Guidelines for Prevention of Trade Based Money Laundering
Bangladesh Financial Intelligence Unit • Bangladesh Bank • 2019
Learning purpose: This portal converts the BFIU guideline into a practical bank-learning deck for trade operations, AD branches, OBUs, compliance, audit, risk teams and training sessions.
Core riskDisguising criminal proceeds and moving value through trade transactions.
Control modelInfrastructure, customer, transaction and enterprise-level TBML risk assessment.
Operational engineThree-level review system supported by TTP, alerts, screening, price verification and STR/SAR process.
| Item | Content |
|---|---|
| Issuer | Bangladesh Financial Intelligence Unit, Bangladesh Bank. |
| Document | Guidelines for Prevention of Trade Based Money Laundering, 2019. |
| Legal basis referred | Money Laundering Prevention Act, 2012; Money Laundering Prevention Rules, 2019; Anti-Terrorism Act, 2009; FERA 1947; Customs Act, 1969; Import and Export Control Act, 1950; IPO/Export Policy and regulator instructions. |
| Applicability | All scheduled banks, AD branches, OBUs and any branch/unit/division engaged in trade-related activities. |
| Products covered | Documentary credits, guarantees, SBLCs, collections, open account, cash in advance, trade finance/payments, services and software trade. |
Important learning note: Alerts are indicative and non-exhaustive. Banks should update TBML alerts and controls based on their own risk exposure, typologies, regulator instructions and transaction experience.
Guideline Map
Chapter 1: Introduction
This chapter explains why TBML/TF matters, which banks/units and products are covered, and who should be considered in trade due diligence.
Chapter 2: Landscape of TBML in Bangladesh
This chapter translates Bangladesh-specific vulnerabilities into practical bank risk points for import, export, royalty/service fee, OBU and specialized zone transactions.
Chapter 3: Risk Based Approach and TBML Controls
This chapter is the operating model: infrastructure, customer risk assessment, transaction review, enterprise risk management, STR/SAR and training.
Infrastructure Risk Assessment
Customer Level Risk Assessment
Transaction Level 3-Stage Review
Enterprise Level Risk Management
Three-Level Review System
Depending on risk, transactions should be disambiguated at Level 1 or escalated to Level 2/Level 3 before execution, rejection or STR/SAR reporting.
| Level | Typical officials | Main responsibility | Decision output |
|---|---|---|---|
| Level 1 | Maker, checker, authorizer, reviewer, verifier or designated trade processor. | Check KYC/TTP, perform TBML alert analysis and sanction screening, execute or escalate. | Process transaction, escalate to Level 2, or raise suspicion. |
| Level 2 | Trade compliance officer, head of trade or designated senior officials. | Review Level 1 alerts, consult TTP, use third-party data, disambiguate or escalate. | Instruct Level 1 to process, reject/escalate, or send to Level 3. |
| Level 3 | DCAMLCO or CAMLCO-assigned officials with strong TBML expertise. | Comprehensive review, decide if alerts are mitigated or suspicious, file STR/SAR where required. | Process, reject, post-facto scrutinize or file STR/SAR. |
Practical Escalation Logic
| Step | Question | Action |
|---|---|---|
| 1 | Is there a current approved KYC and TTP? | If no, stop and complete customer-level requirements. |
| 2 | Any sanction hit or TBML alert? | If false match/mitigated, document rationale. If unresolved, escalate. |
| 3 | Can Level 2 disambiguate with evidence? | If yes, process with documented rationale. If no, send to Level 3. |
| 4 | Does suspicion remain after Level 3 review? | Reject/process as decided and file STR/SAR where required. |
TBML Alerts
The guideline provides non-exhaustive alert indicators. This deck groups major alert themes for easier learning and operational use.
Bangladesh Case Lessons
Appendix A provides Bangladesh-context abuse examples. The learning point is not to memorize cases, but to recognize recurring risk patterns.
Appendices and Annexure Summary
| Section | Purpose | Now added as separate slide tab |
|---|---|---|
| Appendix A | Some instances of abuse of trade in Bangladesh context. | Appendix A: Abuse Cases |
| Appendix B | TBML Alerts. | Appendix B: TBML Alerts |
| Appendix C | Product-wise TBML alerts, relevant lists and examples. | Appendix C: Product-wise Alerts |
| Annexure | Trade data and brief analysis. | Annexure: Trade Data |
Use in training: Pair each alert with at least one case example and ask trainees to identify Level 1, Level 2 and Level 3 actions. The full appendix and annexure content is now available in separate slide tabs immediately after this summary.
Appendix A: Some instances of abuse of trade in Bangladesh context
Correct-format source content: The content below is added from the uploaded guideline as separate page-wise slides to avoid missing appendix/annexure material. Use the slide buttons to move through the full section.
Appendix A: Some instances of abuse of trade in Bangladesh context — Slide 1 PDF page 43
Appendix A: Some instances of abuse of trade in Bangladesh
context
(Lessons should be learnt from related large scams published in various media, the case
studies published in the BFIU annual reports and other relevant sources as well)
Case 1: TBML through bill of entry fabrication
Mr. ‘P’, an importer, opens an LC amounting USD 7, 58,710.30 for import of edible oil.
Bank made payment of the full amount (USD 7,58,710.30) based on shipping documents and
endorsed the same in favor of the importer for the purpose of releasing the goods. Instead of
those documents, a set of fabricated documents were submitted to the customs as the value of
goods arrived under that LC was only USD 54,150.00. However, goods could not be released
from customs due to failure in quality inspection. Meanwhile, a fabricated copy of bill of
entry valuing USD 7,58,710.30 was submitted to the bank evidencing the proper release of
the goods. When the fabrication was revealed by Bangladesh Bank, explanation was called
and subsequently the remitted amount (USD 7, 58,710.30) was returned from two different
countries other than the beneficiary's country and no evident relation was found with the
beneficiary regarding this refund.
TBML Alerts:
1. Inadequate assessment of trade customer.
2. Refund from third countries not related to beneficiary.
3. Supplier country was not the producer of the goods.
4. Shipping documents not verified.
5. Bill of Entry not verified by the bank.
6. Though large amount, adequate cautionary measures were not taken.
Case 2: TBML through releasing high value goods using copy documents
Mr. ‘M’, an importer of trading goods, opened two LCs worth USD 12,180 and 5,240 during
August 2016 at a Bangladeshi commercial bank for importing Tyres and released the goods
from Customs against the second LC using copy documents. Bank was informed by the
importer that goods against the other LC were under process of release. No import payments
were made due to non-receipt of original shipping documents. Due to non receipt of the
payment, complaint was lodged by the beneficiary with necessary documents. The LCs as
referred to by the complaint of non-payment was for USD 6, 39, 478 and was not issued by
any Bangladeshi bank, rather it was issued by a finance company of a western country during
June 2016. However, analysis reveals that in addition to the LC opened at the western
country the two commercial invoices also refer LCs issued by the Bangladeshi bank; and the
name, address, IRC and BIN mentioned in the two invoices completely match with the
35
Appendix A: Some instances of abuse of trade in Bangladesh context — Slide 2 PDF page 44
Appendix A
information in OIMS. Moreover, name and quantity of the goods as mentioned in the
invoices also bear similarity with the ones mentioned in the Bill of Entry.
Therefore, it appears that the LC issued in the western country has connection with the LCs
issued by the Bangladeshi commercial bank. In collusion with the exporter, the importer
perhaps wanted to avoid tax opening LCs of lower value and releasing goods through copy
documents. As the breach of trust between importer and exporter occurred and the exporter
didn’t receive payment, complaint was lodged and the incidence came to light.
TBML Alerts:
1. Inadequate assessment of trade customer.
2. Probable collusion between importer and exporter.
3. Issuamce of LC by a finance company from third country.
4. Proper due diligence in value and unit price verification of the goods was not
conducted.
Case-3: TBML through phantom shipment
Mr. ‘F’, an importer of fruits, usually operates with ‘P Bank’ with small scale LCs. All on a
sudden, he opened account with three other banks and at a time opened 21 LCs with the four
banks worth USD 9,106,842.50. Banks made import payments based on shipping documents.
No single shipment was made against the LCs and the amounts remitted were not refunded.
TBML Alerts:
1. Lack of proper due diligence for the customer by the three banks.
2. Vessel container was not tracked.
3. Number and value of LC inconsistent with customer’s bsiness pattern.
Case-4: TBML through import of old/used capital machinery
Mr. ‘M’ opened a usance LC to import old/used capital machinery for around USD 16,000.00
in 2016. Within one month and a half shipment was made and documents were received by
the bank. Though initially discrepancy was established under UCP 600, payment was made
by the bank. While releasing machine from Customs, it was found that the minimum
economic life exceeds the limit permitted in current IPO and the certifying authority was not
nominated by NBR. Goods were confiscated by Customs. Meanwhile, import payments were
made and the machineries were placed for public auction by the Customs.
TBML Alerts:
1. Import involved high risk goods.
2. Certifying authority was not nominated by NBR.
3. Importer and exporter were somehow related parties.
36
Appendix A: Some instances of abuse of trade in Bangladesh context — Slide 3 PDF page 45
Appendix A
4. Old/used machinery import rules and regulations were violated by the bank and the
importer.
Case-5: TBML through importing different goods
Mr. ‘Z’, a new importer opened an LC for importing malt beverage (lower duties and taxes)
from Singapore worth USD 5,460. Goods were shipped and shipping documents were
received by the bank. Upon instigation of the importer, bank official raised a minor
discrepancy and held the documents. Meanwhile, Customs imposed higher taxes and duties
on the goods while releasing those as it was revealed that the goods were light-alcoholic beer.
Consequently, customer refused to take the goods. Goods were confiscated and placed for
public auction by Customs. The highest bidder who got the auctioned goods was the agent of
the importer. Thus, importer released the goods, sold it in the market and then informed the
bank of his readiness to accept the discrepant documents. Therefore, bank made the import
payments. In this way, Customs lost the applicable taxes and probably the rest of the prices of
the light-alcoholic beer was suspected to be paid through informal channel.
TBML Alerts:
1. Misrepresentation of goods for duty and tax evasion purpose.
2. Importer behaviour to raise discrepancy in the beginning and afterwards his readiness
to receive discrepant documents.
Case 6: TBML attempted at first through sea port then through land port
An attempt was made to remit more than USD 4,27,500 submitting forged documents such as
No Objection Certificate of a commercial bank in Bangladesh and that of a western country
at a land custom house. A transferrable LC opened in January, 2018 at the bank of a western
country mentions import of 500 MT of onion at the rate of 855 USD (per MT). The
Bangladeshi commercial bank’s NOC showed a signature of branch manager and another
signature of President & CEO & CFO while foreign bank’s NOC showed one signature of
CFO and another signature of President & CEO & CFO. However, Bangladeshi commercial
bank branch didn’t have official of such rank. When the Customs official took step to verify,
this illegal attempt ended in vain. Matter of concern is that the consignee of the goods was a
customer of that commercial bank in Bangladesh.
TBML Alerts:
1. Lack of adequate KYC and verification of trade customers by the bank in such
situations.
2. Immediate steps have to be taken after getting the verification notices in such
circumstances.
3. All ADs, Customs and relevant agencies should be informed immediately after such
incidences.
37
Appendix A: Some instances of abuse of trade in Bangladesh context — Slide 4 PDF page 46
Appendix A
Case 7: SWIFT password was hacked from back office and used to make fraudulent
payment
SWIFT password was hacked and payment instruction was made to the Nostro A/C to pay
USD for the payment against import. Consequently payment was made and statement was
sent to back office accordingly. But back office did not scrutinize and the middle office also
didn’t reconcile with the requisition from the branch to pay USD against import
payment.Next day another instruction was made to pay GBP but GBP was not available in
the Nostro A/C. Treasury Management Department (TMD) was asked to place GBP to the
nostro account of GBP but TMD had no requisition in support with the instruction. TMD
asked the Nostro A/C to stop the payment. USD payment had already been executed and it
was not possible to recover the amount.
TBML Alerts:
1) SWIFT message did not mention underlying transaction reference.
2) Lack of checking by back office and no reconciliation by middle office.
3) Rationale behind payment instruction was not verified.
