Trade Based Money Laundering:
How Criminals Use Your Invoice Against You

Why legitimate businesses unknowingly become part of a money laundering scheme — and how to protect yourself.

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International trade is the engine of the global economy — but it is also one of the most abused channels for money laundering. Trade-Based Money Laundering (TBML) is, according to FATF and AMLC, one of the most complex and underestimated forms of financial crime. And the risk to your business is greater than you think. Because criminals don’t need a bank account with a criminal stamp. They need your invoice.

What is Trade Based Money Laundering?

TBML is the process by which criminal proceeds are concealed by manipulating trade-related transactions. The goal is not to move goods, but to move value — from dirty money to “clean” trading revenue.

Where classic money laundering runs through bank accounts or real estate, TBML hides behind export containers, bills of lading and trade deals. Regulators call it the “dark matter” of financial crime: present everywhere, difficult to detect.

The Four Main Methods

In the Netherlands and the UK the concept of negligent money laundering exists: if you should have recognised red flags but did not, you can face criminal prosecution. Courts look not only at what you knew, but at what you should have known.

Based on FATF guidelines and AMLC indicators, enforcement agencies distinguish four primary techniques:

Over- or Under-Invoicing

The invoice price deliberately deviates from the actual market value. With over-invoicing the buyer transfers more money than the goods are worth — the surplus is criminal money converted into a legitimate payment. With under-invoicing the recipient sells the goods at their true price and keeps the difference as “clean” profit.

Phantom Invoices (Phantom Shipping)

Full payments are made for goods that were never shipped. Criminals use forged transport documents such as a Bill of Lading to convince banks and regulators of a legitimate trade transaction. Large sums of money cross borders as a “business payment” without a single product ever being placed in a container.

Multiple Invoicing

A legitimate shipment of goods is invoiced multiple times to different banks or financial institutions. Each invoice justifies a separate payment — repeatedly routing criminal money flows through the system while only one real shipment exists.

Quality or Quantity Discrepancies

The goods in the container do not match the paperwork. The invoice says “luxury silk” (high value); the container holds cheap cotton (low value). The price difference between the paper reality and the physical cargo is laundered or used to transfer illegal value to another country.

How Dou You Become Unknowingly Involved?

Criminals infiltrate legitimate supply chains. Bona fide companies are abused precisely because they are trustworthy: a good reputation attracts less scrutiny from customs and banks. These are the three most common routes:

The unknown third-party payment

You sell goods to client A, but payment comes from party C — an unknown company. Party C is a front company using criminal funds to settle your legitimate invoice. To you it looks like a normal sale; you have just helped convert criminal money into legal goods. A timely UBO investigation and sanctions screening of party C could have prevented this.

Manipulation by the trading partner

A new client asks for a small adjustment to the invoice — a different description or a slightly amended price, “for tax purposes”. If you comply without checking market conformity, you may be facilitating over- or under-invoicing. A UBO investigation into the requesting party reveals who is actually behind the request.

The seemingly cheap service provider

Criminals set up transport companies or agents offering extremely low rates. By working with them, your goods flow becomes mixed with that of criminals to mask their trade volume. Always conduct a sanctions screening on new transport partners before signing a contract.

Recent Case Law.
 Convictions Worldwide

TBML is not a theoretical risk. Regulators and courts are actively taking action:
Region / Date Case / party What happened?
Netherlands
November 2025 		Metal recycling company Multi-million fine for money laundering and document fraud via trade flows. Involvement in cocaine importation.
Canada
November 2025 		FINTRAC / MSB-zaak MSBs used third-party payments and false import invoices to move millions in fraud proceeds.
United States
October 2023 		Metalhouse / J.C. Unsalan President of steel company pleaded guilty to money laundering conspiracy: $160m to circumvent sanctions against Russia.
United Kingdom
2024 		Operation Destabilise (NCA) Billion-dollar network dismantled via gold and trade flows for Russian entities. 84 arrests.
Australia
2023 		Sydney-based Syndicate AUSTRAC dismantled a syndicate using luxury goods and trade invoices to move drug money to South-East Asia.

Recognize the Red Flags

Use this list as a starting point for your internal control process. A single hit is already reason for further investigation before completing the transaction:
  • Red flags - recognise TBML in your own trade chain
  • The invoice price significantly deviates from the market value — too high or too low without a business justification.
  • The payment comes from an unknown third party that is not a direct contractual party.
  • The client requests changes to the invoice description or price without a clear reason.
  • Multiple invoices are presented for what appears to be the same shipment.
  • Transport documents (Bill of Lading) do not match the physical shipment or the invoice.
  • The goods in the container do not match the description on the paperwork.
  • Your service provider or agent charges unrealistically low rates without explanation.

Download The TBML Checklist!

What Can You Do?

TBML is complex, but prevention starts with disciplined KYC — including for existing trade partners and with every new transaction:

  • Verify the identity and background of all parties in a transaction — including the paying party if it differs from your contract partner. A full UBO investigation reveals who is actually behind a company.
  • Check invoice prices against market prices via public data sources. UN Comtrade (comtradeplus.un.org) is the free UN database with global trade prices per goods category and customs code — a practical starting point for a price comparison.
  • Conduct a sanctions screening on all parties involved: buyer, seller, payer and carrier. Use the EU FSF list, OFAC SDN list and UK Sanctions List. One hit is sufficient reason to halt the transaction.
  • Pay particular attention to dual-use goods — products that can be used for both civilian and military purposes, such as certain electronics, chemicals or optical equipment. Check whether the goods are being shipped to countries known as transit hubs to sanctioned regions, such as the UAE, Turkey or Armenia.
  • Document suspicious transactions in a file and report unusual transactions to the relevant FIU if you are subject to AML legislation.
  • Train staff in recognising red flags — particularly those handling trade administration.
  • Contractually establish that clients are responsible for the accuracy of the documents they submit to you.

Doubts About a Trading Partner or Payment?

KYC-Checks.nl swiftly and thoroughly investigates the background of your trading partners, UBOs, and payment flows. Protect your business before entering into a transaction.

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