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Cmte Financial Services (R)
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Terror Financing Task Force Examines Trading with the Enemy

Washington, Feb 3 -

WASHINGTON – Terrorist groups and criminal organizations can exploit the international trade system to fund their activities with relatively low risk of detection, members of the Financial Services Task Force to Investigate Terror Financing said today during a hearing.

Trade-based money laundering (TBML) is widely recognized as one of the most common manifestations of international money laundering.  It allows illegal organizations the opportunity to earn, move and store proceeds disguised as legitimate trade. The Department of Homeland Security established the first Trade Transparency Unit (TTU) in 2004 to examine anomalies and financial irregularities in trade data to identify instances of TBML and customs fraud.

Today’s hearing, “Trading with the Enemy: Trade-Based Money Laundering is the Growth Industry in Terror Finance,” was the Task Force’s sixth hearing since it was established by the House Financial Services Committee last year.

Rep. Michael Fitzpatrick (R-PA), the Chairman of the Task Force, said, “It is my hope that, with the help of our expert witnesses, this body will walk away with a better understanding of the problem as well as an effective measure to curb and combat this practice.”

Key Takeaways from the Hearing:

The Department of the Treasury, citing Immigration and Customs Enforcement information, has described trade-based money laundering as capable of laundering billions of dollars annually.

Key characteristics of the international trade system make it both attractive and vulnerable to illicit exploitation, including the enormous volume of trade, the complexity of foreign exchange transactions, and the limited ability to exchange customs data between countries.
Although trade-based money laundering is widely recognized as one of the most common manifestations of international money laundering, it appears to be less understood among policymakers than traditional forms of money laundering.
Topline Quotes from Witnesses:

The Department of Homeland Security “has neither the customs nor financial expertise to make the TTU initiative a success. The loser here is our ability to tackle trade-based money laundering and tax revenue loss on a grand scale along with a missed opportunity to target funding flowing to terrorist targets such as ISIS which, of necessity, do participate in global trade.” - Louis Bock, former Senior Special Agent, U.S. Customs and Border Protection

“We have plenty of laws, rules, and regulations on the books that enable law enforcement to combat financial crimes including TBML. In my opinion, what we need is awareness, consensus to make this a priority, and an emphasis on enforcement.” - John Cassara, former U.S. Intelligence Officer and Treasury Special Agent

“[T]here are many stakeholders in this fight, from law enforcement and regulators to the transportation industry and the financial sector. Each of them holds some unique data, but nobody has the whole picture, and nobody is making full use of the range of data available to them in the public domain. - Farley Mesko, Co-Founder and Chief Executive Officer, Sayari Analytics.

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