.S. and Mexican authorities and has our support,” said UIF Director Alberto Bazbaz Sacal. “Mexico and the United States will continue to further improve our fight against money laundering with this and other measures.”
“As part of HSI’s broader strategy to dismantle transnational criminal rganizations and seize their illicit proceeds, we are actively targeting and identifying organizations that work to move money across the southwest border ports of entry,” said HSI Executive Associate Director Peter Edge. “We believe the Geographic Targeting Order is an invaluable tool toward achieving these goals. As such, we will continue to work with our partners in law enforcement and private industry to identify and shut down vulnerabilities susceptible to exploitation.”
In 2010, Mexico enacted new anti-money laundering (AML) provisions to attack the flow of illicit cash from the United States to Mexico. These efforts made it much more difficult for criminals and narco-traffickers to place large amounts of cash in Mexican financial institutions and resulted in an increase in cash coming back to the United States from Mexico, via ACS or couriers, for attempted placement in U.S. financial institutions. Law enforcement information and BSA data analysis suggest that much of this cash movement is not properly reported on a CMIR and therefore not made available in the FinCEN database for the benefit of investigators and analysts following illicit money trails.
The Director of FinCEN is authorized to issue a GTO requiring any domestic financial institution, or certain other trade or business groups, in a geographic area to obtain and report desired information. In this case, the order requires more detailed information to be reported on cash movements. A GTO is a particularly powerful and appropriate tool to narrowly address risks in certain regions without more broadly affecting commerce or business routines. FinCEN has worked in close coordination with law enforcement on this GTO, including U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) and U.S. Customs and Border Protection (CBP).
In a report published, the Council of Europe’s anti-money laundering Committee (MONEYVAL) calls on the Romanian authorities to address important concerns in respect of key institutional players in the anti-money laundering field, notably the financial intelligence unit and supervisory authorities, and their enforcement results.
The report sets out an analysis of the implementation of international and European standards on anti-money laundering/combating financing of terrorism. The main findings can be summed-up as follows:
- The money laundering offence is broadly in line with international standards and the number of investigations, prosecutions and convictions has positively increased. Further measures are required to strengthen the implementation of the money laundering offence, and to address structural and capacity deficiencies in the law enforcement and judicial processes.
- Romania has improved its legal framework and its ability to freeze, seize and confiscate proceeds of crime. However, law enforcement authorities need to conduct parallel financial investigations proactively alongside the investigation of proceeds-generating crimes.
- Authorities need to strengthen the independence of the financial intelligence unit by divesting the government-appointed Board of its decision-making powers on core operational functions.
- The system for the detection of physical cross-border transportation of currency raises serious concerns given the significant vulnerability of the Romanian financial system to cash-based money laundering.
· The framework providing for customer due diligence requirements, reporting of suspicious transactions, and record-keeping is not yet fully in line with the Financial Action Task Force (FATF) Recommendations. Most financial institutions appeared to implement the required standards adequately. Implementation seemed weaker by non-financial institutions.
- MONEYVAL has several concerns regarding the effectiveness and consistency of the anti-money laundering and terrorist financing supervision, and of the application of sanctions for non-compliance with the relevant requirements by the relevant supervisory authorities.
- Further efforts are required to ensure that the national coordination mechanism in place regularly reviews the Romanian anti-money laundering and terrorist financing system and its effectiveness. Formal and informal cooperation by competent authorities appears to be conducted in an effective manner. However a number of deficiencies remain to be addressed concerning the legal framework for international cooperation by supervisory authorities with their foreign counterparts.
MONEYVAL will continue to monitor implementation of the recommendations by Romania through its regular follow-up procedures, which require the country to submit a follow up report by April 2016.
http://business-review.eu
FATF--This report aims to raise awareness about the financial flows related to the Afghan opiate trade. Afghanistan is the world leader in the production and trafficking of opiates: generating revenues estimated to be as high as USD 70 billion. Despite international efforts, the cultivation of opium poppies in Afghanistan continues, and even increased significantly in southern parts of Afghanistan to reach a record high by 2013.
Little information exists about the “business model” of the Afghan opiates trade, but what is known is that globally, only a fraction of drug related funds or assets are confiscated while almost all drug profits are integrated into the world’s legitimate financial system.
