There exist certain features in trade finance transactions
which may provide a warning sign that a problem should be noticed or dealt
with. The following list is not exhaustive and each bank should ensure it
has its own comprehensive list and guidelines.
- Absence of a transport document and/or
pre-accepted discrepancies and/or unauthorised alterations are made to
- Inconsistency with customer strategy and/or
unnecessarily complex structure and/or non-standard clauses.
- Excessive client pressure and/or avoidance
to provide clarity.
- Description of goods not matching, and/or
military or dual-use goods.
- Inconsistent shipment locations
/Quantity of goods exceeds known capacity of containers.
- Changes of address.
- Future dated bills of lading.
- Unusually favourable payment terms.
Trade products in general
- Use of a trade finance product to add
legitimacy to transactions between countries where such an instrument would not
normally be in common usage or where it is inconsistent with a company's usual
- Letters of credit that are frequently
amended and/or extended without reasonable justification.
- Frequent changes within a letter of credit
to the address of the beneficiary or location of payment.
- Significant discrepancies between the goods
description and the actual goods shipped.
- Obvious inconsistencies between the market
value of a commodity and the amount actually invoiced.
- Size of the consignment not in line with a client's
previous trading activity.
- Type of commodity is inconsistent with a
client's normal business.
- The transaction reveals links between
traders at both ends of the supply chain.
- Misrepresentation of the quality and/or type
- Over-valuation of the goods.
- The commodity is transhipped through one or
more jurisdictions for no apparent economic reason.
- Unusual shipping routes or transhipment
Adapted from Asia/Pacific Group Report on Trade Based Money Laundering
A more detailed analysis of financial crime, together with
specific examples, can be found within the Financial Crime module at www.tradefinance.training