Bahrain: Cash laundered 'through ports'

By Soman Baby

A number of Gulf ports are being used for trade-based money laundering, experts said yesterday. Under or over-invoicing of goods can take place at intermediary ports in the Gulf while re-exporting goods to the final destination, said International Chamber of Commerce's (ICC) Bahrain Trade Finance Forum chairman Pradeep Taneja.

Mr Taneja, who was speaking at a seminar on trade-based money laundering, did not specify which ports in the Gulf were being used for such activities.

"Several invoices issued and routed through various financial institutions lead to multiple payments for the same goods," he said.

The seminar was organised by the forum at the Bahrain Chamber of Commerce and Industry (BCCI), in Manama.

It was aimed to increase awareness of various stakeholders in international trade finance about trade-based money laundering, said ICC Bahrain chairman Ebrahim Zainal.

"Most bankers feel that they deal in documents and not in goods," he said.

"But this is not the real case in today's complex world, where money laundering, compliance and due diligence have become issues of concern.

"It is important to understand if the presentation under a Documentary Credit is a fraudulent one aimed to abuse the banking system to siphon off money against a cargo which is non-existent.

"Also, it is essential to know if the money is diverted for tax evasion, terrorist funding or the like."

Banks take millions of dollars worth of decisions based on documents, but these documents can be forged, said Mr Zainal.

"It is vital for banks, exporters and importers alike to be aware as to how the abuse of trade finance system has increasingly become attractive to the money launders," he added.

There have been several cases of misrepresentation of quality and type of goods and services, said Mr Taneja.

"Shipping and customs documents may differ from what is actually shipped," he added.

Mr Taneja stressed the need for increasing awareness on trade-based money laundering through training, international co-operation and information sharing amongst competent authorities.

Forum secretary Mohammed Essa Al Gassab said that money laundering was a process by which criminals attempt to hide the true origin and ownership of the proceeds of their criminal activities.

"The term money laundering is also used in relation to the financing of terrorist activity where funds may, or may not, originate from crime," he said.

"Bahrain's Anti-Money Laundering Law of 2001 describes money laundering as committing an act for the purpose of showing that the source of property is lawful, while knowing or believing that it is unlawful.

"The law imposed obligation on an institution to maintain client and transaction record, and report a suspicious transaction to the enforcement unit."

Source: Gulf Daily News