Is tackling Trade Based Money
Laundering (TBML) through
stricter reporting regulation the
most eﬀective response?
Mohammed Ahmad Naheem
Mayfair Compliance, Frankfurt, Germany
Purpose –This paper (written in August 2015) aims to discuss the regulatory approach to detecting and
preventing trade-based money laundering (TBML) by using the example of Financial Crimes Enforcement
Network (FinCEN)and its use of geographic targeting orders.
Design/methodology/approach –The paper uses both theoreticaland empirical reports on TBML to
explorewhether increased regulation will ultimately achievethe ends it claims to offer.
Findings –The main ﬁndings from the analysis are that increased regulation has been found to have a
negative impact on improving TBML detection. There is evidence that it causes an over-defensiveresponse
from banksthat leads to a decrease in useful information to ﬁnancialintelligence units.
Research limitations/implications –The research topic is very new and an emerging topic; therefore,
analysis papers and other academic writing on this topic are limited.
Practical implications –This paper has implications for both the regulatoryand the banking/ﬁnancial
Originality/value –The originality of this paper is thedeeper analysis of a speciﬁc TBML case, and the
focus is on both the theoreticaland empirical implications of the approach being used.
Keywords Beneﬁcial ownership, Customer due diligence, Trade-based money laundering,
Banking and ﬁnancial services, Geographic targeting order, Money laundering regulation
Paper type Research paper
The recent media coverage of a geographic targeting order (GTO) (Cummings, 2015) being
used by Financial Crimes EnforcementNetwork (FinCEN), for Miami-based businesses, acts
as a reminder that the use of money laundering by drug cartels is still a live issue. The
introduction of the order reﬂects the change from the traditional methods of bulk cash
Please note that this paper was composed and submitted for review to this journal in August 2015 –a
time at which the author was working on his second doctorate level research project titled. “Trade
based money laundering: exploring the implications for international banks”. All the content within
this paper was current at the time of submission (August 2015). The banking and regulation
industries have evolved since then, with new material from academic research also emerging. These
points need to be taken into consideration when reading this paper. The author acknowledges being
the recipient of a research grant awarded by Princess Ālae as part of Seven Foundation’s“2020
Banking Vision –building banks of the future”and he thanks her for the continued support and
motivation both to himself and other students who beneﬁt through her generosity (www.
sevenfoundation.ch). The author also thanks Professor Muhammad Jumáh (a leading economist of
this era based in Damascus) who has continued to provide valuable input both through his teaching
of the science of economics and for his continued guidance.
Journalof Money Laundering
Vol.21 No. 3, 2018
© Emerald Publishing Limited
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