Sanctions Evasion Reference

Trade-based money laundering

Moving value by misrepresenting the price, quantity or quality of goods in international trade, so that the transfer appears as ordinary commerce.

also known as

TBML

reviewed

2026-08-20

FATF defines it as the process of disguising the proceeds of crime and moving value through trade transactions in an attempt to legitimise their illicit origin. The same mechanics move value in defiance of a restriction rather than to clean it, which is why the typology literature is directly applicable to sanctions work.

The 2020 FATF and Egmont Group study found that trade-based techniques are frequently combined with corporate concealment and with informal value transfer, rather than used alone, and that detection almost always depends on reconciling documents held by different parties.

Where this term is used

  • How are gold and commodities used to settle sanctioned trade? — Settling cross-border obligations by moving physical gold or fungible commodities instead of currency, so that value transfers without any payment entering the banking system.
  • What is hawala and how does informal value transfer work? — Settling obligations between brokers in different countries by netting them against each other, so a customer's payment reaches a recipient abroad without any funds crossing a border.
  • What is a phantom shipment? — A phantom shipment is a trade transaction that is documented, financed and paid in full when no goods, or far fewer goods, were ever shipped. The payment is the entire purpose.
  • What is trade misinvoicing? — Trade misinvoicing is misstating the price, quantity or description of goods on trade documents, so that value moves across a border in a direction and an amount the paperwork does not admit.

Related terms

  • Trade misinvoicing — Deliberately misstating the price, quantity or description of goods on trade documents so that the value recorded differs from the value actually exchanged.
  • Over-invoicing — Stating a price above the true value of goods on an invoice, so that the importer transfers more value to the exporter than the trade justifies.
  • Phantom shipment — A trade transaction documented and paid for in full where no goods, or substantially fewer goods, were ever shipped.
  • Hawala — A value transfer arrangement in which brokers in different countries pay out to each other's customers and settle the resulting obligations between themselves later.

Sources

  1. Trade-Based Money Laundering: Trends and Developments. Financial Action Task Force and Egmont Group, 2020.
  2. Trade-Based Money Laundering: Risk Indicators. Financial Action Task Force and Egmont Group, 2021.

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