Trade-Based Money Laundering and Natural Resource Corruption

The document explains how trade-based money laundering (TBML) is used to disguise the proceeds of environmental crimes, often through misinvoicing or complex global schemes. It highlights why natural resources are particularly susceptible to TBML due to their need for licit supply chains and the ability to co-mingle illicit goods with legal ones. The guide provides 'red flags' for identifying suspicious trade and financial activity and lists inter-governmental, private sector, and NGO resources available to help practitioners combat these financial crimes.

• Trade-Based Money Laundering (TBML) is a method of laundering money via trade transactions to hide the criminal origins of funds, integrate them into the international financial system, and transfer value between actors or locations. It frequently involves corruption, such as bribery, to facilitate these processes.
• Misinvoicing is a common TBML technique where information regarding a shipment's value, contents, volume, or quantity is falsified. In the natural resource sector, this may involve mislabeling a product, such as invoicing rosewood as a different wood type, or mixing illicit items like pangolin scales with licit goods like tea leaves.
• Natural resources are highly susceptible to TBML because many items are difficult to smuggle and must be inserted into licit supply chains. Additionally, these products are easily co-mingled with legal goods, and the lack of fixed market prices for some resources makes identifying misinvoicing difficult.
• TBML has severe impacts on resource-rich developing countries, enabling corrupt actors to extract financial benefits while leaving environmental and social costs behind. Consequences include unregulated deforestation, species endangerment, the funding of terrorism and crime, and potential mass human displacement.
• Identifying TBML relies on 'red flags' across financial and trade activities. Financial red flags include a preference for cash and discrepancies on invoices, while trade red flags include 'carousel transactions' (repeated import/export of the same high-value commodity) and unusual shipping routes.
• Practitioners can combat TBML by partnering with various entities: the Financial Action Task Force (FATF) and the Egmont Group (a network of 164 Financial Intelligence Units) at the inter-governmental level; private sector actors like freight forwarders and ACAMS; and NGOs such as C4ADS, the Gecko Project, Global Financial Integrity, and the Environmental Investigation Agency.

APA

Shelley, L. (2020). Trade-Based Money Laundering and Natural Resource Corruption. WWF International. https://www.worldwildlife.org/documents/130/4rdhjczhe0_Introductory_Overview_Trade_Based_Money_Laundering_and_Natural_Reso_Nhi2snw.pdf

Chicago

Shelley, Louise. Trade-Based Money Laundering and Natural Resource Corruption. WWF International, 2020. https://www.worldwildlife.org/documents/130/4rdhjczhe0_Introductory_Overview_Trade_Based_Money_Laundering_and_Natural_Reso_Nhi2snw.pdf.

Wikipedia

{{cite report |last1=Shelley |first1=Louise |title=Trade-Based Money Laundering and Natural Resource Corruption |publisher=WWF International |date=October 2020 |url=https://www.worldwildlife.org/documents/130/4rdhjczhe0_Introductory_Overview_Trade_Based_Money_Laundering_and_Natural_Reso_Nhi2snw.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{shelley2020tradebased, author = {Shelley, Louise}, title = {{Trade-Based Money Laundering and Natural Resource Corruption}}, institution = {WWF International}, year = {2020}, month = oct, url = {https://www.worldwildlife.org/documents/130/4rdhjczhe0_Introductory_Overview_Trade_Based_Money_Laundering_and_Natural_Reso_Nhi2snw.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }