Detecting trade based money laundering

As of September 2026: The Trade Transparency Unit figures (17 partner countries, first unit with Colombia in 2005, most recent with New Zealand in 2019) come from GAO's April 2020 report; GAO found the program had lapses in information sharing and no strategy or performance framework, and this page has not verified later changes. The Operation Fortune Runner charges announced in June 2024 are allegations in an indictment; outcomes for individual defendants are not tracked here. Lebanese Canadian Bank was described by the DEA in 2013 as defunct.

What does detection of trade based money laundering look for?

Trade based money laundering hides value inside real or fake commerce. The invoice, the shipment, and the payment can each look ordinary alone. So detection is mostly about comparison: does the price match the market, does the export record match the import record, does the payer match the buyer, and does the trade make sense for the business?

No single agency holds all of those pieces. Customs sees goods, banks see payments, and tax authorities see returns. FATF and the Egmont Group’s December 2020 report says a lack of cooperation between such authorities remains one of the largest concerns in stopping TBML, and that agencies sometimes treat a discrepancy as plain customs fraud or smuggling without asking whether it is laundering.

How do customs and trade data expose it?

Customs data is the only source that records what was declared about the goods themselves. Analysts use it in two main ways.

Unit price analysis compares the price per unit on a declaration with a benchmark for that commodity. In one study GAO describes, prices outside the upper or lower quartile for a product were treated as suspicious. Prices far above or below the norm can mean over- or under-invoicing.

Mirror analysis compares what one country says it exported with what its partner says it imported. In a case FATF and Egmont describe, Australian Border Force used automated and manual checks of this kind on undervalued electronics exports and used the mismatch as a lead to link a criminal group to the transactions.

Both methods produce leads, not proof. GAO notes that unit price analysis depends on having a benchmark, and that the US Census Bureau edits roughly 18 to 22 percent of monthly trade records, which can smooth away the extreme prices analysts are looking for. Mirror gaps can also come from price swings, transit trade, and bonded warehouses. Both methods also miss schemes that do not misstate price, such as those in the Black Market Peso Exchange pattern.

How do Trade Transparency Units work?

A Trade Transparency Unit (TTU) is an agency that swaps trade records with a partner country so both sides can be compared. US Homeland Security Investigations runs the US program. GAO reported in April 2020 that HSI had set up TTUs in 17 partner countries, the first with Colombia in 2005. A country needs a customs mutual assistance agreement with the United States first, then a memorandum of understanding. HSI gives the partner access to its Data Analysis and Research for Trade Transparency System and trains its staff.

The same report shows the limits. GAO found lapses in information sharing, differing priorities between HSI and partner units, limits in the data system, and no US funding directly to partner units in recent years. It recommended a strategy and a performance framework; DHS agreed with the first and not the second. TTUs are a useful comparison engine, not a complete answer.

What do banks check in trade finance?

Banks see trade through the payment method. FATF and Egmont rank them by risk to each side, and the useful point is how much a bank can see under each.

Letters of credit put the bank in the middle: it examines the documents, so it can notice things like an amended credit with no commercial reason, or descriptions that differ between the bill of lading and the invoice.

Documentary collections give the bank a smaller role. FATF and Egmont say banks do not necessarily verify the documents, and paperwork is often not standardized. Where documents can be checked, they list signals such as a personal email address in place of a business one, recycled documents with almost no edits, or an exporter with no trading presence.

Open account trade means goods ship first and payment follows in 30 to 90 days. The bank just processes the payment. Both the FATF and Egmont report and GAO cite the Wolfsberg Group estimate that about 80 percent of trade is open account. Banks then rely on transaction monitoring and customer due diligence instead of document review, which gives far less cover.

What do FinCEN and FATF tell institutions to watch for?

FinCEN’s February 2010 advisory gave US institutions trade red flags drawn from suspicious activity reports. They include payments by a third party unrelated to the buyer or seller, letters of credit amended without justification, a customer who cannot produce invoices, and large mismatches between the goods on the bill of lading, invoice, and packing list. It asked filers to write “TBML” or “BMPE” in the SAR narrative so the FIU can find these reports later. See how filing works on the reporting page.

FinCEN’s May 2014 advisory added the funnel account pattern: an account in one place gets small cash deposits in distant states, and the money is then used to pay for goods that ship abroad. FATF and Egmont published a separate set of risk indicators in March 2021, grouped into structural, trade activity, trade document and commodity, and account and transaction categories. The 2020 report adds business indicators, such as a new company growing fast in an established market or an established firm that suddenly moves into an unrelated sector. Its own warning applies to all lists: matching an indicator is a reason to look closer, not proof, especially at general trading companies.

Where does detection fall short?

Five gaps recur across the sources.

• Banks see paper, not goods. FinCEN says documents may be created by the launderers, with no neutral party to verify them.
• Most trade skips the bank’s document review. Open account dominates.
• Fair prices are hard to set. FATF and Egmont say some goods have no public benchmark, and paperwork arrives in different formats and languages, so checks are often manual.
• Customs cannot check everything. In fiscal year 2019 almost 79,000 containers a day entered the United States. FATF and Egmont say customs authorities struggle to check more than a fraction of shipments.
• Both sides are often complicit. When the buyer and seller are controlled by the same group, the counterparty’s beneficial owner may not be visible to the paying bank. See why the wider system leaks on the why detection fails page.

What do real cases show?

Lebanese Canadian Bank. On February 10, 2011, FinCEN found the bank to be of primary money laundering concern under Section 311. In the DEA’s account of the later civil case, at least US$329 million was wired from January 2007 to early 2011 from the bank and two Lebanese exchange houses to the United States to buy used cars shipped to West Africa. Car-sale cash and drug proceeds were then sent to Lebanon through channels the government said Hizballah controlled. A June 2013 settlement required US$102 million to be forfeited from seized funds.

Los Angeles Fashion District, 2014. About 1,000 officers executed warrants against businesses suspected of Black Market Peso Exchange schemes and seized at least US$65 million in cash and bank deposits. One HSI case, called Operation Fashion Police, began with an undercover agent posing as a money courier who delivered about US$370,000 in bulk cash on four occasions to a garment wholesaler. In this case investigators worked from bulk cash and undercover deliveries, not from garment prices.

Wachovia and the casas de cambio. Prosecutors said Wachovia failed to effectively monitor more than US$420 billion in transactions with Mexican casas de cambio and paid US$160 million in 2010. It is a case of a bank missing a corridor risk, not of a specific mispriced invoice. More cases are on the cases hub.

Operation Fortune Runner. In June 2024 the Justice Department unsealed an indictment of 24 defendants, alleging Sinaloa Cartel associates worked with a money transmitting group linked to Chinese underground banking, moving more than US$50 million. Trade based laundering was one of several alleged methods, alongside structuring and cryptocurrency. These are allegations, not findings.

In several of these cases the leads came from cash, informants, or undercover work, with trade and bank records used to trace the rest.

First published September 21, 2026 · Last updated September 21, 2026 · Legal statuses current as of September 2026