This report analyses how the financial transactions related to the Afghan opiates trade are conducted. The report finds that generally, the opiates and the associated financial flows do not follow the same routes. The majority of revenues generated by the trade in Afghan opiates is moved through, and possible stored in, so called “financial centers”, usually involving money or value transfer services (MVTS). This report also identifies other methods used by the opiate traffickers to transfer funds and facilitate distribution of the opiates.
Another finding is that the Afghan Taliban are heavily involved in the opiates trade, either through trafficking or profiting. The growing trade in opiates will soon be one of their leading sources of income, providing them with the financial means to become a major threat to the national security of Afghanistan and the wider region.
The report, and in particular the case studies provided, will assist in the detection of opiate-related financial transactions. It also provides financial centers with information about the factors that make them attractive and vulnerable to financial transactions involving proceeds of drug trade or other crimes.
Macau and Mainland China reached a consensus to sign a Memorandum of Cooperation on anti-money laundering during the 17th Annual Meeting of the Asia Pacific Group (APG) held last week in Macau.
According to Xinhua, the deputy governor of The People’s Bank of China, Li Dongrong, discussed the subject of the two districts’ cooperation on anti-money laundering with Anselmo, Teng Lin Seng, chairman of the Monetary Authority of Macau.
During the meeting, Mr. Li also had a discussion with the president of the Financial Action Task Force, Roger Wilkins, on deepening the cooperation between China and Australia.
Meanwhile, the annual meeting approved new mutual evaluation procedures, agreement for a new business plan for the upcoming year, agreement on other governance arrangements including a revised APG communications policy as well as approving the admission of the Democratic People’s Republic of Korea as an APG observer.
China’s two-year term as APG rotating co-chair ended with the meeting; New Zealand will be the rotating co-chair for the next two years, represented by the Deputy Secretary for Justice at the New Zealand Ministry of Justice, Frank McLaughlin.
The next APG annual meeting will be held in Auckland in July 2015.
North Korea will soon hold a meeting with an international organization to discuss measures against money laundering, a news report said Wednesday.
Last week, Pyongyang joined the Asia/Pacific Group on Money Laundering (APG) aimed at combating financing for the development of nuclear weapons and terrorist attacks.
The APG is the Asia-Pacific arm of the Financial Action Task Force (FATF) under the Organization for Economic Cooperation and Development (OECD).
The FATF, based in Paris, welcomed North Korea's move, saying it would help the communist nation bring its anti-money laundering system in line with global standards, according to the Voice of America (VOA).
In an email to the VOA, the FATF revealed its plans for North Korea to hold related discussions with its International Co-operation Review Group before the October plenary session, according to the Washington-based U.S. broadcaster.
North Korea gained an observer status at the APG, and it would be eligible for full-fledged member status should it abide by the FATF-set regulations in the next few years.
South Korean officials said the communist nation seems to be seeking to ease U.S.-led financial sanctions against it by reaching out to the APG. (Yonhap)
The Iraqi Private Banks League on Thursday (July 17th) announced new measures to prevent money laundering and terrorist financing attempts.
"The new measures include creating an inter-bank database on suspicious clients, sharing pictures of individuals wanted in connection with financial crimes, and banning dealings with those who do not provide transparent reports on their financial activities and the licenses of their companies approved by security authorities," said league member Salam al-Khayyat.
The measures may cause banks difficulties, but they are an important step, he told Al-Shorfa.
Human trafficking has no place in the modern world, the President of the General Assembly declared today at a special event at United Nations Headquarters ahead of the observance of the first ever World Day against Trafficking in Persons.
"Millions of people, the majority of whom are women and children, are victims of a modern form of slavery - we call it human trafficking," John Ashe said, noting that an estimated 2.5 million people are victim to this scourge.
"Men, women and children fall into the hands of traffickers both in their own countries and abroad," he stated. "Every country in the world is affected by human trafficking, whether as a country of origin, transit or destination for victims."
Funding organizations that directly assist the victims is a key instrument to providing support, said Mr. Ashe, as he encouraged all Member States to do their part in financing the UN Voluntary Trust Fund for Victims of Human Trafficking.
"Not only is human trafficking one of the most grotesque violations of human rights, it is a lucrative crime for perpetrators," the President pointed out. "With annual profits as high as $36 billion per year, it ranks as the world's third most profitable crime after illicit drug and arms trafficking."
He added that although a lot has been done to combat human trafficking, including the Assembly's adoption in 2010 of the Global Plan of Action to Combat Trafficking in Persons, much more needs to be done to help women, men and children who are trafficked into labour, sex slavery, and coerced into illegal actions.
Martin Sajdik, President of the Economic and Social Council (ECOSOC), said that the Voluntary Trust Fund for Victims of Human Trafficking has already made strides in rebuilding the lives of those affected.
"We can do more and much more," he said, "We must better understand the nature of the crime that we are trying to confront."
Addressing the victims, he said: "You are not alone and we will support you in the return to your lives and your dignity."
In the same vein, Secretary-General Ban Ki-moon, in a video message, stressed the need to improve the lives of trafficking victims. It is critical, he said, that all Member States finance the Voluntary Trust Fund, which supported invaluable non-governmental organizations that helped survivors get back on their feet and integrated into society.
Yury Fedotov, Executive Director of the UN Office on Drugs and Crime (UNODC), said in a video message that the act of selling human beings like commodities shreds every ounce of dignity and respect.
It is hard to believe that trafficking of human beings takes place in today's world, he stated. Even more alarming, women make up the majority - up to 60 per cent - of all trafficking victims globally and women and girls together make up 75 per cent of all victims.
He called on every country to ratify and fully implement the UN Convention against Transnational Organized Crime at the local, national and regional levels, as well as interlink efforts and sever the flow of laundered money. All countries even in these troubling economic times must continue to help victims and survivors, he added.
A large-scale Romanian police operation has broken up a gang allegedly involved in fraud and money laundering in connection with fruit and vegetable imports.
On July 9, various police organizations led by the Directorate for Investigating Organized Crime and Terrorism (DIOCT) in Romania’s capital Bucharest carried out extensive searches (46 in total) of addresses of people described to be Romanian nationals, Turks and Arabs, who are believed to be part of the criminal gang.
A DIOCT release says that during 2013-14, the gang made ‘intra-community acquisitions and imports of fruit and vegetables from non-European countries using interposed companies in order to evade payment of VAT and income tax worth around €24 million (US$32.7 million)’.
In addition to the gang, two officials from the National Agency for Fiscal Administration (NAFA) are also believed to be involved.
Police seized documentation relating to the fresh produce and intermediary companies that had been set up in order to avoid paying taxes, according to the release.
The gang also created false premises that were supposedly used in connection with the fresh produce business, but were in fact just vacant land, service stations or garages.
“The 28 suspects were taken to the headquarters of the DIOCT in Bucharest. Also, in order to recover damages, prosecutors instituted precautionary measures on bank accounts, luxury cars and property,” the release said.
“An investigation shall be carried out on the possible involvement in criminal activity of two officials of the NAFA which favored the activities of members of organized criminal group.”
A hearing will be held later this year.
http://www.freshfruitportal.comAustralia has strengthened trans-Tasman cooperation in the fight against money laundering and terrorism financing, signing a new Memorandum of Understanding (MoU) with New Zealand.
AUSTRAC—the Australian Transaction Reports and Analysis Centre—signed the MoU with three New Zealand government agencies responsible for supervising reporting entities under New Zealand’s anti-money laundering and counter-terrorism financing (AML/CTF) regime.
AUSTRAC and the NZ agencies—which include the Department of Internal Affairs, the New Zealand Financial Markets Authority and the Reserve Bank of New Zealand—agree to share administrative information such as risk modelling, regulatory strategies and assessment techniques.
It complements an existing MoU to share financial intelligence data with the NZ financial intelligence unit.
AUSTRAC now has two MoUs for sharing regulatory information, and 70 MoUs for the sharing of financial intelligence with foreign counterparts.
Following the money trail is an essential element of tracking serious and organized crime, and requires international cooperation for sharing financial intelligence.
Criminals involved in money laundering, terrorism, tax evasion, drug trafficking and other serious crimes do not respect borders, so cooperation is needed between financial intelligence units and law enforcement in a range of countries.
These memorandums are key to combating transnational crime and protecting the integrity of Australia's financial system.
In Australia, AUSTRAC regulates banks and various organizations. They are required to submit transaction reports to AUSTRAC, including reports relating to international funds transfers and suspicious transactions.
In 2012–13, almost 80 million international transfer reports were received by AUSTRAC, recording more than $3.5 trillion in transfers into and out of Australia.