Case 8: Guarantees converted into funded liabilities
Exporter received contract from a European country for export of vassel and received
advances in various installments from the importer. Advance payment guarantee and
performance guarantee were issued by the exporter’s bank. Counter guarantees were issued
by another foreign bank. Exports were not executed within the stipulated time and contracts
were cancelled. Consequently guarantees were encashed by the foreign bank. Local bank
created forced loan to pay guarantee amount with interest. The client i.e. the exporter failed to
pay the amount and the loan converted to term loan and finally turned into Non Performing
Loans.
TBML Alerts:
1) End use of advanced receipt against prospective Export was not monitored and
confirmed by the bank.
2) Performance of the exporter was not assessed accurately.
Case 9: TBML through import & export using related parties
Company ‘X’ in Bangladesh is owned by an Influential Person (IP). This company has been
awarded a government project to install a power plant for which they opened LC favoring a
beneficiary company ‘Y’ located in Singapore to import capital machineries, spare parts and
accessories of BDT 2 billion. Accordingly, the Company ‘X’ made payment against the said
LC.
38
Appendix A: Some instances of abuse of trade in Bangladesh context — Slide 5 PDF page 47
Appendix A
Another company ‘Z’ in Bangladesh has a sale contract with company ‘Y’ in Singapore to
export agro product to India for BDT 1 billion. Export proceeds are received by company ‘Z’
from company ‘Y’ in Singapore through another bank in Bangladesh though goods are
shipped to India. This company ‘Z’ has received cash incentive of BDT 0.2 billion (@20%)
from the Government against export of the agro-products. Company ‘Z’ is newly registered
as an exporter and obtained ERC from the CCI&E. Finings show that Company ‘Y’ in
Singapore is an affiliate company of company ‘X’ and the owner of company ‘X’ is also a
partner of company ‘Z’. Export price of agro product in documents is unusually high and the
quantity exported is under-shipped. Thus the government money is embezzled through trade
transactions.
TBML Alerts:
1) Transaction is not in line with customer’s Trade Transaction Profile (TTP) or line of
business.
2) Importer and exporter are related parties and there is common interest.
3) Over Invoicing and Under Shipment against agro product export to India.
4) Goods shipped from Bangladesh to India but importer is located in Singapore.
Case 10: TBML through trade fraud by supplier
Company ‘ABC’ in Bangladesh availed an LC to import capital machinery from Switzerland
for USD 50,000.00. LC was confirmed by a foreign bank in Bangladesh. Presenting
documents beneficiary claimed payment from confirming bank (CB). CB honored the claim
of beneficiary and placed claim to issuing bank in Bangladesh. Issuing bank paid by creating
a Loan against Trust Receipt. After few days of payment importer lodged a claim to the
issuing bank that goods received by them is not the desired goods, rather they are old
spoiled machineries. Meanwhile, after receiving the money beneficiary closed their account
in the Swiss bank. Applicant filed a case in the court in Bangladesh. An analysis showed that
though it was regulatory obligatins to obtain supplier’s credit report, issuing bank as well as
the confirming bank did not obtain it before opening and confirming LC. Applicant
complained against the bank that the loss incurred due to banks’ failure to obtain supplier’s
credit report before opening LC. As such they claimed that banks should bear the loss since
they would not be able to repay the import loan.
TBML Alerts:
1) Supplier’s credit report was not obtained.
2) Supplier’s line of business was unknown.
3) Payment term was favorable to beneficiary with less protection to applicant.
4) Importer and exporter may be related parties with common interest.
39
Appendix A: Some instances of abuse of trade in Bangladesh context — Slide 6 PDF page 48
Appendix A
Case 11: TBML by sending fund to importing country through hundi and repatriating
as export proceeds while transferring original export proceeds to a third country
‘ABC’ is a pharmaceutical finished goods exporter of Bangladesh. This company mainly
generates its revenue from domestic sale and hardly exports in countries like India, Pakistan
and UAE. Most of its export is based on sales contract and mode of payment is 90 days
deferred from shipment date. It uses multiple banks as nominated bank but the transaction
volume is low. 3 different banks issued EXPs favoring this exporter for exporting finished
productes to India, Pakistan and UAE against diferent contracts. After shipment to 3 different
countries, exporter submits export bill in 3 different EXP issuing banks. After ninety 90 days
payment is received from Pakistan only but the other EXPs become overdue after 120 days
from shipment. It is revealed afterwards that exporter contacts with Hundi businessmen to
send money from Bangladesh to India. Indian Hundi counterpart deposits fund into banking
channel using dishonest businessmen. Indian importer sends export proceeds from their
banking channel to ABC co.’s exporting bank. Export proceeds are received through MT103
instead of MT202 message in the name of exporter without mentioning export bill reference.
Exporter submits the request letter to realize the proceeds against the overdue export bill and
thus EXP overdue becomes regular. This fund is also used to convert it as export proceeds for
shipment to UAE. Goods shipped to India and UAE are sold to that local market and sales
proceeds are transferred to an offshore hub.
TBML Alerts:
1) Export proceeds received through MT103 instead of MT202.
2) Swift message does not mention the underlying transaction reference number.
3) Payment received from third country.
Case 12: TBML through import LC issuance and import payment
‘ABC’ is a very reputed and leading company in Bangladesh in computer and accessories.
This company has multiple joint ventures in countries like Singapore, Malaysia, Hong Kong,
China, China and India. They are also involved in providing financial services and have some
trust operations in Cayman Island. This company (non EPZ in nature) is also dominant in
Bangladesh with good reputation as conglomerate and their business slogan is ‘Customer is
first’. They are willing to pay higher fees if same day payment is guaranteed. The company
imports different types of computers, parts and accessories from different countries of the
world. They have both industrial and commercial IRCs. ‘ABC’ company requested their bank
‘X’ to issue one import LC favoring beneficiary in Singapore. PI indicates import LC value is
$1,000,000.00 consisting of import of computor monitor, keyboard and other accessories.
They prefer ‘X’ bank as it makes payment very quickly after receiving import documents and
customer always likes to pre accept the discrepancy. Customer also wants to avail UPAS
benefit as this import is industrial in nature. Though customer opens LC under industrial IRC,
their underlying purpose is to sell the imported items commercially. Conducting due
40
Appendix A: Some instances of abuse of trade in Bangladesh context — Slide 7 PDF page 49
Appendix A
diligence, bank issues import LC and receives import bill later on. While lodging import bill,
bank official finds that some of the items are not available in PI but these are included in CI.
When asked by bank, importer confirms that they import product on demand and schedule is
very tight. In addition, computer technology is ever changing element. Hence during
shipment they changed some of the items with change in unit price. When bank official wants
to take more time for scrutiny, customer becomes unhappy about the service and threatens to
move business to other banks. Customer also confirmed that their counterpart in Singapore
wants payment copy by the same day. Considering charges, commission and other incomes,
the size of business and customer pressure, bank processes the bill and makes payment.Thus
importing inferior quality goods and over invoicing leads to TBML.
TBML Alerts:
1) Customer is very keen to waive discrepancy and make quick payment.
2) Customer is not concerned about charges.
3) Customer always expresses his acceptance on import documents before receiving
import bill.
4) Avails UPAS benefit under industrial LC for commercial purpose.
5) Trust in Cayman Island may be owned by both importer and exporter.
Case 13: Involvement of third party (unrelated party) for layering and integration via
buying house commission
‘X’ is a very reputed and leading company in Bangladesh for garments manufacturing items
and accessories. This non EPZ company has multiple joint ventures in countries like
Singapore, Malaysia, Hong Kong China, China and India. They are also involved in financial
business and have some trust operations in British Virgin Islands. They conduct banking with
couple of prominent banks in Bangladesh. Company ‘X’ imports different raw materials from
different countries and exports finished goods to prominent market like US, EU etc. and
enjoys bonded warehouse facility for import for industrial consumption. On one occasion ‘X’
imports cotton from Uzbekistan, Zimbabwe through Singapore for USD 75,000.00 keeping
master export LC of USD 100,000.00 as lien. 3 months later, exporter submits export bill for
USD 100,000.00 with the additional instruction to the negotiating bank that 40% export
payment will be paid to the buying house/commission locally as commission which is
transferrable from ERQ account. When asked about the excessive commission, exporter
replies to the negotiating bank that the quality of goods is inferior in nature and outdated.
Convinced with the response, negotiating bank processes the export bill. Buying house
receives the fund with legitimacy and thus underlying commission is used to perpetrate
money laundering.
TBML Alerts:
1) Imports from landlocked countries which are risky for terrorism and sanctions.
41
Appendix A: Some instances of abuse of trade in Bangladesh context — Slide 8 PDF page 50
Appendix A
2) Use of bonded warehouse facility for tax evasion.
3) Lack of verification and understanding of the quality of the goods.
4) Excessive commission.
Case 14: TBML through over invoicing
M/s. ‘R’ Enterprise, a client of ‘X’ Bank branch, located in border area, deals in import and
export business. Besides, the client also deals with the cattle business from India to
Bangladesh. The client usually imports onion from India. M/s. ‘R’ Enterprise approaches ‘X’
branch to avail an LC valued USD 60,000 for importing 100 Metric Ton onion from India
favoring M/s. ‘D’ Enterprise. ‘X’ branch issues the LC in favor of M/s. ‘D’ Enterprise, India.
M/s. ‘R’ Enterprise receives the goods and sells in the market duly and payment is made
accordingly. But it is observed that it sells TK. 25000/- per Metric Ton in the open market
while the total import cost per Metric Ton onion is of BDT. 50,000/-. Later M/s. ‘D’
Enterprise makes cross border smuggling of 30 cattle from India to Bangladesh. M/s. ‘R’
Enterprise receives the cattle, sells them in the market and gets illicit proceeds.
TBML Alerts:
1) Over invoicing.
2) Illegal cross border.
Case 15: TBML by two brothers through different methods
Mr. ‘X’, an expatriate from Chapainawabganj District lives in Dubai, UAE with free visa. He
operates a grocery shop in Dubai. His younger brother ‘Y’, credit client of branch ‘A’ deals
in paddy, rice and cattle business and works as an agent of his elder brother. ‘X’ convinces
the Bangladeshi expatriates visiting his shop to send their money to Bangladesh through him
providing 1 or 2 percent higher rate than banking channel with the surety of making payment
to him after confirmation of receiving money by their beneficiaries in Bangladesh either in
account or in cash. When the expatriates agree, he directs his younger brother ‘Y’ to deliver
money to the respective beneficiaries’ bank accounts or in cash. Upon confirmation of
receiving money by their beneficiaries, the expatriates pay money to ‘X’. In the mean time,
‘Y’ gets bank’s credit showing different purposes or earns money from illicit sources and
with that money he pays to the beneficiaries in Bangladesh. ‘X’ with that money buys gold
and diamond ornament, gold bar having great demand in Bangladesh for the belief of their
purity. Usually he sends gold and diamond ornament through the agent under Bangladesh
Customs baggage rules. ‘Y’ receives such gold and diamond ornament, gold bar and sells
them in the open market. With that money, he adjusts bank dues against credit and buys real
estate in his own and his brother’s name.
42
Appendix A: Some instances of abuse of trade in Bangladesh context — Slide 9 PDF page 51
Appendix A
TBML Alerts:
1) The remittance is coming from UAE through Alternative Remittance System and the
perpetrator takes credit from a local bank to disburse the money to the local
beneficiary.
2) The colluder partners engaged in a valid trade cycle under Customs baggage rules.
Case study 16: TBML through Offshore Banking Unit
A Singapore based fund-raising and investment company named ‘A’ approaches a reputed
bank in Bangladesh named ‘X’ seeking loan of USD 20.00 million. The company ‘A’ is
registered in Singapore to conduct its operations as a financial organization. But the license is
cancelled, thereby turning the fake company fully invalid.
‘A’ submits an ordinary application to borrow fund from ‘X’ Bank in Bangladesh in collusion
with Bank’s high officials and Board members. ‘A’ does not submit any Articles of
Association, Business Profile, Registration Certificate and Memorandum of Article of
Association along with its application. Mr. ‘B’, a Canadian citizen, is a director of company
‘A’ and signs the loan application on behalf of ‘A’.
The ‘X’ Bank signs the deal with ‘A’ to invest USD 20 million on condition that ‘A’ would
give return of 8% interest on the loan. ‘A’ also promises of investing USD 80 million with
the Bank within 95 days of getting loan USD 20 million.
‘A’ creates a subsidiary company named ‘C’ in Dubai to act as Special Purpose Vehicle
(SPV) to transfer the borrowed fund. To work as SPV, it is obligatory to be a financial
Institution or an investment company but ‘C’ is a trading company. ‘C’ opens an account in
UAE based ‘Y’ Bank. The account with ‘Y’ Bank is supposed to be jointly controlled by ‘A’
and ‘X’ Bank as per loan agreement. But actually this does not happen.
Later, it is found that the Chairman of ‘X’ Bank is the nominee of Bank’s fund e.g., USD 20
million and a joint signatory of the account maintained with ‘Y’ bank in Dubai.
‘X’ Bank finally remits the USD 20 million funds to ‘Y’ Bank. Later on fund cannot be
traced. It is noted that since ‘X’ Bank does not have foreign currency, it buys USD with BDT
from interbank money market in Dhaka with higher price. Just after remitting the fund‘C’
withdraws the total fund and closes the account maintained with ‘Y’ Bank.
TBML Alerts:
1. Investment abroad manipulating OBU loans and ultimately leading to money
laundering.
2. Failure of OBU to take legal advice from both local and foreign law firm before
investing abroad.
3. Failure to comply with regulatory rules in OBU fund management.
43
Appendix A: Some instances of abuse of trade in Bangladesh context — Slide 10 PDF page 52
Appendix A
Case study 17: TBML through fake documents
Mr ‘X’, proprietor of ‘A Food Products’ opened 3 current accounts in 3 branches of 3
different banks. The account opening form used the official address in Banani, Dhaka and
factory address in Salna, Gazipur. The customer was willing to export turmeric, pepper
powder spices but no proof regarding the export capacity or previous business experience of
the customer was preserved.
A foreign buyer located in Dubai named ‘M/s. B Trading LLC’, Dubai, remitted USD
15,98,545.00 favoring the account of ‘A Food Products’ through an exchange house named
‘Y Exchange Center LLC’, Dubai, UAE using 26 Advanced FTTs. Out of this 26 Advanced
FTTs, 10 FTTs amounting USD 6,08,035.00 were shown as export proceeds of turmeric,
pepper powder spices. 20% cash incentive was claimed by the exporter and bank authorities
reclaiming the same amount from Bangladesh Bank credited BDT 98, 15, 689.00 to the party
account. Rest of the 16 FTTs had no export documents preserved in the branches. These
remittances were not reported to Bangladesh Bank by the AD branches. The entire amount
was encashed through the current accounts of the customer. During inspection it was found
that all the export documents were fake. Forged bills of lading were prepared using the letter
head pad of a foreign shipping company and seal and signature of its local shipping agent. All
these were used to prepare forged export documents and claim cash incentive by the
customer. The inspection team communicated with the local agent of the bill of lading issuer.
The shipping agent by a letter informed the Bangladesh Bank as well as the commercial
banks that the exported goods against which cash incentive was claimed were not shipped by
them, rather the exporter used fake seal and name of the shipping agent. Upon receiving such
letter from the said shipping agent, Bangladesh Bank directed the banks to realize the said
cash incentive amount from the customer.
TBML Alerts:
1) The customer engages in transactions that are inconsistent with his business strategy
or profile.
2) Amount of foreign currency transacted through exchange house is abnormal and
doesn’t match with the reality.
3) Essential documents not presented/obtained and verified properly.
Case study 18: TBML through back-to-back LC
A UK based buyer, ‘XYZ Ltd’. placed export order through sales contract by two local
garment buying houses named ‘A’ and ‘B’ Apparels Ltd. The foreign buyer lured the
Bangladeshi exporters invoicing higher price per unit of export goods. In exchange the buyer
put conditions to procure high priced raw materials from its nominated suppliers based in
China.
44
Appendix A: Some instances of abuse of trade in Bangladesh context — Slide 11 PDF page 53
Appendix A
Receiving the sales contract, Bangladeshi exporters opened back to back letter of credit (BTB
LC) in order to procure raw materials. After the shipment of several consignments these
exporters came to know that the foreign buyer ‘XYZ Ltd’. did not receive the exported
garments. The exported goods were left unattended in the Manchester port and exporters
were bearing higher rental cost for the containers. At that time Bangladeshi garment exporters
could understand that they had fallen victim to fraudulence. In the name of BTB LC money
was siphoned off from the country, but export proceeds could not be repatriated. During BB
inspection it was observed that banks did not take ratings and information of the credit
reports of the foreign buyer and supplier into consideration. It was also revealed that one
director of ‘XYZ Ltd.’ was Chinese. This director may have linkage with or may be one of
the suppliers in China. Banks also did not justify the market price of raw materials though
unit price of raw materials was very high. In the meantime, the Chinese suppliers started
knocking Bangladesh Bank for settlement of BTB LCs. Some banks already paid and some
held the documents as discrepant.
TBML Alerts:
1) Buyer nominated supplier.
2) Credit Report of buyer and the supplier was not taken, and in some cases report was
taken but was not analysed properly.
3) The price is unusual.
4) Probable collusion between buyer and supplier of raw materials.
Case study 19: TBML through fraud
During an inspection by Bangladesh Bank on a private commercial bank branch, it was
observed that the bank branch was intentionally hiding the overdue export bill as well as
overdue EXPs. As a result the customer could continue to avail the facilities like cash
incentive, EDF loan, BIDA approved low cost foreign loan. It is challenging to find out those
hidden overdue export bills among thousands of EXPs. But during inspection it was found
that five customers were given cash incentive even though they had overdue export bills. The
amount of cash incentive disbursed through this malpractice was more than BDT 300 million.
The bank was instructed to immediately return the cash incentive amount disbursed violating
Bangladesh Bank regulations and take necessary action against the responsible officials.
TBML Alerts:
1) Wilful non-reporting of overdue export bills.
2) Cash incentives allowed to customer not eligible as per regulations.
3) Advanced cash incentives allowed.
45
Appendix A: Some instances of abuse of trade in Bangladesh context — Slide 12 PDF page 54
Appendix A
Case 20: TBML through purchase of foreign documentary bills
During inspection by Bangladesh Bank on a commercial bank branch it was observed that
several customers were exporting leather goods to foreign countries. The largest portion of
the loan portfolio of the bank branch was composed of Foreign Documentary Bill Purchase
(FDBP). Most of the export bills of leather goods were of 90 days deferred LC term. But the
branch was found to provide 120 days tenor to hide the number of overdue export bill. The
branch not only exaggerated the tenor of the export bill but also purchased those bills without
receiving the acceptance from the LC issuing bank. The branch was already exposed to
greater risks by purchasing export bills without acceptance. Moreover, it continued
purchasing the bills of the customer who already had overdue export bill. During further
analysis it was found that four of the export companies had the same owner. The motive was
to simplify the process of purchasing more bills on account of a customer if others fall
overdue.
TBML Alerts:
1. Wilful non-reporting of overdue export bills.
2. Allowing longer term trade financing.
3. Purchasing bills without acceptance from the LC issuing bank.
4. Purchasing bills of the customer who already had overdue export bill.
46
Appendix B: TBML Alerts
Correct-format source content: The content below is added from the uploaded guideline as separate page-wise slides to avoid missing appendix/annexure material. Use the slide buttons to move through the full section.
Appendix B: TBML Alerts — Slide 1 PDF page 55
Appendix B: TBML Alerts
TBML Alert, a warning sign, is not in itself an indication that something is wrong but that
given the nature of the client’s business and the nature of the underlying transaction, the
TBML Alert merits further review.
The TBML Alerts may be sub-divided into the following categories, i.e.
a. The transactions
b. The goods and size of shipment
c. Transport
d. Payment
e. Country
f. Party/parties
g. Discrepancies
h. Unusual documentation
Banks should take into consideration the TBML Alerts described below while conducting
trade operations:
TBML
TBML Alerts Purpose/Rationale with example
Aler No.
Applicant/Beneficiary
Alert# 1 Importer and exporter are In most cases of illegally transferred
related parties and there is fund, applicant and beneficiary are
common interest. related or connected parties or there are
some common interests between them.
So bank needs to be aware of whether the
applicant and beneficiary of a trade
transaction are in any way related to
some common interests. In this context,
bank should also follow instructions
contained in para 2 of Chapter 7 and para
7(b)(iv) & para 7(c) of Chapter 8 of
GFET, 2018.
Alert# 2 Transacting parties appear to be Party ‘A’ enters into a contract with party
affiliated, conduct business out ‘B’ for import of goods through
of a residential address or documentary credit. The contact address
provide only a registered agent’s of party ‘B’ appears C/O: legal
address. representative name and its address
details, or prior to opening of LC, credit
report of party ‘B’ reveals that party B’s
47
Appendix B: TBML Alerts — Slide 2 PDF page 56
Appendix B
line of business is not consistent with
underlying goods. In both instances, the
exporter may try to hide the true
beneficial owner of the transaction.
Alert# 3 Customer behaviour. The behaviour of the customer may give
rise to TBML alerts. For example, the
customer suddenly becomes anxious and
puts pressure on the bank, or offers
bribery, threatens to terminate business
relationship to execute the transaction.
Alert# 4 Any of LC/Contract/Guarantee PEPs & IPs may exert undue influence to
parties are known to be owned conduct trade transaction in their favour.
or controlled by Politically As such banks need to have an effective
Exposed Persons (PEPs) or mechanism to identify PEPs’ involvement
Influential Persons (IPs). in the trade transactions as applicant or
beneficiary or any other party.
3rd Parties
Alert # 5 Involvement of the parties in It has been seen that applicant and
the trade transaction cannot be beneficiary are not willing to explain the
explained. rationale of involvement of
intermediaries in the transaction. At this
backdrop, though banks may not be able
to know all the parties involved in the
transaction, they should understand why
they are involved, and involved parties
with no apparent logical role in the
transaction should be examined further.
Illustration Party ‘A’ approaches Bank ‘B’ to open an LC favouring beneficiary of country
‘C’. Party ‘A’ requests bank to advise the LC in any bank in Country ‘D’
instead of country ‘C’. However, there is no information in proforma invoice on
the basis of which the reason of such demand by the beneficiary can be
ascertained. In addition to that the beneficiary further demands credit available
in another country not related to beneficiary’s country. This type of scenario
needs further analysis in order to understand different parties’ involvement in
the transaction.
Alert # 6 Too many intermediaries An applicant or beneficiary may approach
making transaction overly a bank for a trade transaction with too
complex. many intermediaries involved in the
48
Appendix B: TBML Alerts — Slide 3 PDF page 57
Appendix B
transaction with an ill motive of executing
transaction through creating complexity.
As part of due diligence bank should
understand the justification of
involvement of intermediaries within the
trade cycle. Contact from unexplained
parties may be an indicator of a
transaction that is more complex than it
appears or an indication of unusual
activity.
The transactions
Alert# 7 Transaction structure appears Though financially solvent, the applicant
unnecessarily complex or may avail trade finance facility from the
unusual and designed to obscure bank in order to disguise the true nature
the true nature of the of the transaction. He may use unusual
transaction. trade term, involve many countries &
intermediaries in the transactions.
Hence, as part of process banks should
review the structure and complexity of an
LC/Contract.
Banks should analyse financial products
and transaction structures and determine
if they are intended to obscure the true
nature of the transaction. For example; it
is clear from the transaction structure that
giving an undertaking to the beneficiary
was not the purpose behind issuing the
documentary credit.
Illustration Transaction structure appears unnecessarily complex:
Party ‘A’ enters into the contract with party ‘B’ for import of goods through
documentary credit. The underlying agreement is that Party ‘B’ (the
beneficiary) will send some regulatory documents directly to the applicant.
Documentary credit only requires that all regulatory documents like: fumigation
certificate, phyto-sanitary certificate, quarantine certificate etc. be directly sent
to the applicant by the beneficiary. The credit also requires being transferable.
Bank ‘X’ opens a transferable LC with the above condition, which is
subsequently transferred to 2nd beneficiary. The issuing bank has received
presentation from the transferring bank which indicates that 2nd beneficiary
49
Appendix B: TBML Alerts — Slide 4 PDF page 58
Appendix B
assigned its proceeds to the third parties and requests the issuing bank to pay
directly to the third party.
Considering the above case, there are few elements that may be considered as
alerts, i.e.
1. The beneficiary sends few regulatory documents directly to the applicant:
By doing this, the beneficiary is able to keep the required regulatory
documents outside the bank’s operational purview.
