EXPECT LAUNDRYMEN TO USE CHANGED CONDITIONS AT PANAMA CANAL AND SUEZ CANAL TO SHIELD TRADE-BASED MONEY LAUNDERING OPERATIONS

Shipping backed up at the Panama Canal

Money launderers who employ trade-based money laundering (TBML) techniques to cover international movement and cleaning of the proceeds of crime are astute observers of current events. They keep their eyes peeled for any departure in normal conditions in international trade that they can use to shield and further protect their illicit operations. Such details, which are often missed to even trained compliance officers charged with detecting and ferreting out TBML, can serve to provide cover due to changes in conditions, which can mean that traditional indicia of trade-based money laundering are neither applicable nor helpful.

This perfect storm of conditions is supplied by two unforseeable events: the drought in the Panama Canal restricting the number of eastbound merchant vessel traffic from Asia & Oceania transiting that shortcut to the Atlantic coast of North America and Latin America, and the Houthi attacks on vessels from Asia using the Suez Canal as a faster route to Europe and the United States. These two situations have forced shippers to (1) resort to an overland route across Panama, employing local rail assets, and a long voyage around the Cape of Good Hope.

Delivery times and costs of shipment are going to be completely changed by these events, scrambling normal computations, adding additional payments, none of which have been anticipated, nor have the length of time which will be necessary to adapt to these routes and methods, and when they will no longer be necessary to reduce risk and transit time. Will the US & UK attacks yesterday and in the future sufficiently reduce attacks on vessels in the Red Sea so as to resume Suez Canal transit safely? When will changed environmental conditions in Panama allowa return to increased capacity in the Panama Canal? We cannot say, and therein lies the laundrymans' opportunity.

Money launderers thrive during periods of chaos and uncertainty, because normal indicators of money laundering, in this case TBML, cannot be relied upon to catch dirty money hiding within payments for international trade transactions. Costs and other factors involving delivery will be changing, and reliance upon normal figures will be impossible, at least in the short run. This represents a golden opportunity for the laundryman to exploit the uncertainty. Never underestimate his ability to adapt his operation in response to unanticipated events; it is his flexibility that allows him to defeat compliance officers tasked with catching him; they must also be constant observers of anything which might give him an advantage.