Ports in the Arabian Gulf are being used for trade-based money laundering activities that can incorporate fraudulent letters of credit (L/Cs), according to experts speaking at a recent seminar in Manama, Bahrain.

Speakers at the seminar at Bahrain Chamber of Commerce and Industry (BCCI) highlighted several forms of trade-based money laundering and recommended increased awareness of this type of criminality.

Different methods

The International Chamber of Commerce's (ICC's) Bahrain Trade Finance Forum chairman, Pradeep Taneja, said that under or over-invoicing of goods can take place at ports in the Gulf that re-export goods to their final destinations.

He also pointed to other schemes in which several invoices are issued and routed through various financial institutions, leading to multiple payments for the same goods.

Awareness

Taneja stressed the importance of recognising instances of fraud aimed at abusing the banking system, and said that awareness of fraudulent activities could be improved through proper training, international co-operation and information sharing.

Chairman of ICC Bahrain, Ebrahim Zainal, also highlighted the need for greater awareness about trade-based money laundering activities.

"It is vital for banks, exporters and importers alike to be aware as to how the abuse of trade finance system has increasingly become attractive to the money launderers," he said.

More methods

Other instances and types of trade-based money laundering raised at the seminar included several cases of misrepresentation of the quality and type of goods and scam transactions where the description of goods on the shipping and customs documents differed completely from what was actually shipped.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.