2. The LC is transferable: Under general circumstance, there is no harm in
making the LC transferable. But the issuing bank should understand the
reasonable ground for transfer. In some situations, the beneficiary
sometimes insists on the condition to gain tax benefit and to create gateway
to transfer fund from one country to another.
Moreover, the issuing bank should have prior knowledge of the
prospective 2nd beneficiaries and if possible restrict transfer within the
beneficiaries. By doing this issuing bank has prior knowledge of those
with whom they are dealing.
Furthermore, the issuing bank should also understand whether it will
restrict the transfer within the first beneficiary country or give authority
to the transferring bank to make the transferred credit available in 2nd
beneficiary’s country. The issuing bank should have prior knowledge
about 2nd beneficiary’s country with whom the issuing bank intends to
deal.
3. Assignment of proceeds: Even though it is not possible to have prior
knowledge about request for assignment of proceeds until receipt of notice
of assignment or indication in covering schedule, it is quite unusual to
receive assignment of proceeds notice under transferable LC. Even in
regular irrevocable LC, if the issuing banks receive assignment of proceeds
notice, it indicates that the issuing bank is requested to deal with third
parties other than the beneficiary.
Assignment of proceeds under UCP 600 is always subject to applicable
law and it will not be enforceable to the issuing bank until it
acknowledges the assignment of proceeds. The issuing bank should
conduct proper due diligence before crediting the documentary credit to
third parties.
The above is only one example of how a documentary credit can become
unnecessarily complex. The Bank should consider every unusual request
beyond its regular standard practice under the purview of trade based money
laundering perspective. In fact opening Transferable LCs should be restricted to
50
Appendix B: TBML Alerts — Slide 5 PDF page 59
Appendix B
2nd or 3rd.
Alert # 8 The customer engages in Any trade transaction that deviates from
transactions that are the customer’s existing line of business
inconsistent with the customer’s may have ill-motive to transact against
business strategy or profile. criminal proceeds or may simply move
money rather than goods through
(Transaction is not in line with
accommodation of bill etc.
the customer’s line of business
or with his/her TTP) Hence, as part of trade specific due
diligence measures, banks should take
adequate measures to understand the
current trading profile of the customer
and its future plans on an ongoing basis.
Ensuring these, banks may identify which
trade products are suitable and which
trade products are vulnerable for a
particular trade customer at the outset of
a trade relationship. The measures will
also help them identify the extent of
deviation of a particular trade transaction
from the customer’s strategy and future
plans.
Illustration Company ‘X’ imports garlic, cardamom etc. through Bank ‘A’ regularly.
Suddenly he approaches bank to import 10,000 MT of rice, inconsistent with
his regular import items. The underlying purpose may be to facilitate hiding the
true beneficial owner of the transaction. This may also be applicable where the
customer approaches bank to open LC for larger quantity than his regular
import volume without having any reasonable ground or any business
expansion.
Company ‘Y’ generally imports metals but suddenly opened an LC to import
some electronics which are unusual and prices are unknown to the market. In
this way value can be transferred using such new items of goods. It may be that
both the importer and the exporter are sister concern managed by the
shareholders. As there may not be any physical movement of the goods, the
respective transaction has no economic value other than transfer of money from
the importer to exporter in the guise of trade.
Alert # 9 The Trade Finance transaction contains non-standard terminology and/or
non-standard clauses.
51
Appendix B: TBML Alerts — Slide 6 PDF page 60
Appendix B
Documentary credits often stipulate very standard clauses as documents
requirement, which is by its nature very traditional. If a bank receives an export
LC or the customer approaches bank to open an import LC with non-standard
terminology or clauses, it may be an indication that the counterpart is trying to
convince bank of the creditworthiness of the party and legitimacy of the
underlying transaction.
Examples:
Non Standard Terminologies in documentary credit:
Assignable
Divisible
Unconditional
Unconditional revolving etc.
Non Standard Clauses in documentary credit:
Ready, willing and able”
“Letter of interest”
“proof of product”
“The funds are “good, clean and cleared, of non- criminal origin”
“This is a bearer instrument letter of credit”
“to be advised between applicant and beneficiary”
“A prime bank guarantee issued by one of the top 50 or 100 world banks
or a cash wire transfer” etc.
The above mentioned indications on a documentary credit are very unusual. In
such cases banks should further scrutiny.
Alert # 10 Frequent amendment/extension An LC that has been repeatedly amended
/cancellation pattern. should be treated carefully. After an
excessive number of amendments, the
parties should be required to have a new
LC issued. Correction of a slight
misspelling of a beneficiary name or of
the company designation (i.e. “LLP” vs.
“Corp.”), should be handled as a transfer
rather than as an amendment.
Alert # 11 The transaction appears to Banks should look at the geographic
involve the use of front or shell location and addresses of the parties to a
companies for the purpose of transaction paying special attention to
hiding the true parties involved. those countries or areas where front or
52
Appendix B: TBML Alerts — Slide 7 PDF page 61
Appendix B
shell companies are known to operate. If
a bank suspects that a party could be a
front or shell company, it should take
adequate steps to determine the identity
of the suspect entity and whether the
entity is designed to hide the true nature
of the participants to the transaction.
Alert # 12 Guarantee/Standby LC fails to When a bank issues guarantee, or receives
reference underlying project or counter guarantee ultimately to issue
contract. guarantee, it may fail to incorporate all the
required information including reference
of underlying projects.
Hence, banks need to ensure the apparent
authenticity of the underlying contract,
bid etc. based on which the guarantee is
being issued. If beneficiary of the
guarantee is a government entity, then it
could be easily verified via their website.
In case of private beneficiary extra due
diligence should be applied for the
underlying contract. e.g copy of the
contract, copy of paper announcement etc.
Alert # 13 Fake underlying transactions Banks need to ensure the identity of the
against a guarantee/SBLC/LC. applicant, beneficiary and the underlying
documents in order to avoid conflict of
interest. Guarantee might be fake if both
applicant and beneficiary are related
entities and there is no such underlying
transactions/performance. It can be
executed through KYC for the parties in
order to confirm that no same parties or
related/common interest parties are
involved in them.
