Illicit actors use trade based money laundering (TBML) to disguise the proceeds of crime by moving money via trade transactions to legitimize their unlawful origins. TBML is one of the most used and most difficult to detect methods of money laundering because of the volume and complexity of international trade transactions. Given this volume, a U.S. government report estimates criminal organizations have ample opportunity to launder an estimated $1.6 trillion across the world every year.
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TBML in the electronics industry
Electronics, high-value goods with complex global supply chains, are a prime target for TBML. Mobile phones, in particular, are attractive to money launderers as a way to move money across borders under the guise of legitimate trade. Importers across the globe purchase these phones in bulk and distribute them to retailers. This process involves multiple cross-border transactions, trade documents, and payment transfers, often facilitated by banks. While many of these transactions are legitimate, they can also be a cover for TBML, as criminals may manipulate value or the invoice quantity to transfer illicit money across borders.
A 2025 U.S. federal indictment alleges that defendants laundered tens of millions of dollars in drug proceeds from the U.S. through China and the Middle East. The defendants are accused of disguising the source of the drug proceeds by moving money through the shipment of electronic goods to China and the Middle East.
Identifying TBML techniques and risk indicators
TBML techniques include over- and under-invoicing or over- and under-shipment of goods and services, multiple invoicing of goods and services, and false descriptions of goods and services. Misinvoicing, misrepresenting the price of goods or services in order to transfer value, is one of the most common TBML methods.
Risk indicators for TBML fall into several categories, including trade activity risk indicators, trade document and commodity risk indicators, and account and transaction activity risk indicators. Within these categories, risk indicators particularly relevant to TBML involving electronics include:
- Vague or false descriptions: Goods on an invoice are described in generic terms like “electronics” or “computer parts,” rather than specific model numbers, brands, and quantities. This ambiguity makes it easy to obscure the goods’ true value.
- Mismatched business: A company’s stated line of business does not match the trade. For example, a company registered as a seafood exporter is now importing a large volume of electronics.
- New or dormant companies: A newly registered company or a long-dormant shelf company now engages in high-value, high-volume trades of electronics.
Why combating TBML of electronics is so challenging
TBML schemes can consist of a large number of front companies, with funds transmitted between several banks. Consequently, each involved financial institution (FI) sees only a small part of the network. This fragmentation makes it difficult for FIs to identify potential TBML schemes based on the analysis of the whole chain and can limit their ability to detect discrepancies in supplementary documentation and customer profiles.
Two characteristics make it particularly challenging to identify and combat TBML within the electronics industry:
- High value/volume and global demand: These characteristics make electronics, such as smartphones, attractive to criminals. A high volume of legitimate trade makes it easy for illicit transactions to be “hidden in plain sight” within the flow of global commerce.
- Difficulty in determining the “fair price” of traded electronics: Illicit actors may list a higher or lower price for the traded commodity compared to the usual market prices in an attempt to move additional value under the guise of the trade operation. When coupled with a vague description of the traded good, FIs must expend significant resources to establish a “fair price.”
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Using corporate data and relationships to combat TBML
To detect possible anomalies indicating TBML, FIs often rely on comparisons between trade and financial data. In their analysis of trends and development in TBML, FATF/Egmont Group note how some institutions are pursuing another angle in identifying TBML cases — one that does not necessarily require supporting trade documentation. This new approach involves the “analysis of corporate structures, registration details, alleged company purposes, corporate banking profiles, and the relationship between corporate networks, such as common representatives, overlapping ownership structures, identical registration addresses, and joint bank accounts.” By collecting and joining these different pieces of financial intelligence and corporate data, FIs can determine, for example, that an “international trading corporation” is actually a set of shell companies and that the trade transactions conducted between these “subsidiaries” are fictitious.
Sayari is uniquely positioned to support this approach through its comprehensive collection of corporate and trade data. Sayari data includes detailed profiles on companies and individuals across 250+ jurisdictions worldwide, including hard-to-access regions like Russia, China, Iran, and Venezuela. Financial institutions can conduct AML investigations faster using global public records enriched with trade data and connected through graph technology to pre-compute complex, cross-border corporate networks and obtain a clear picture of illicit financial actors, their infrastructure, and relationships.
To learn more about how Sayari can help your institution detect and combat TBML, request a personalized demo.