This information is analyzed by AUSTRAC and, where appropriate, provided to other Commonwealth, State and Territory agencies, including the Australian Federal Police and the Australian Taxation Office.
SINGAPORE: The Monetary Authority of Singapore (MAS) is seeking public feedback on proposed new measures to further protect Singapore's financial system from being used to launder money or finance terrorism.
A consultation paper has been released on Tuesday (July 15).
Under the changes proposed, financial institutions will be required to conduct money laundering and terrorist financing risk assessments at the wider institutional level, in addition to assessing the risk of individual customers.
MAS also wants to formalize the need to screen customers and their connected parties. It suggests implementing additional requirements for cross-border wire transfers exceeding S$1,500. These include customer due diligence on occasional transactions and minimum information fields in the message or payment instructions.
MAS says many of the proposed changes formalize existing supervisory expectations and practices of financial institutions.
http://www.channelnewsasia.com
The Fiji Financial Intelligence Unit received 522 suspicious transaction reports, 380,430 cash transaction reports and more than 1.47million international remittance transaction reports from financial institutions last year.
And according to FIU, 160 requests for investigation assistance from law enforcement agencies and 46 requests for due diligence background checks from government agencies were also received last year.
The findings were revealed in a statement yesterday on the launch of FIU's 2013 annual report, which was tabled at the Cabinet meeting this week by Attorney-General and Minister for Justice Aiyaz Sayed-Khaiyum.
"About 459 border currency reports were filed in 2013. Intelligence reports developed by the FIU led to successful and ongoing investigation and prosecution of money laundering and other serious criminal activities such as fraud, tax evasion, corruption, cybercrime, human and drug trafficking," FIU said.
"During 2013, 284 intelligence reports were disseminated while additional investigation and financial checks and profiling were conducted on 130 business entities and 362 individuals.
"About 71 entities and 70 individuals were also screened for due diligence and background checks during 2013. As a result of the FIU's compliance and enforcement function, 856 enquiries were made with reporting financial institutions."
It said 43 ad-hoc policy advisories, five instruction notices and eight alert notices were issued to the reporting institutions.
Record keeping and reporting compliance activity were also conducted for six reporting institutions during the review period.
"FIU's anti-money laundering policies continued to support financial inclusion initiatives. These policies also contributed towards the safety and integrity of Fiji's financial system," said the statutory agency of the Fijian Government.
"During 2013, the FIU also contributed to a number of domestic and international co-ordination programs such as the National Anti-Money Laundering Council, bilateral memorandum of understanding arrangements, the Egmont Group of FIUs of the World, the Asia Pacific Group on Money Laundering, and the Association of Pacific Island FIUs."
Australia has further strengthened its efforts to follow the money trail and undermine the business models of international criminal syndicates hiding illicit funds across the globe with the signing of an agreement with Peru, Minister for Justice Michael Keenan said today.
The signing took place this week at the annual plenary meeting of the Egmont Group—the globally-recognized international network of financial intelligence units—which was hosted by Peru this year.
AUSTRAC now has 70 exchange instruments for the sharing of financial intelligence with foreign counterparts.
Mr. Keenan said following the money trail was an essential element of tracking serious and organized crime, and requires international cooperation for sharing financial intelligence.
'Criminals involved in money laundering, terrorism, tax evasion, drug trafficking and other serious crimes do not respect borders, so cooperation is needed between financial intelligence units and law enforcement in a range of countries,' Mr. Keenan said.
'The memorandum of understanding sets out agreed terms for the exchange of information between the two jurisdictions and is a key tool in combating global crimes and protecting the integrity of Australia's financial system,' Mr. Keenan said.
In Australia, banks and various organizations are required to submit transaction reports to AUSTRAC, including reports relating to international funds transfers and suspicious transactions.
In 2012–13, almost 80 million international transfer reports were received by AUSTRAC, recording more than $3.5 trillion in transfers into and out of Australia.
This information is analyzed by AUSTRAC and, where appropriate, provided to other Commonwealth, State and Territory agencies, including the Australian Federal Police and the Australian Taxation Office.
AUSTRAC, on behalf of Australia, is an active member of the Egmont Group which was established to promote cooperation between its member countries.
KUWAIT CITY, July 10: The Legal Affairs Section of the General Customs Department has issued directives regarding customs regulations and procedures on implementation of money laundering and terrorism funding law, reports Al-Shahed daily.
