November 28, 2022


What GAO Discovered

Commerce-based cash laundering (TBML) is among the main mechanisms legal organizations and others use to launder illicit proceeds, and the essential methods contain the mis-invoicing of products and companies, equivalent to via over- and under-invoicing. The Financial institution Secrecy Act requires, amongst different issues, monetary establishments to report suspicious monetary transactions to the Division of the Treasury. However for many commerce transactions, monetary establishments lack visibility into the kinds of documentation that might enable them to establish suspicious exercise. Additionally, many trade-related paperwork, equivalent to buy orders, invoices, and customs paperwork, are susceptible to fraudulent manipulation. Felony organizations exploit these vulnerabilities for different trade-related monetary crimes, equivalent to customs fraud, trafficking in counterfeit items, and sanctions evasion.

The Division of Homeland Safety (particularly, U.S. Immigration and Customs Enforcement’s Homeland Safety Investigations) established the Commerce Transparency Unit (TTU) to fight TBML via the evaluation of monetary and commerce information, together with import and export information exchanged with companion international locations. The TTU makes use of the Information Evaluation and Analysis for Commerce Transparency System (DARTTS) to investigate commerce and monetary information to establish suspicious transactions which will warrant investigation for cash laundering or different crimes. TTU officers informed GAO that they conduct most of their evaluation in response to particular requests from brokers within the subject to assist ongoing investigations.

TBML schemes typically contain many kinds of illicit exercise—such because the commerce of counterfeit items and sanctions evasion—that reduce throughout a number of companies’ roles and obligations. Nonetheless, present federal collaborative efforts to fight TBML don’t embrace some key companies concerned in overseeing commerce, and data on suspicious monetary and commerce exercise is siloed amongst totally different companies. For instance:

  • Treasury’s nationwide technique for combating cash laundering doesn’t incorporate the views and views of a number of companies positioned to establish illicit commerce, in addition to private-sector entities, equivalent to freight forwarders. There isn’t a formal collaboration mechanism centered on combating TBML, equivalent to a working group or job power, amongst federal companies with anti-money laundering and commerce enforcement obligations. Such a mechanism may facilitate the sharing of data and information on trade-facilitated monetary crimes between federal companies and with private-sector entities.
  • Based on company officers conversant in DARTTS, information from this technique usually are not proactively analyzed to, amongst different issues, establish rising traits or patterns of illicit exercise. Additional, the information and evaluation usually are not shared with different related companies concerned in combating illicit finance and commerce that would doubtlessly establish suspicious exercise. TTU officers informed GAO that the TTU’s data-sharing agreements with companion international locations restrict its capability to share DARTTS information, however the TTU may take steps to discover methods to include interagency information sharing into these agreements. With entry to related information, U.S. companies might be able to higher establish rising dangers and traits associated to TBML and different illicit commerce schemes.

Why GAO Did This Examine

Felony organizations and different malign actors exploit vulnerabilities within the U.S. monetary and commerce programs to obscure the supply and vacation spot of ill-gotten proceeds and additional their illicit exercise. TBML is among the most difficult types of cash laundering to analyze due to the complexities of commerce transactions and the massive quantity of worldwide commerce. U.S. companies report there was a rise in TBML exercise, partially as a result of criminals are utilizing extra subtle schemes to keep away from detection.

GAO was requested to supply data on U.S. efforts to fight TBML. This report examines, amongst different issues, (1) vulnerabilities within the U.S. monetary and commerce programs which might be exploited to facilitate TBML, (2) the information U.S. companies use to detect and fight TBML, and (3) the extent to which U.S. companies collaborate to share data to fight TBML. GAO reviewed U.S. company studies, information, and different documentation. GAO additionally interviewed U.S. company officers and representatives of private-sector entities, together with from the monetary, commerce, and know-how sectors.



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