23rd Parliamentary Intelligence-Security Forum – Trade-Based Money Laundering

Mr. John Cassara commenced his address by expressing gratitude to Congressman Pittinger, the organizers of the forum, and Senator Cassidy for their leadership in combating trade-based money laundering (TBML). He underscored that TBML is the least recognized and effectively enforced form of money laundering, encompassing customs fraud, tax evasion, abuse of export incentives, clandestine financial networks, and illicit market exchanges. These activities constitute a substantial portion of the global economy, accounting for approximately 36% in developing nations and 13% in developed nations.

Cassara’s focus was on the Black Market Peso Exchange (BMPE), a regional TBML system that has evolved over several decades. Initially established in Colombia to circumvent foreign exchange restrictions, it emerged as a primary mechanism for laundering U.S. drug proceeds. Subsequently, it shifted to Mexico and, more recently, to China. He elucidated the intricacies of BMPE, including over- and under-invoicing, the trade of low-value commodities, and contemporary “mirror swap” techniques utilizing mobile applications. These techniques enable criminal proceeds to be transferred offshore efficiently while circumventing financial intelligence reporting obligations.

Cassara observed that Chinese organized crime has largely supplanted traditional Mexican and Colombian launderers, resulting in a 21st-century system that exploits global trade networks. He concluded by emphasizing that goods in local black markets are frequently associated with criminal proceeds, and that novel mobile-based laundering methods pose challenges to conventional anti-money-laundering measures.