EXPECT INCREASED PHANTOM TBML TRANSACTIONS IN 2024, MORE SHELL COMPANIES, DUE TO ISSUES AT MAJOR INTERNATIONAL SHIPPING CHOKE POINTS

While we have been explaining to compliance officers how laundrymen involved in Trade-Based Money Laundering (TBML) operations have been taking full advantage of the chaotic situation at the drought-plagued Panama Canal, the fear of attack enroute to the Suez and leaving the Ukraine, perhaps we should now focus on what indicia compliance officers might find as a result, to better equip them to identify TBML in 2024.

Given the massive trade disruption, which has complicated the tasks of frontline compliance officers who are assigned to TBML identification and interdiction,and their inability to apply legacy guidelines in search for financial crime, laundrymen are most certainly using far more phantom transactions than in the past. The reason is that transport disruptions have made their analysis duties more difficult, and time-consuming to complete, due to the new unknowns. Thus, they are definitely not getting to examine the number of transactions they had previously been able to accomplish.

If more payment transactions are overlooked, simply due to the limitations of time, then so-called phantom transactions, where there is no shipment to back up a payment, have a greater chance of success, and are therefore increased. Laundrymen apply their own brand of risk-based procedures.

Additionally, the ability to invent totally bogus shell, shelf and front companies, which are ostensibly on the fringe of the international transportation industry, such as insurance, reinsurance, container leasing, spot space on vessels, and other businesses that serve the shipping world, will increase, simply because such support companies are typically neglected by compliance, and even more so now with the increased demands on time of compliance officers. Expect that they will choose deceptively similar corporate names, names of defunct companies in those trades, and even names that suggest they are owned by large multinationals. Laundrymen are always devious in that manner, and you should expect no less in 2024.

Compliance should heed this specific guidance, as it comes from my decade in a dark and unforgiving "profession," where one's resourcefulness often breeds success, and where a lack of imagination, and a routine manner of conducting AML compliance, results in failure.