Welcome back to your loyal blog of international trade. Last time we talked about the effect of reverse globalization, so if you haven’t read it, we invite you to do it, we promise you’ll find it very interesting.
Now, continuing with the complex world of international commerce, money laundering through foreign trade has become one of the most sophisticated tactics used by criminal organizations. From inflated invoices to falsified shipments, illicit networks exploit import-export operations to disguise the origin of illegal funds.
In this high-risk landscape, Mexican customs brokers play a critical role as the first line of defense. Their expertise in compliance, documentation, and regulatory procedures not only ensures that goods cross borders legally but also helps detect, deter, and report suspicious financial activities.
In today’s article, we will further develop how customs brokers contribute to anti-money laundering efforts, which is essential for companies seeking to operate safely and ethically in global markets.
Understanding money laundering in international trade
Money laundering in the context of global commerce is far more complex than the traditional methods commonly associated with banking or cash-intensive businesses. Criminal organizations use international trade operations as a sophisticated channel to disguise the origin of illicit funds by manipulating invoices, shipment values, and documentation.
This technique, known as trade-based money laundering (TBML), takes advantage of the sheer volume of cross-border transactions and the difficulty authorities face in inspecting each one with the same level of scrutiny.
What is trade-based money laundering (TBML)?
TBML refers to the process of moving or disguising illicit money through legitimate import and export activities. Rather than using direct financial transfers, criminals embed illegal funds within the commercial value of goods.
This makes detection challenging because the illicit activity is hidden behind routine documentation. The complexity and global nature of trade systems give criminals room to exploit regulatory gaps, inconsistent enforcement, and varied standards between countries.
Common techniques used by criminal organizations
Criminal groups rely on several well-known TBML strategies to evade detection. Over-invoicing and under-invoicing are among the most common, allowing criminals to move value across borders by artificially inflating or decreasing the price of goods.
Others resort to misclassification, intentionally labeling products with incorrect tariff codes to disguise their true value or nature. Phantom shipments, products that exist only on paper, enable the transfer of money without any actual cargo movement.
Another strategy is multiple invoicing; this one uses repeated documentation for the same shipment to justify additional financial transfers. These techniques highlight the vulnerabilities in the global supply chain and underscore the need for trained professionals who can recognize irregularities.
The role of customs brokers against money laundering
Customs brokers occupy a unique position at the intersection of businesses, logistics operators, and government authorities. Because they manage documentation, valuation, classification, and clearance processes, they have direct visibility into the data points most commonly exploited for trade-based money laundering.
Their role is not limited to facilitating the movement of goods across borders; they also ensure that every shipment respects national and international regulations. This dual function, operational and regulatory, makes customs brokers essential in identifying early warning signs of criminal activity within global supply chains. Hereunder, we explain more about the roles of these operators.
1.- Ensuring accurate documentation and declarations
One of the most effective tools against TBML is accurate, transparent documentation. Customs brokers verify that invoices, packing lists, certificates, and declarations match the actual goods being transported.
When values, quantities, or product descriptions are inconsistent, they can flag discrepancies before they become part of an illicit transaction. By maintaining strict documentation standards, brokers help keep trade records aligned with reality, preventing criminals from manipulating paperwork to disguise illicit funds.
2.- Verifying the legitimacy of importers and exporters
Another critical responsibility of customs brokers is confirming the legitimacy of the parties involved in the trade operation. Brokers often conduct due diligence by reviewing licenses, registration data, and historical activity to ensure that companies are operating lawfully.
When a new client lacks a clear business background, displays unusual transaction patterns, or uses inconsistent contact information, brokers can view these behaviors as red flags. Their ability to screen clients and question suspicious circumstances adds an additional layer of protection against money laundering schemes.
3.- Detecting irregularities in valuation and cargo information
Valuation discrepancies are among the most common indicators of trade-based money laundering. Customs brokers routinely analyze the declared value of goods to ensure it aligns with market standards.
If the price appears significantly inflated or undervalued, brokers may request supporting evidence or escalate the issue to authorities. Similarly, mismatches between declared cargo and physical shipment can signal potential illicit activity.
Technology and tools that strengthen AML controls
As international trade becomes faster and more digitized, customs brokers increasingly rely on technology to enhance their anti–money laundering (AML) capabilities. Modern systems help them process large volumes of data, detect irregular patterns, and maintain the level of precision required to prevent trade-based money laundering (TBML).
These digital tools not only streamline operations but also reduce human error, making compliance more efficient and reliable. Here, we explain some technological tools we used in our AML functions.
1.- Automated screening systems
One of the most valuable technologies for customs brokers is automated screening software. These systems check clients, suppliers, and transactions against global watchlists, sanctions lists, politically exposed person (PEP) databases, and high-risk jurisdictions.
These systems accelerate the due diligence process, ensuring that potentially risky parties are identified early. When a match or anomaly appears, the system alerts the broker, triggering further manual verification. This combination of automation and human expertise helps create a robust first line of defense against criminal activities.
2.- Data analytics for pattern detection
Advanced data analytics tools allow customs brokers to analyze historical trade data, spot inconsistencies, and detect patterns that may signal TBML. These tools compare declared values with market benchmarks, monitor unusual fluctuations in cargo volumes, and identify repetitive shipment behaviors that deviate from normal business practices.
Analytics platforms can also cross-reference multiple data sources to provide a comprehensive view of each operation. This holistic approach enables brokers to detect irregularities that would be impossible to notice through manual review alone.
3.- Digital record-keeping for audit trails
Maintaining accurate and accessible records is essential for AML compliance, and digital recordkeeping systems provide the reliability that regulators expect. These platforms store documentation such as invoices, declarations, and client verification records in secure, searchable databases. In the event of an audit or investigation, brokers can quickly retrieve relevant information, helping authorities trace the flow of goods and money.
As you may have seen, customs brokers play an essential role against TBML, their expertise allows them to identify red flags that often go unnoticed within the vast flow of international shipments. We hope you’ve found this article useful; don’t forget to share it on social media and stay tuned to our blog for more updates.
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