Trade-Based Money Laundering

A method of money laundering that disguises the movement of illicit proceeds by manipulating the value, quantity or description of goods in an international trade transaction, commonly through over-invoicing or under-invoicing a shipment, in which the price stated on a trade document is deliberately set well above or below the goods' true market value so that the resulting difference in funds transferred settles an illicit debt or moves illicit value across a border under the cover of an apparently legitimate commercial transaction. The Financial Action Task Force, the leading international standard-setting body for anti-money laundering policy, has identified trade-based money laundering as one of the primary methods by which criminal and terrorist organizations move value internationally, noting that it is a documented method of choice precisely because it exploits the sheer volume and complexity of global trade, within which a fraudulent invoice can be difficult to detect against the much larger flow of genuine trade documentation.