The role of freight forwarding companies in detecting and investigating trade-based money laundering
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Date
Authors
Makkink, Ilse Maritha
Steyn, Blanche
Bezuidenhout, Hannes Christo
Journal Title
Journal ISSN
Volume Title
Publisher
Emerald
Abstract
PURPOSE :
This study aims to investigate the role of freight forwarding companies in detecting and reporting trade-based money laundering. The proximity of freight forwarding companies to shipping-related trade-based money laundering red flags places them in an ideal position to detect suspicious transactions.
DESIGN/METHODOLOGY/APPROACH : The study used semi-structured interviews with expert participants in freight forwarding shipping and compliance aspects around freight forwarding. This study focuses on the South African context.
FiINDINGS :
Freight forwarding companies are well-positioned to detect, investigate and report on trade-based money laundering schemes. However, the companies are not always aware of the guidelines designed to assist in identifying trade-based money laundering schemes. Thus, freight forwarding companies develop internal processes to identify trade anomalies but are often unable to link trade anomalies to illegal financial flows and trade-based money laundering schemes.
RESEARCH LIMITATIONS/IMPLICATIONS :
The current regulations on money laundering can be extended to freight forwarding companies by the respective regulators for enhanced anti-money laundering protection. This study is limited to freight forwarding companies in a South African context.
PRACTICAL IMPLICATIONS :
Increased awareness among staff in freight forwarding companies can assist them in identifying trade-based money laundering red flags to detect and prevent trade-based money laundering schemes.
SOCIAL IMPLICATIONS :
This paper assists other role players and policymakers in the trade process to create a better awareness of trade-based money laundering. The limited obligations on freight forwarding companies to comply with anti-money laundering regulations lead to a more volunteer-like compliance practice.
ORIGINALITY/VALUE :
To the best of the authors’ knowledge, this is the first paper that offers insight into the role of freight forwarding companies in detecting trade-based money laundering in South Africa.
Description
Keywords
Trade-based money laundering, Red flags, Freight forwarding companies, Illegal financial flows, Illicit financial flows, SDG-16: Peace, justice and strong institutions
Sustainable Development Goals
SDG-16:Peace,justice and strong institutions
Citation
Makkink, I.M., Steyn, B. and Bezuidenhout, H.C. (2024), "The role of freight forwarding companies in detecting and investigating trade-based money laundering", Journal of Money Laundering Control, Vol. 27 No. 7, pp. 36-52. https://doi.org/10.1108/JMLC-04-2024-0069.