Towards Policy Effectiveness on Trade Based Money Laundering

Corruption: Global Security Threat

Corruption is the single most important enabling factor at every stage of every criminal supply chain we have studied.

Criminal network leaders themselves ID corruption as critical to business.

Many governments are machines for fleecing their own citizens, investors.

Much analysis from the developed world refers to ‘failing’ or ‘failed’ states. This is misguided. Leaders in such places have no intention of providing the services we think a state should provide, but seek to extract resources.

Insurgencies and violent extremist groups emerge in these places. These states will continue to be a drain on our blood and treasure

until we address and counter this problem.

Focus on Networks not Product

Many governments in the world still have 19th C bureaucracies and legal regimes fighting 21st C adversaries.

The networks don’t get hung up on what they traffic, and neither should we.

Stove-piping investigations by the commodity trafficked not only slows progress, it also causes missed opportunities.

Interchange with groups fighting lesser priority issues like wildlife, human trafficking ought to be embraced as new sources of new data, not new tasks.

Our information from conservation groups and organizations fighting human trafficking has enriched our support to narcotics cases.

Converging the data can lead us to the super-facilitators who facilitate a wide range of illicit activity – Mossack Fonseca is a classic example.

Case Study: Network Structure

There is not complete convergence, 100% of the time.

It varies depending on where the actor sits on the supply chain.

Certain transport coordinators will focus on certain commodities.

Their specialty is often determined by geography and connections – having a “route” or an “in.”

We see the most convergence at the financial level.

Financial targeting holds the promise of impacting the most markets.

Martini Glass Model

“Follow the Value”

In our work in Africa, we assess that the majority of illicit money is flowing through commodity trades.

There are multiple stories of criminal networks literally trading illicit goods of similar value.

Smugglers seem to be hiding inside the food industry, also timber and mining.

When business activity doesn’t add up…

Towards More Effective Policy

Advocacy and education among policy-makers, public and private sector.

Lack of knowledge means inadequate funding and manpower to LE efforts.

Harmonizing data collection and providing wider access to data analysis.

Technology to analyze TBML exists but is not implemented in many places. Admirable efforts by the UNODC and WCO to harmonize efforts in 25 states.

OECD could take the lead by harmonizing data collection among members.

Data sharing: Can we find models from other cases of data sharing, such as the “five eyes” intelligence sharing or FATF regulations on KYC?

Legal regimes: Again FATF provides a good model for standardizing KYC rules and regulations that could be adapted to TBML.

Improve partnership between government – financial industry.

“It’s always seems impossible…

Nelson Mandela

Contact: gretchen@sataoproject.com

until it’s done.”