Trade-Based Money Laundering (TBML): a stealthy scheme that often goes unnoticed

When it comes to money laundering, most companies think of cash in suitcases or suspicious bank transfers. However, one of the most common — and at the same time, one of the hardest to detect —methods is hidden where you least expect it: in ordinary invoices, supply contracts, and customs documents. This is known as trade-based money laundering (TBML).

The FATF and European supervisory authorities describe trade-based money laundering as one of the largest and most underestimated channels of financial crime. The reason is simple: international trade is massive, the flow of documents is constant, and criminal funds disappear into it as imperceptibly as a drop in the ocean.

How TBML Works

The essence of TBML is the manipulation of the actual value of goods or services in order to transfer value across national borders and give illicit funds the appearance of legitimacy. The most common methods include:

• Inflating or deflating invoice values —  goods are listed as more expensive or cheaper than they actually are to shift value across borders.
• Multiple invoicing — multiple invoices are issued for the same shipment, thereby “justifying” multiple payments.
• Phantom shipments — payment is made for goods that are never shipped or do not even exist.
• Falsification of the quantity or description of goods – the documents indicate more, fewer, or different types of goods than were actually delivered.

The result is always the same: the cash flow appears to be commercially justified, even though it actually serves to transfer value and conceal its origin.

Why This Affects Your Business, Too

TBML is not just a problem for banks. Everyone involved in the movement of goods or their financing is at risk – international trade companies, logistics and transportation service providers, as well as accountants, lawyers, and consultants who serve such clients. If your client is involved in fraudulent transactions, you may unwittingly become a link in the money-laundering chain – with all the legal, financial, and reputational consequences that entails.

Warning Signs (Red Flags)

In practice, TBML often reveals minor discrepancies. Pay attention if:

• the invoice amount differs significantly from the market value of the goods;
• a third party unrelated to the transaction makes or receives the payment;
• the route of the goods is illogical or involves high-risk jurisdictions without economic justification;
• the description of the goods is vague, general, or inconsistent with the company’s usual business activities;
• the transaction volume does not correspond to the customer’s profile and declared business activities;
• there are discrepancies in the documentation between the invoice, contract, and shipping documents.

No single indicator is conclusive on its own – but several together are a clear signal for further investigation.

What to Do

Effective protection against TBML is based on three pillars: understanding your customer and their business (KYC and risk assessment), verifying the economic rationale of the transaction, and systematically screening sanctions lists and transaction partners. It’s important not only to formally collect documents but also to ask the key question: Does this transaction have a logical commercial rationale? This is precisely where a structured approach and the right tools save time and protect against costly mistakes.

How aml.plus Can Help

aml.plus helps companies put these principles into daily practice: conduct customer risk assessments, screen transaction partners and sanctions lists, monitor reputation and adverse media risks, and receive support from professional AML specialists – including through outsourcing. Instead of letting TBML remain a “hidden scheme,” you gain clear visibility and confidence in your transactions.

Want to ensure that your internal control system also detects hidden risks in trading? Contact the aml.plus team – and turn compliance into a competitive advantage.

aml.plus team

[email protected]