Trade Diversion, Money-Laundering and Illicit Flows

This chapter delves into the multifaceted nature of Trade Diversion, Money-Laundering, and Illicit Flows, as defined by the FATF. It discusses how these methods are used to commit various financial crimes, including fraud, money laundering, and terrorism financing. The text explores the underlying practices and case studies, such as the diversion of cereals, beauty products, and cigarette smuggling, to illustrate the intricate networks and substantial profits involved. It also highlights the importance of trade integrity and control measures in preventing these activities, which can undermine national economies and facilitate illegal financial outflows. The chapter concludes by emphasizing the need for greater attention to irregular trade transactions, proper due diligence, and evidence-based policy analysis to address these issues effectively.