Aligning Statutory Object Clauses with Commercial Invoice Descriptions
Aligning statutory corporate objects with invoice billing catalog items prevents customs seizures, input tax credit disallowance, and banking wire freezes.
Trade Based Money Laundering
Meaning
The practice of disguising the proceeds of crime or moving value through the use of trade transactions to avoid detection. Unlike traditional banking fraud, trade based money laundering relies on the manipulation of invoices, quantities or the quality of goods. It is one of the most difficult forms of financial crime to detect.
Invoice Manipulation
Criminals may over invoice a shipment to move money out of a country. By using trade based money laundering, the party pays more than the goods are worth and the difference is kept in a foreign account. Under invoicing works the same way to hide profits from tax authorities.
Ghost Shipping
Sometimes no goods are shipped at all despite a full set of documents being presented to the bank. In this version of trade based money laundering, the entire transaction is a fiction designed to justify a large wire transfer. Customs data often reveals the fraud when it does not match the bank records.
Compliance Barrier
Banks use sophisticated software to compare invoice prices against global market averages. Detecting trade based money laundering requires a deep understanding of commodity prices and shipping routes. This scrutiny adds time to the approval of letters of credit but is necessary to protect the financial system.