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Trade-based money laundering (TBML) involves manipulating trade transactions to move illicit funds rather than goods. One common technique is over-invoicing, where an exporter intentionally inflates the invoice value of goods. In this scenario, an England-based exporter would over-invoice a shipment to Cyprus. By doing so, the exporter creates a surplus amount that can be transferred back to the terrorist organization in England, effectively disguising the movement of illicit funds12.

Public-private partnerships (PPPs) are highlighted by FATF, the EU, and CAMS 6th Edition as a key method for improving the fight against financial crime. The main benefit is the sharing of intelligence and typologies between banks, law enforcement, and regulators, enabling more effective detection and prevention of illicit activity.

“PPPs facilitate the exchange of actionable intelligence between public and private sectors, resulting in better detection, investigation, and prevention of financial crime.”

(CAMS 6th Edition, Public-Private Partnerships in AML/CTF)

Incorrect Options:

B: PPPs are not primarily designed to automate information sharing or reduce costs.

C: SARs must always be filed with the FIU; PPPs do not change this.

D: PPPs do not guarantee real-time intelligence, which remains a challenge.

Money laundering has a significant negative impact on the financial sector by undermining the integrity of financial markets. It distorts asset and commodity prices and leads to the misallocation of resources, which can dampen economic growth. The process also erodes public trust in the financial system and can deter foreign investment.

 According to the BSA/AML Manual1, one purpose of filing SARs is to identify violations or potential violations of law to the appropriate law enforcement authorities for criminal investigation. Therefore, when an institution receives a document request from law enforcement with regard to an STR that the institution has filed, it should cooperate and provide the documents that were previously collected to support the STR. This will help the law enforcement agency to conduct its investigation and follow up on the suspicious activity reported by the institution. The institution should also maintain the confidentiality of the STR and the document request, and avoid tipping off the customer or any other person involved in the suspicious activity.

BSA/AML Manual1

Answers to Frequently Asked Questions Regarding Suspicious Activity Reporting and Other Anti-Money Laundering Considerations2

Suspicious Transaction Report STR3