Improving the risk management system for combatting trade-based money laundering

Abstract

he subject of the research is analysis of the tools for combatting money laundering in international trade. The relevance of the research is based on the difficulties of controlling trade operations due to the use of foreign exchange transactions and trade financing mechanisms, through which criminals try to mix illegal funds with legitimate money flows. The novelty of the research is that the study suggests measures aimed at creating an effective system of countering money laundering in international trade, including the introduction and development of a risk-based approach in Russia to identify the risks of international trade-based money laundering crimes and the development of anti-money laundering legislation (AML). The goal of the research is to improve the money laundering risk management system in international trade in Russia based on the analysis of the standards and recommendations of the Financial Action Task Force (FATF) and the Organization for Economic Cooperation and Development (OECD) and the practices of the member countries of these organizations. The research methodology is based on the use of methods of logical, systemic and comparative legal analysis and case studies from the relevant authorities’ practice. To achieve this goal, it is assumed that the following objectives will be accomplished: a review of FATF and OECD standards regarding the money laundering risk management system in international trade and analysis of the money laundering risk management system in international trade in foreign countries, including the USA, European Union countries (France, Germany), China, Singapore, etc.; determination of approaches to the creation of an effective system to combat money laundering in international trade, including introduction and development of risk-based approaches; development of measures to improve the effectiveness of the anti-money laundering risk management system in Russia based on FATF and OECD standards by complying with AML/CFT legislation, developing internal interdepartmental and international cooperation for combatting money laundering in international trade, etc. Based on the research, the following conclusions were made. Firstly, one of the ways to identify the risks of trade-based money laundering is the use of «red flags» indicators for criminal activity recognition. Secondly, countries are actively using the interdepartmental information exchange tools in case of suspicious activity, conducting joint investigations at the national and international level. Thirdly, cooperation with the private sector is an important tool for combatting money laundering, for example, through the exchange of information or the creation of joint organizations, training of the private sector and public authorities. The results of the study include proposals for Russia on the development of risk-based approach tools for combatting trade-based money laundering. This work was prepared based on the materials of research carried out under the State assignment of the Russian Presidential Academy of National Economy and Public Administration for 2021.

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