Trade-Based Money Laundering / TBML

1. Definition #

TBML is the misuse of trade transactions, goods, invoices, shipping routes, prices or documentation to move, disguise or legitimise value.

2. Why It Matters #

Trade can hide value transfer behind apparently commercial documents. Goods, payments and documents may each tell a different story.

3. Common Triggers and Use Context #

• Cross-border trade transaction.
• Goods involve high-risk geographies, sectors or routes.
• Trade documents inconsistent with each other.
• Pricing appears unusual.
• Payment route differs from goods route.
• Intermediaries inserted without commercial purpose.
• Dual-use, restricted, high-value or easily misdescribed goods.
• Counterparty lacks experience in goods traded.

4. Value Trail vs Money Trail #

AML review should not focus only on visible bank payments. A money trail follows funds through accounts and payment rails. A value trail follows how economic value moves, changes form or becomes legitimised through goods, services, assets, invoices, ownership structures, wallets, loans or professional intermediaries.

This matters because some cases are not explained by a payment alone. The reviewer may need to understand:

• what value moved;
• who owned or controlled it;
• what document claims to explain it;
• whether the commercial story is plausible;
• whether goods, services, invoices, assets and payments align;
• whether the value trail creates unresolved risk even when the payment trail looks ordinary.

5. Source Basis #

• SRC-FATF-006: TBML risk indicators.
• SRC-FATF-001: CDD, RBA, record keeping and STR/SAR.
• SRC-FATF-007: PF/TFS evasion risk where goods/end-user are sensitive.

6. Practitioner workflow #

1. Identify buyer, seller, intermediary, shipper, consignee, bank and end user.
2. Identify goods, HS code/description where available, quantity, price and route.
3. Compare contract, invoice, packing list, bill of lading/air waybill and payment documents.
4. Check geographic exposure risk and sanctions/PF exposure.
5. Compare price and quantity to plausible market range where data is available.
6. Assess whether customer has legitimate business capability for the goods.
7. Identify red flags and unresolved inconsistencies.
8. Produce TBML memo.
9. Escalate suspicious or PF/sanctions-sensitive cases to MLRO.

7. Evidence to collect #

• Contract/purchase order.
• Commercial invoice.
• Packing list.
• Bill of lading/air waybill.
• Certificates of origin/quality where relevant.
• Payment instructions and SWIFT/payment data where available.
• Buyer/seller corporate profiles.
• End-user/end-use statement where relevant.
• Public price/commodity references where available.
• Sanctions and geographic exposure risk screening.

8. TBML red flags #

Documentation#

• Vague goods description.
• Invoice does not match shipping documents.
• Multiple invoices for same goods.
• Inconsistent weights, quantities or values.
• Missing end-user information for sensitive goods.

Transaction structure#

• Payment by unrelated third party.
• Payment to unrelated offshore account.
• Goods route and payment route do not align.
• Unusual advance payment or overpayment.
• Back-to-back trades with no value added.

Goods and route#

• Goods are dual-use, high-value, portable or easy to over/under value.
• Route includes unnecessary transshipment.
• Counterparty located in geography unrelated to goods flow.
• Customer has no track record in the traded commodity.

Behaviour#

• Customer resists providing trade documents.
• Customer insists on speed despite missing evidence.
• Customer changes counterparties or route after compliance questions.

9. Decision matrix #

10. Example output #

# TBML Risk Memo

Transaction: [summary]
Goods: [description/HS if known]
Parties: [buyer/seller/intermediaries/end user]
Countries/routes: [summary]
Payment route: [summary]
Document consistency: [assessment]
Price/quantity plausibility: [assessment]
Sanctions/PF exposure: [assessment]
Red flags: [list]
Risk rating: [low/medium/high/critical]
Recommendation: [proceed/request info/EDD/escalate]
Source basis: SRC-FATF-006; SRC-FATF-001; SRC-FATF-007

Corruption proceeds and asset-recovery context#

TBML reviews may intersect with corruption proceeds, nominee entities, hidden control and later asset tracing. In those cases:

• SRC-STAR-NOMINEES-001 supports review of nominee arrangements and control opacity;
• SRC-STAR-ASSET-001 supports the asset-tracing and recovery lifecycle;
• SRC-UNODC-UNCAC-AR-001 provides the UNCAC asset-recovery framework.

These sources do not create standalone TBML indicators. They support the wider analysis when trade structures appear connected to corruption proceeds, concealed ownership or recoverable assets.