Anti Money Laundering (AML) in India - Trade Based Money Laundering

So, we all know what AML is how Banks can prevent Money Laundering. But very few of us know about Trade Based Money Laundering (TBML). Infact, for India, this is one of the most significant ways of money laundering because it is so difficult to detect the laundering process.

Imagine an India based company invoicing an overseas customer for Rs 10 crores for a shipment that infact is truly worth Rs 5 crore only. By over invoicing, value of Rs 5 crores (the difference) has moved from India to overseas. In return legitimate, integrated money of Rs 5 crore has moved form overseas location to India. (the laundered money in disguise).This money is then used by the India based company to pay off the excess receipts as per the instructions of the importer.

A simple trade finance transaction solves the problem of hiring cash couriers, asking them to smuggle money into India or using Hawala system and moving money from overseas to Indian location. A perfect and seemingly legitimate transaction takes care of money laundering like never before. It's almost like laundering the money using the best bleach possible.

Trade Finance in itself is a complex beast. And Money laundering rides on this very nicely.

To learn more about Trade Based Money Laundering, do contact Manoj Jain at manoj.jain@riskpro.in

Riskpro has also launched AML E Learning program. For details, visit following link
http://www.riskpro.in/risk-management-e-learning-programs-online-trainin...

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