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Research and Advisory Services to Government

Trade-Based Money Laundering (TBML)

Trade-based money laundering involves manipulating trade transactions to disguise the origins of illegally obtained funds. Criminals use tactics such as over-invoicing, under-invoicing, and falsified shipping documentation to move illicit money across borders. At ITC, we work alongside customs agencies to uncover suspicious trade flows, offering insights into high-risk areas, identifying patterns of TBML, and providing actionable intelligence to regulatory bodies.

 

Research areas include:

  • Identifying unusual trade patterns that indicate TBML activity.
  • Analyzing trade data to detect discrepancies in pricing and volume.
  • Examining documents for signs of falsified invoices and declarations.
  • Collaborating with financial intelligence units for cross-referencing trade and financial data.
  • Investigating sectors and countries prone to money laundering risks.
  • Reviewing free trade zones for potential exploitation by money launderers.
  • Providing recommendations on tightening customs regulations to prevent TBML.
  • Supporting training programs for customs officials to better identify TBML tactics.

Counterfeit Goods

Counterfeit goods without proper certification have become a significant concern in global trade, particularly due to the health and safety risks they pose. From pharmaceuticals to electrical appliances, counterfeit products can endanger lives. The ITC works with regulatory agencies to combat the circulation of uncertified, hazardous products, ensuring consumers are protected and legitimate businesses aren’t harmed.

 

Key research areas include:

  • Tracking the flow of counterfeit goods across borders.
  • Identifying high-risk product categories prone to counterfeiting.
  • Examining the impact of counterfeit goods on health and safety standards.
  • Evaluating the economic impact of counterfeit products on legitimate manufacturers.
  • Analyzing consumer protection laws and their enforcement across different jurisdictions.
  • Reviewing the role of e-commerce platforms in facilitating counterfeit sales.
  • Providing insights into certification and authentication processes for traded goods.
  • Offering recommendations on cross-border cooperation to combat counterfeiting.

Sanctions Avoidance

Sanctions avoidance involves efforts by individuals or entities to bypass international sanctions imposed by governments or international bodies. This activity undermines global security and economic stability. ITC works with customs and financial authorities to identify and curb the illicit practices that facilitate sanctions evasion, ensuring that trade regulations are respected.

 

Research in this field focuses on:

  • Monitoring trade routes commonly used for sanctions evasion.
  • Identifying companies involved in suspicious transactions with sanctioned entities.
  • Reviewing compliance measures implemented by businesses in sensitive industries.
  • Investigating third-party intermediaries used to conceal the final destination of goods.
  • Analyzing supply chains to detect rerouted goods intended for sanctioned countries.
  • Offering guidance on sanctions compliance to businesses engaged in international trade.
  • Evaluating the effectiveness of existing sanctions enforcement mechanisms.
  • Collaborating with governments to strengthen international sanctions regimes.

Supply Chain Diversions

Supply chain diversions occur when goods are intentionally rerouted to avoid trade restrictions, often bypassing legal requirements or entering unauthorized markets. ITC’s research focuses on understanding how these diversions happen, which industries are most vulnerable, and how customs agencies can better detect and prevent them.

 

Research areas include:

  • Analyzing patterns of unusual trade route changes.
  • Investigating industries susceptible to supply chain diversions.
  • Examining discrepancies between declared and actual destinations for goods.
  • Reviewing documentation and labeling practices to detect diversions.
  • Evaluating the role of transshipment hubs in facilitating diversions.
  • Identifying high-risk ports and customs zones prone to manipulation.
  • Offering strategies to strengthen customs oversight and improve verification.
  • Collaborating with logistics companies to address vulnerabilities in the supply chain.

International Smuggling: A Complex and Global Problem

International smuggling involves the illegal movement of goods across borders, encompassing a wide range of high-value commodities such as oil, wildlife, gemstones, and precious metals. Smuggling extends far beyond trade-based money laundering, threatening environmental sustainability, undermining economies, and facilitating organized crime. The size of the problem is immense, with billions of dollars’ worth of goods being smuggled annually. The ITC works with customs agencies and governments to combat this global issue by researching and identifying smuggling networks, analyzing trade routes, and offering actionable solutions to curb illicit trade.

 

Research includes:

  • Identifying key smuggling routes: Mapping common international pathways used to smuggle high-value items like oil, gemstones, and endangered wildlife.
  • Analyzing trade patterns for anomalies: Detecting unusual patterns in imports and exports that may indicate smuggling activities.
  • Tracking illicit oil trading networks: Investigating the diversion of oil from legal markets to black markets, often through transnational criminal syndicates.
  • Monitoring wildlife smuggling operations: Examining wildlife trafficking routes and species at risk, with a focus on conservation and legal protections.
  • Investigating gemstone and precious metal smuggling: Tracing the illegal flow of gemstones and precious metals, often used to finance illicit activities or bypass taxation.
  • Collaborating with conservation and environmental agencies: Partnering with organizations to protect endangered species and combat the environmental impact of wildlife smuggling.
  • Evaluating the role of free trade zones and ports: Assessing how free trade zones and certain ports may be exploited to facilitate the smuggling of goods.
  • Recommending enhanced customs enforcement strategies: Offering solutions to improve detection capabilities, including training, technology adoption, and cross-border cooperation to prevent smuggling.

Tax and Import Duty Avoidance

Tax and import duty avoidance is a widespread problem in international trade, where businesses manipulate the value, origin, or classification of goods to reduce or completely avoid taxes and duties owed to governments. This practice not only results in significant revenue losses for countries but also creates an unfair playing field, allowing some companies to gain a competitive edge by exploiting loopholes. The ITC works closely with customs agencies to investigate and address these schemes, helping to improve the transparency, accuracy, and enforcement of duty collection systems worldwide.

 

Research includes:

  • Identifying common misclassification and undervaluation schemes: Investigating how businesses misclassify goods or undervalue their imports to minimize their tax liability.
  • Analyzing trade data for discrepancies in declared values of imports: Using data analytics to uncover inconsistencies between reported import values and market norms, signaling potential avoidance practices.
  • Investigating the misuse of free trade agreements (FTAs): Examining how companies exploit FTAs by falsely claiming goods originate from preferred countries to benefit from reduced or zero tariffs.
  • Reviewing cases of false country-of-origin claims: Researching how businesses misrepresent the origin of goods to evade higher taxes or duties, often moving products through intermediate countries to obscure their true source.
  • Studying the role of transfer pricing in tax avoidance: Evaluating how multinational corporations shift profits and costs between subsidiaries in different countries to reduce their overall tax burden.
  • Evaluating the effectiveness of customs audits and inspections: Assessing how well customs agencies detect and deter tax and duty avoidance through their current audit and inspection practices, and recommending areas for improvement.
  • Recommending technological solutions for better transparency: Advocating for the use of advanced technology, such as blockchain and artificial intelligence, to improve the traceability of goods and the accuracy of tax and duty assessments.
  • Offering guidance on legislative and procedural reforms: Providing recommendations for strengthening customs laws and procedures to close loopholes and increase compliance with tax and duty regulations.

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