According to the directives, anyone who enters or departs the country through any of its borders must declare the value of currency or items used for monetary transactions travelers’ cheque or money orders that are with him. It includes arrangement by owners to transfer any amount equal to and above KD 3,000 into or out of Kuwait through a person, postal service or cargo.
http://www.arabtimesonline.comKenya has been taken off the list of countries at high risk for money laundering and terrorist financing, the government said on Tuesday.
In 2010, the Financial Action Task Force (FATF), the official global watchdog, placed Kenya on its "grey list" of high risk countries failing to combat money laundering, drug trafficking, corruption and terrorism.
Following a visit to Kenya in May and a review at the FATF meeting in Paris in June, Kenya has been given the all clear. This is welcome news for the government which plans to strike a deal with the City of London to build Nairobi into a major international financial hub.
"On the basis of the on-site visit report, the FATF concluded that Kenya has established the legal and regulatory framework to address the strategic deficiencies that the FATF had identified," Henry Rotich, cabinet secretary for the treasury, said in a newspaper statement.
"This is an achievement we all should embrace... I therefore wish to take this opportunity to thank all those who have been involved in this process for their relentless efforts to achieve this milestone."
As a result, Kenya no longer has to give public updates on progress made in implementing its anti-money laundering regime.
FATF was set up in 1989 to set international standards on anti-money laundering and combating terrorist financing.
During the review, FATF found that Kenya had ensured an effective financial intelligence unit, introduced laws to identify and freeze terrorist assets, established procedures for confiscating funds related to money laundering and imposed sanctions against people who did not comply with anti-money laundering requirements.
Data calculated for Thomson Reuters Foundation by Global Financial Integrity (GFI), a Washington-based financial watchdog, showed the amount of illicit money entering Kenya from faulty trade invoicing, crime, corruption and shady business activities increased more than five-fold in the last decade to equal roughly 8 percent of Kenya's economy.
http://allafrica.comKUALA LUMPUR: The Dewan Negara passed the Anti-Money Laundering and Anti-Terrorism (Amendment) Bill 2013 (AMLATFA) on Monday.
Bank Negara Malaysia said the Bill was earlier passed by the Dewan Rakyat on June 18.
"Amendments to the AMLATFA aims to further enhance public and investors' confidence in the Malaysian financial system and the economy by addressing the risks and threats of money laundering and terrorist financing activities in the country," said the central bank.
BNM added the implementation of the AMLATFA would support the necessary legal framework to combat overall crime.
It would also enable Malaysia to cooperate with other countries globally and also further strengthen the country's security and wellbeing, it said.
http://www.thestar.com.myMore than 350 delegates from 41 jurisdictions will take part in the 17th Annual Meeting of Asia/Pacific Group on Money Laundering from the 15th to 18th of July 2014 at the Sheraton Macao Hotel.
The event, organized by the MSAR government, will discuss anti-money laundering and counter-terrorist financing strategies, and share experiences in fighting such crimes. This is the second time that Macau will host this meeting, which was previously held here in 2003.
The APG was founded in Bangkok in 1997 as an autonomous international organization that fosters cooperation and compliance with internationally recognized standards. The co-chairs of the APG are Australia and China. China completes its term after the local meeting and will be replaced by New Zealand.
Macau joined the APG in 2001 and, according to a press release issued by the Financial Information Office, “always stays vigilant for the emergence of new money laundering and terrorist financing trends and threats associated with new technologies, and will introduce measures to mitigate the risks associated with them.”
The Governor of the Central Bank of Sudan (CBOS) recently met with the technical mission from IMF Anti-Money laundering/Combating the Financing of Terrorism (AML/CFT).
The two sides discussed the necessity of passing legislation and laws ensuring unity and independence of financial information, its structure and operations and banking precautionary measures. The latest amendment to the banking and financial sector law was also addressed.
The Governor of CBOS emphasized the government’s commitment to international systems, particularly the newest system devised to combat money-laundering and terrorism financing. The Governor underlined CBOS’s role in overseeing banks, highlighting the need for special bodies to monitor irregular financial sectors.
The Governor also asserted the bank's readiness to provide assistance to the IMF mission.
The Mission praised Sudan’s attitude and the great importance it has placed on combating money laundering and the financing of terrorism. They promised to provide technical assistance to Sudan to help it regulate and monitor its financial sector.
