Trade based money laundering red flags — what do you actually look for?

par :name Maya Johansson · Lutte contre le blanchiment d'argent (LBA) · Apr 3, 2026 · 2 réponses Répondu

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We process a decent volume of trade finance and our compliance team needs to get better at identifying trade based money laundering red flags. We've read the FATF guidance but it's pretty high-level.

In practice, what specific trade based money laundering red flags do you look for when reviewing letters of credit, trade documents, or open account transactions? And how do you distinguish between genuinely suspicious pricing anomalies and normal market variations?

I feel like we either flag everything or nothing. There's no middle ground.

Maya Johansson

Membre depuis Apr 2026

Réponse acceptée

Trade based money laundering is hard to detect precisely because legitimate trade has so much natural variation. Here are the most actionable red flags from our experience:

Pricing anomalies:

Invoice values significantly above or below market prices for the goods (over/under-invoicing is the classic TBML technique)
Pricing that doesn't change over multiple shipments even when commodity prices fluctuate

Document red flags:

Goods descriptions that are vague or don't match the HS codes
Shipping routes that don't make geographic sense
Documents from different stages of the transaction that contain inconsistencies

Counterparty red flags:

Trading companies with no web presence, no physical office, or recently incorporated
Same goods being shipped back and forth between the same parties (phantom shipments)
Counterparties in jurisdictions with no logical connection to the goods

Volume/pattern flags:

Sudden spike in trade volumes without corresponding business growth
Shipments where the weight/quantity is impossible given the declared vessel or container size

The FATF trade based money laundering red flags report from 2020 is actually pretty good as a comprehensive checklist. The key is turning those red flags into specific rules your team can apply consistently.

For the pricing problem: you need a reference database. Even a basic one tracking commodity prices by category helps your analysts distinguish between over-invoicing and normal market variation.

LexFlag Team

Membre depuis Apr 2026

2 réponses

I'll share a real trade based money laundering example that opened my eyes. We had a customer importing electronics from Southeast Asia. The unit prices on the invoices looked normal — within market range. But when we cross-referenced the declared weight against the number of units, the math didn't work. The shipments were too light for the quantities declared. Turned out the containers were half-empty and the inflated invoices were being used to move money out of the country.

The lesson: look at internal consistency across all the trade documents, not just whether the prices look right. Trade based money laundering schemes often get one variable right but forget about the others.

Tomás Herrera

Apr 6, 2026 at 5:47 AM