Countering Trade-Based Money Laundering
Countering Trade-Based Money Laundering
Trade-Based Money Laundering (TBML) is a widespread money laundering typology. This infographic elaborates on how Regulated Entities can effectively counter TBML by adopting risk-based countermeasures. Let us delve into each of these countermeasures in depth as follows:
Robust AML/CFT Policies and Procedures
Regulated Entities must ensure that they formulate and implement Anti Money Laundering and Counter Financing of Terrorism (AML/CFT) policies and procedures after considering TBML risk specific to the Regulated Entity by having at their core, a risk-based and risk-sensitive approach. A risk-sensitive AML/CFT policy and procedure should be devised after carefully weighing the TBML risk specific to the Regulated Entity.
Regulatory Oversight
Regulated Entities can successfully counter TBML risks by ensuring Compliance with applicable AML Laws and Regulations. The AML/CFT laws applicable to Regulated Entities in UAE are as follows:
- Federal Decree-Law No. (20) of 2018 On Anti-Money Laundering and Combating the Financing of Terrorism and Financing of Illegal Organisations.
- Cabinet Decision No. (10) of 2019 Concerning the Implementing Regulation of Decree Law No. (20) of 2018.
- Cabinet Resolution No. (74) of 2020 Regarding Terrorism Lists Regulation and Implementation of UN Security Council Resolutions on the Suppression and Combating of Terrorism, Terrorist Financing, Countering the Proliferation of Weapons of Mass Destruction and its Financing and Relevant Resolutions.
- The Cabinet Decision No. (109) of 2023 On Regulating the Beneficial Owner Procedures.
Transaction Monitoring
As TBML is a transaction-heavy money laundering technique, it makes rational business sense for Regulated Entities to invest in a Transaction Monitoring tool or software. A transaction monitoring tool helps Regulated Entities to identify suspicious transactions and transaction monitoring related red-flags. Regulated Entities must be mindful of ensuring that they impart adequate and training to staff for using transaction monitoring tools for identifying TBML red flags to make the most of it.
Information Sharing
Regulated Entities must define within their AML/CFT policies and procedures methods for uniform sharing of information across branch offices, holdings, and subsidiaries spread across the globe. Such information sharing protocols must take into consideration, the applicable Data Protection and Data Privacy laws applicable across the globe. This information sharing protocol plays an instrumental role in identifying and mitigating TBML as secure sharing of information is important in identifying common areas posing TBML risks.
International Cooperation
Ensuring Compliance with internationally accepted AML Standards, such as Financial Action Task Force (FATF) Recommendations, interpretation notes, and publications to combat TBML, helps Regulated Entities ensure that they keep pace with internationally accepted standards and norms which facilitates with ease of doing business across the world.
Training and Awareness
Regulated Entities must ensure that they define Role Specific AML Training and Awareness program for their personnel which shall be helpful in combating TBML risks. This training must focus on making the personnel aware of the TBML typologies such as TBML through invoice manipulation and TBML red-flags. Policies must also define the frequency and means of training delivery into the AML Policies and Procedures.
Leveraging Technology
Regulated Entities must delegate manual AML Compliance processes to unified AML software solutions such as follows:
Record-Keeping
Regulated Entities must ensure that they maintain records of their TBML countermeasures to ensure adequate regulatory compliance. Regulated Entities must be careful about duration for which AML records have to be maintained according to Supervisory Body they are governed by.
These tools and software help regulated entities counter TBML risks by saving time and resources consumed by manual AML compliance processes.
Conclusion
Adequate TBML countermeasures, such as risk-based AML policies and procedures and leveraging technology, help Regulated Entities combat TBML risks easily.
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