IMF AML/CFT technical assistance is provided on a voluntary, cooperative basis, that is to say, at the request and with the assistance of the authorities of that country. It is based on international standards and best practices derived, inter alia, from the Vienna Convention, the International Convention for the Suppression of the Financing of Terrorism, relevant UN Security Council Resolutions, and the FATF 40+9 Recommendations.
The IMF's AML/CFT technical assistance aims to improve AML/CFT regimes worldwide and to provide concrete support to the IMF's membership. This assistance is delivered through timely and high-level programs customized to fit the specific needs and priorities of IMF member countries and their respective institutions.
The IMF attaches great importance to country ownership. To ensure that the IMF's technical assistance is effective and brings lasting benefits, it is planned and carried out with the full involvement of the authorities of the recipient country at each stage of the process-from the identification of needs, determined by discussion and agreement on terms of reference and project goals through implementation and follow-up.
The International Chamber of Commerce (ICC) has once again suggested that banks financing trade should be regulated less stringently than those involved in other areas of finance.
Having beaten the drum for banks' trade finance arms to be subjected to less drastic capital holding requirements, since it discourages them from lending to small businesses, the ICC has now claimed that "enforcement of anti-money laundering regulations" could result in banks cutting their lending for trade and exports.
In recent months and years, a number of high profile banks including BNP Paribas, Credit Suisse, HSBC and Standard Chartered have been slapped with huge fines for facilitating money laundering and terrorist financing.
The pressure to adhere to anti-money laundering (AML) standards, has resulted "in higher operational costs for trade and export finance business", says the ICC.
Banks have shored up their global banking networks, reviewing relationships with correspondent banks – overseas banks that facilitate trade in their local area on behalf of another, and usually larger bank – "with some of these banks terminating correspondent banking relationships with perceived outsized risk" related to AML and other regulatory developments.
Essentially, since correspondent banks allow financial institutions to finance trade in a country or region without having a physical presence on the ground, a trend towards terminating them could mean trade goes unfinanced.
The findings are expressed in the ICC Banking Commission's Trade Register, authored with the assistance of banks and advisory firms working in the trade space. They draw on statistics showing the relatively low risk profile trade finance loans have.
Using data submitted by member banks, the ICC found that across more than 4.5 million transactions, worth upwards of $2.4tn (£1.4tn, €1.75tn), trade finance has a default rate of around 0.02%, much lower than other forms of debt.
However, the report comes at a time in which trade-based money laundering is very much in the public eye. As well as the hefty fines doled out to global banks, work done by the research firm Global Financial Integrity (GFI) has detailed the scale of trade-based money laundering and the impact it has on the developing world.
In 2012, for example, the firm found that between 1970 and 2010, $870bn in illicit financial flows left Mexico, the majority of which left the country via trade-based money laundering.
Earlier this year, GFI found that in some African countries, double-digit GDP loss is experienced through trade-based money laundering, mainly through trade misinvoicing.
"The potential average annual tax loss from trade misinvoicing amounted to roughly 12.7% of Uganda's total government revenue over the years 2002-2011, followed by Ghana (11.0%), Mozambique (10.4%), Kenya (8.3%), and Tanzania (7.4%)," said the report.
A report by the UK's Financial Conduct Authority (FCA) last year also highlighted the risks of money laundering that are associated with trade finance.
The report found that "there was an inconsistent approach to risk assessment and only a few banks had conducted a specific trade finance money laundering risk assessment".
While the ICC's quest to have a staggered implementation of the Basel III accord – the legislation dictating the amount of capital reserves banks are required to hold – to reflect the low risk profile of trade transactions, the groundswell of public opinion around money laundering and corporate tax avoidance may make it more difficult to convince regulators of the validity of changing their practices.
-Raising the profile of the FATF in its 25th year and communicating its continued relevance.
-Working with the FSRBs to address the issue of regulatory arbitrage.
-Emphasizing the effectiveness component of mutual evaluations.
-Ensuring quality and consistency in mutual evaluation reports across the global network.
-Promoting meaningful engagement and open communication with the private sector.
-Working with the G20 on areas of mutual interest, including corruption and beneficial ownership.
-Considering the risks associated with virtual currency and potential policy responses.
-Continuing the FATF strategic view discussions, including prioritization of the FATF’s work.
