Just a Clerical Error?


Plastic buckets from the Czech Republic imported into the United States with a declared price of $972 per bucket! Bulldozers exported to Colombia at $1.74 each, Toilet tissue from China imported at the price of over $4,000 per kilogram! Perhaps the price includes outstanding royalties , since the Chinese are credited with the invention of toilet paper.

Of course they could all be  just clerical errors.

According to Nikos Passas, Professor of criminology and criminal justice, at North Eastern University,trade has been the weakest link in the anti-money laundering infrastructure built up since the 1980s. He was testifying at a a congressional hearing on Feb. 3, on money laundering and terrorist financing.

The hearing was specifically interested to learn more about Trade-Based Money Laundering (TBML) which is perhaps the largest and most pervasive money laundering methodology, according to the witness John Cassara, a former U.S. intelligence officer and Treasury special agent.

He said that it was surprising that the United States had not focused more on TBML, “because annually, we are possibly losing billions of dollars in lost taxes to trade-mispricing alone.” The data is not new and originally came from a study of U.S. trade data by Florida International University professor John Zdanowicz.

Indeed the need for trade transparency would have been top of mind for the framers of the  Financial Action Task Force on Money Laundering (FATF) when it was established by the 1989 G-7 Summit. Trade in goods and services can, and clearly do facilitate money-laundering, as is also the case with the smuggling of cash from one country to another.

The hearing was reminded that in 2004 the creation of the world’s first trade transparency unit (TTU), was adopted at the Department of Homeland Security in its Homeland Security Investigations (HSI) unit. Cassara also reminded that the HSI had developed a computer program that enables one to see both sides of a trade transaction. The work at HSI is designed to identify global patterns and instances of TBML that become apparent by examining both sides of a trade transaction.

In response, Rep. Stephen Lynch (D-Mass.), the ranking member on the task force, suggested the creation of a “a global network of trade transparency units (TTUs) to help bring some light to the very opaque system of international trade in goods.”

With the signing of the  a Trans-Pacific Trade Partnership among twelve Pacific Rim countries on February, 4th 2016 in Auckland after 7 years of negotiations, interest in global trade transparency is set to increase dramatically not only because of  accelerated work on reforming the  transfer pricing system under the OECD BEPS programme; but also because of the emphasis on trade transparency set out in the now signed Trans-Pacific Trade Partnership.


One thought on “Just a Clerical Error?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s