The Customs and Excise Division of the Treasury has today published a new Public Notice (Notice 1000 MAN) which is concerned with the use of real or bogus trade as cover for the movement or laundering of illicit funds, from a variety of frauds, generally referred to as trade-based money laundering.
In recent months a number of bodies have highlighted the growing and continued risk from trade-based criminal activity. For example, studies by the Financial Action Task Force have concluded that trade-based money laundering represents an important channel of criminal activity, which is likely to become attractive to criminals as other means of money laundering become less attractive due to tighter controls and the exchange of information in regulated sectors. Similarly, in 2015, Europol, the European police agency, reported the belief that trade-based money laundering had significantly developed and increased, and in the United States, PriceWaterhouseCoopers published a white paper in January 2015 which reported that it presented serious and costly risks associated with a growing number of fraudulent transactions.
The Treasury is issuing Notice 1000 MAN in order to –
- help raise awareness of the risks; and
- highlight the fact that it is not only banks and other regulated financial institutions that are at risk of being used in money laundering.
In fact, anyone involved in trade, particularly cross-border trade, or setting up or administering trading companies, importers, exporters, freight forwarders and carriers can be at risk of being used in trade-based money laundering.
The single most important message would appear to be that all the businesses involved in a supply chain should exercise sensible due diligence, and to be alert to anomalies and incongruities that might indicate that something is not quite right. In addition, it is clear that it is not only banks and other regulated businesses that should have and use “know your customer” (KYC) and customer due diligence (CDD) processes and procedures.
Notice 1000 MAN contains a number of case studies and indicators (or “red flags”), which demonstrate that trade-based money laundering and other trade-based financial crime goes beyond the obvious under- or over-pricing of consignments, misdescription of goods, or using paperwork for fictitious shipments.
The Isle of Man being an important international finance centre, with a considerable involvement in international trade, it is essential that business, service providers, regulators and law enforcement are alert to the risks that trade-based crime represents. If criminals were seen to be able to take advantage of the expertise and good standing of the Island to further their illicit activities then this would tarnish the reputation of the Island and ultimately damages its businesses.
Notice 1000 MAN is a “must read” for all of the Island’s businesses and service providers.
The new Notice is available on the web pages of the Customs and Excise Division.
For more information contact Customs and Excise.
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