Trade Documentation Seen as Key to Preventing Trade-Based Money Laundering
Open-source information, bills of lading, documentation of intermediate container movements, and manifest records of U.S. imports and exports should be used by the federal government to hunt entities that engage in trade-based money laundering, former CBP special agent Louis Bock told congressional lawmakers on Feb. 3. The congressional Task Force to Investigate Terrorism Financing hosted the hearing to examine potential solutions for trade-based money laundering, a common tactic used by groups like ISIS and Hezbollah to disguise how they make their money.
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Collecting more trade movement information could help DHS’ failing Trade Transparency Units, 90 percent of whose focus is wrongly fixed on South America, Bock said. That movement information could include open-source trade finance, insurance, and storage-related documents, Northeastern University criminology professor Dr. Nikos Passas said during the hearing. ICE oversees trade transparency units, which are formed when U.S. trading partners agree to exchange data to compare and analyze information in hopes of catching perpetrators.
“The real money flowing to ISIS involves trade from the Middle East, Europe and including Turkey,” Bock said. “DHS has neither the customs nor financial expertise to make the trade transparency units a success. The loser here is our ability to tackle trade-based money laundering and trade and tax revenue loss on a grand scale.” He recommended that trade transparency unit jurisdiction move from ICE to Treasury’s Financial Crimes Enforcement Network (FinCEN), asserting that the transfer would be logical given the agency’s revenue focus.
Former U.S. intelligence officer and Treasury special agent John Cassara disagreed with the notion of relocation, saying FinCEN is not ready to absorb the trade transparency units. He called for more resources and personnel to be dedicated to those divisions, as ISIS and other terrorist organizations maintain a strong foothold in the Middle East and around the world. “This should be a no-brainer,” he said. “We can do that. The data exists and it's a revenue enhancer, why wouldn't we want do it?”
Cassara claimed that companies could profit from freely sharing information about which entities to avoid transacting with, apparently because they could avoid fines and other consequences. On the other hand, federal agencies are sharing information well, but the information is not very useful when no designated mission exists, Bock said. "The biggest problem I have seen in my experience with both the Customs Service and with DHS was that once you found something, you had difficulty bringing it to people who are interested in making the cases," he said.