What is trade-based money laundering?

Moving value across borders by manipulating international trade transactions. Common methods include over-invoicing (overpaying for goods), under-invoicing, and invoicing for phantom shipments that never occur.

How does TBML relate to sanctions evasion?

Sanctioned entities use TBML to move value without direct financial transactions that would trigger sanctions screening. Trade finance is less scrutinized than wire transfers, making it an attractive channel.

Can OFAC penalties result from TBML?

Yes. OFAC has designated numerous TBML networks supporting sanctioned jurisdictions. Companies facilitating TBML, even unknowingly, can face enforcement actions and civil penalties up to $356,571 per violation.

Should AI agents screen for TBML?

AI agents handling B2B payments should validate payment amounts against expected price ranges. Unusually large or small payments for stated goods or services are TBML red flags requiring human review.

Trade-based money laundering sanctions evasion

Trade-based money laundering (TBML) is the most common method sanctioned entities use to move value across borders without triggering financial controls. FATF identifies it as one of the three main money laundering methods.

TL;DR: TBML moves value through international trade transactions by manipulating invoice prices, shipping phantom goods, or using front importers. Sanctioned entities use TBML to access the financial system indirectly, because trade finance is less scrutinized than direct wire transfers.

The three TBML typologies

OFAC and TBML enforcement

OFAC's sanctions on Iran, North Korea, and Russia have repeatedly targeted TBML networks. The 2020 designation of a network of front companies based in the UAE, Hong Kong, and Singapore that facilitated Iranian TBML showed how these networks operate across multiple jurisdictions.

Detection for compliance teams

TBML detection requires comparing transaction prices against market benchmarks. For AI agent payments, the risk is lower (agents typically do not process trade invoices), but any agent handling B2B payments should validate that payment amounts correspond to verifiable goods or services.

Method	How it works	Red flag
Over-invoicing	Importer overpays exporter; difference = value transfer	Price far above market rate for the commodity
Under-invoicing	Exporter undercharges importer; difference = value transfer on import side	Price far below market rate
Phantom shipments	Invoice for goods that never ship; pure paper transaction	No shipping documents, no customs records
Multiple invoicing	Same shipment invoiced multiple times to justify multiple payments	Duplicate invoices for one bill of lading

Frequently Asked Questions

What is trade-based money laundering?: Moving value across borders by manipulating international trade transactions. Common methods include over-invoicing (overpaying for goods), under-invoicing, and invoicing for phantom shipments that never occur.
How does TBML relate to sanctions evasion?: Sanctioned entities use TBML to move value without direct financial transactions that would trigger sanctions screening. Trade finance is less scrutinized than wire transfers, making it an attractive channel.
Can OFAC penalties result from TBML?: Yes. OFAC has designated numerous TBML networks supporting sanctioned jurisdictions. Companies facilitating TBML, even unknowingly, can face enforcement actions and civil penalties up to $356,571 per violation.
Should AI agents screen for TBML?: AI agents handling B2B payments should validate payment amounts against expected price ranges. Unusually large or small payments for stated goods or services are TBML red flags requiring human review.

Trade-based money laundering sanctions evasion

The three TBML typologies

OFAC and TBML enforcement

Detection for compliance teams

Screen your agent's next payment

Frequently Asked Questions