The eye popping enormity of global money laundering

TBML, IT’S A FOUR-LETTER WORD

Trade-based Money Laundering is a dull name for an alarming concept. In short, it’s the practice of moving illicit wealth around the world in the form of stuff, rather than in the form of money. If you want to move wealth out of a country, you over-pay for imports, or under-bill for exports; if you want to move wealth into a country, you do the opposite. Failing that, you can just settle accounts within two different countries, and balance up by moving goods between them. All these techniques avoid the Financial Intelligence Units that are central to standard anti-money laundering methods.

Expert analysis suggests perhaps four-fifths of all money laundering happens in this way, rather than through financial institutions, but it’s laborious work to spot it so – rather in the manner of the drunk man looking for his keys under the lamp post – we tend to focus on money flows, which can be more easily be analyzed.

According to the analysts at Global Financial Integrity in Washington DC, there was a hole worth $1.6 trillion (that is enough wealth to buy you Google, with enough cash left over to make you one of the richest people on earth) in trade statistics between countries in 2018, which is the most up-to-date year for which figures are available. If even half of that was money laundering, rather than just data entry errors, we are talking about a super-colossal amount of wealth moving around the world undetected.

• “It is the largest money laundering methodology in the world, and it's the one that is least recognized and enforced. And it breaks my heart. I just think the overall magnitude of the problem is enormous,” the money laundering expert and US enforcement veteran John Cassara told British Columbia’s Cullen Commission in December 2020.

So, huge props to Transparency International’s Russia chapter, for producing this report on how overpaying for injection molding machines and other imports allowed persons unknown in Russia to export $820 million. That is huge – almost four times more money than was stolen by the corrupt officials exposed by Sergei Magnitsky.