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2008 ICE Annual Report Cover

Office of Investigations

Topics of Interest

Trade-Based Money Laundering

Trade-based money laundering is an alternative remittance system that allows illegal organizations the opportunity to earn, move and store proceeds disguised as legitimate trade. Value can be moved through this process by false-invoicing, over-invoicing and under-invoicing commodities that are imported or exported around the world. Global trade is frequently used by criminal organizations to move value around the world through the complex and sometimes confusing documentation that is frequently associated with legitimate trade transactions. This method is also utilized extensively by Colombian drug cartels to repatriate drug proceeds commonly referred to as the Black Market Peso Exchange (BMPE). Underground banking, unlicensed money service businesses, hawalas, etc., have all utilized trade to move value as settlement of a debt arising from remittances overseas. These organizations can accomplish settlement by purchasing commodities in one country and then transferring them to another country where the commodity is sold and the proceeds remitted to the intended recipient.

Red flag indicators of trade-based money laundering include:

  • Payments to vendor made in cash by unrelated third parties
  • Payments to vendor made via wire transfers from unrelated third parties
  • Payments to vendor made via checks, bank drafts or postal money orders from unrelated third parties
  • False reporting: such as commodity misclassification, commodity over-valuation or under-valuation
  • Carousel transactions: the repeated importation and exportation of the same high-value commodity
  • Commodities being traded do not match the business involved
  • Unusual shipping routes or transshipment points
  • Packaging inconsistent with commodity or shipping method
  • Double-invoicing

The ICE Financial and Trade Investigations Division established the Trade Transparency Unit (TTU), which is dedicated to the ongoing analysis of trade data that is provided through partnership with other countries' trade transparency units. ICE’s experience in trade-based money laundering investigations has shown that one of the most effective ways to identify instances and patterns of trade-based money laundering is through the exchange and subsequent analysis of trade data for anomalies that would only be apparent by examining both sides of a trade transaction.

Trade Transparency Units

Borrowing from the successful Financial Intelligence Unit model, which examines suspect financial transactions, a TTU is formed when the United States and any of its trading partners agree to exchange trade data for the purpose of comparison and analysis. Using state-of-the-art data mining software and proven investigative techniques, a TTU can easily identify previously invisible trade-based alternative remittance systems and customs fraud.

At the core of the TTU concept is the Data Analysis & Research for Trade Transparency System (DARTTS), an ICE computer system designed to analyze import/export and financial data of the United States and its foreign partners for the purpose of identifying trade anomalies and financial irregularities. These anomalies and irregularities often serve as indicators of money laundering, customs fraud, contraband smuggling, and even tax evasion (e.g. value added tax, income tax, duty, tariff).

Ultimately, ICE envisions establishing TTUs with all of the United States’ trading partners, thereby forming a global network. This network will provide a forum for the open exchange of trade data between all participating countries and will play an increasingly important role in the effort to thwart money laundering and transnational crime, including international organized crime. ICE is also working with international organizations such as the Financial Action Task Force to bring awareness to this increasing global issue. In fiscal year 2006, ICE secured funding and developed agreements for the establishment of TTUs in Paraguay, Brazil, and Argentina.

El Dorado Task Force

Law enforcement agencies within New York and New Jersey can partner with the El Dorado Task Force, which targets financial crimes at all levels, utilizing the Cornerstone approach. Task force agents educate the private financial sector to identify and eliminate vulnerabilities and promote anti-money laundering legislation through training and other outreach programs. This aggressive, multi-agency approach to target financial crimes within the metropolitan areas in these two states currently consists of more than 260 members from more than 55 law enforcement agencies, including special agents, state and local police investigators, intelligence analysts and federal prosecutors.

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