Trade Based Financial Crime Volume One: Beyond "Trade Based Money Laundering" (The Vortex Centrum Financial Crime Risk and Compliance Library)

Financial Crime and commercial activity are intertwined. While there is a simplistic view that the financial sector and law enforcement should concentrate on money laundering in trade, that is far, far from the reality: to consider the financial crime risk and compliance aspects. It is absolutely essential to go beyond "trade based money laundering" or its acronym "TBML". The starting point in any assessment of risk in commercial activity is not to understand the criminal abuses, but to understand the commercial activity. In this way, the abnormal is more likely to stand out. That's what Trade Based Financial Crime, in three volumes, does Building on the commercial activity, the opportunities for abuse can be seen and, because of that, financial crime risk and compliance officers are shown avenues for their Know Your Customer and Customer Due Diligence processes both at the time of customer acquisition and during the business relationship. ----------------- Nigel Morris-Cotterill has been a financial crime risk and compliance strategist since 1994 and before that was a solicitor in private practice in London. ----------------------------------- Why this book is needed, and why it is needed now. The history of crime is pretty much the history of trade. And so the possession, custody or control of the funds generated from those crimes is – and here the term is correct – money laundering. But money laundering is an offence that is derived from criminal conduct. Yes, it is a crime in its own right but it exists only because other, predicate, crime has been successful. So, while the world concentrates on money laundering, it has for many years lost sight of the crime that underpins it. It is ironic that when counter-money laundering laws based on suspicious activity were first introduced one of the main objectives that regulated businesses were supposed to do was to conduct "training and awareness" schemes for the people in the business. It is material that these two things were separated. Today, there is a vast amount of training but there is remarkably little attention paid to awareness. Today, there is great attention paid to financial transactions but very little to "know your customer" beyond fairly rudimentary identification. We lost the connection to KYC when it was rebranded "customer due diligence" although recently there has been a fightback in some businesses. But not in banks that close branches, centralise certain types of accounts, have only online or telephone banking – and, of course, fintechs that only do that. KYC is outside the scope of this book. It's about predicate crime – identifying criminal conduct in trade, describing the opportunities to commit crime i.e. to generate the benefits, be they money, assets or any other thing, corporeal or incorporeal, that arise. To concentrate on money laundering is to look at the issues ex post facto. That is why we are seeing efforts, albeit ham-fisted, in most cases, to create regimes to prevent fraud, bribery and other financial crimes. It's taken a while but the pendulum has begun to swing back and attention is now being paid to the underlying criminal conduct.