Value/Price
Alert # 14 The price is unusual, e.g. very Buyer and seller negotiate price and the
high or very low. pricing is based on quality and costs of the
goods, packaging, freight, customs duties,
documentation preparation fees,
53
Appendix B: TBML Alerts — Slide 8 PDF page 62
Appendix B
inspection fees, insurance and many other
factors. Therefore, it may not be easy for
banks to ascertain the market price for all
the components and circumstances that go
into the price of a product. Bank officials
should take adequate measures to try to
identify any blatant or obvious pricing
irregularities that may indicate the
inconsistencies of pricing of the goods
being shipped.
Also note para 20 of Chapter 7 of GFET,
2018.
Illustration Typology: 1
Company ‘X’ approaches Bank ‘B’ to open LC to import mobile phone or car.
The price that as revealed in the proforma invoice is very low as compared to
local market price. Moreover, the customs authority fixes certain amount or
percentage of duty based on per piece etc. to prevent duty or tax evasion. The
reason for quoting unit price very low may be for adjustment of debt which
arises out of conducting transaction through informal or alternate remittance
system.
Typology: 2
Company ‘X’ approaches Bank ‘C’ to open LC to import certain goods. Bank
‘B’ faces difficulties in knowing the exact unit price due to the nature of goods
like capital machinery or chemical mixture etc. In some cases, local duty or tax
is very nominal as the underlying goods have correlation with the economic
development of the country.
Typology: 3
Company ‘X’ approaches Bank ‘D’ to open LC for import of rice or onion.
The importer made certain percentage of advance payment through informal
channel and opened LC up to the value where customs authority has reference
value for custom valuation. But the actual price is higher than that of reference
value. By doing so, the importer is able to avoid custom duty and taxes for the
advance payment made. Similarly, excess amount of freight and other charges
may also be taken into consideration.
Alert # 15 Under Invoicing (against Invoicing goods at a price below the fair
market price). market price, the exporter can transfer
value to the importer. Here the importer
54
Appendix B: TBML Alerts — Slide 9 PDF page 63
Appendix B
receives high value goods at a lower price.
After re-selling the goods importer
receives full value and thus additional
value is received by the importer from
exporter through under-invoicing.
Importer is also able to pay less customs
duty/tax by under-invoicing.
Trade processors should follow the
mechanism and guidelines to be
established by their own bank in
pursuance with these guidelines.
Alert # 16 Over Invoicing (against market Invoicing goods at a price above the fair
price). market price value can be transferred from
importer to exporter. Bank should frame
appropriate policy in this regard and trade
processors should follow the same.
Alert # 17 Invoice showing significant Money can also be transferred from one
amount of misc. charges e.g. country/party to other country/party
handling charges. showing significant amount of misc.
charges/handling charges/ unidentified
charges/in the invoices of goods/services
for laundering purpose.
Bank should know the justification
behind such unusual charges and act
accordingly to prevent TBML.
Alert # 18 There are indications of double Double Invoicing: This is very much
invoicing / Multiple Invoicing. relevant for local trade transaction.
Double invoicing is where a subsidiary
purchases goods from a parent at too high
a price, or a parent purchases from a
subsidiary at too low a price.
Multiple Invoicing: This is also very
much relevant for local trade transaction.
More than one invoice for the same
international trade transaction, which
enables a money launderer or terrorist
financier to justify multiple payments for
55
Appendix B: TBML Alerts — Slide 10 PDF page 64
Appendix B
the same shipment.
Though with the establishment of FX
Dashboard, multiple invoicing is very
hard to do onshore, reasonable care should
be taken in case of off shore.
Payment
Alert # 19 The payment terms appear An importer or exporter may default
inconsistent with the willfully and launder money if payment
transaction. terms of the financing is made without
due consideration to the nature and/or
conversion cycle of the underlying goods.
For example, if an importer is financed
for 365 days to import perishable goods
like onin etc., when his business is to sell
fish, he may abuse the facility and
launder money through different ways
(send money abroad through over
invoicing with bank’s finance, or may go
willful default and use the money to
launder or finance terrorism etc.). Hence,
taking into consideration the market
practice and business of the buyer and
seller banks should determine whether
payment terms are consistent with the
nature and asset conversion cycle of the
goods being shipped and act accordingly.
Alert # 20 The transaction involves the As third party payment arrangements can
receipt of payments from third- be used to disguise the identity of the true
party entities that have no payor and true source of funds, they may
apparent connection with the expose to the risk of money laundering
transaction. and/or unwanted sanctions evasions.
Banks need to know and be satisfied with
the underlying arrangement with the 3rd
party who pay or receive the payments of
the trade transaction.
Illustration Bank ‘I’ issues an LC for raw cotton from Uzbekistan and LC available with
any bank in UAE with an advising bank in UAE. After making shipment,
while the beneficiary is trying to make presentation, UAE bank refuses to
56
Appendix B: TBML Alerts — Slide 11 PDF page 65
Appendix B
handle the transaction. Later on the beneficiary makes direct presentation to
the issuing bank. Bank ‘I’ makes an attempt to make the payment through
MT103, which its foreign correspondent bank refuses to process. Much later,
the beneficiary makes the presentation through his bank in Latvia where the
beneficiary maintains business account and Bank ‘I’ effects payment
accordingly.
Alert # 21 Changing the place of payment Banks should take into account that in
i.e. payment is to be made to some instances, beneficiary under an LC
beneficiary’s account held in directly sends documents to the issuing
another country other than bank within instruction to effect payment
beneficiary’s stated location. to a third country. This situation may
arise either the beneficiary is not able to
route trade document through banking
channel due to possible sanction hits or
trying to park the proceeds in relatively
lax jurisdiction.
Alert # 22 Payment instruction changes in It should be borne in mind that last
the last minute without any minute changes to payment instructions,
reason. inconsistent with the terms of the trade
instrument, or instructions to effect
payment to a third party or account
unrelated to the trade instrument could
indicate unusual activity.
Alert # 23 Applicant (customer) controls The trade finance transaction includes a
the payment. feature by which the buyer effectively
controls the payment. This could indicate
that the seller and buyer are colluding in a
non-competitive manner and that they
have an underlying relationship outside
an expected trading relationship which is
not known to the banks.
Applicant (customer) controls the payment:
Bank ‘X’ issues sight LC with a condition that payment will be effected upon
receipt of applicant’s acceptance regarding receipt of goods in good order.
This type of clause enables applicant to control payment. Providing such
condition, the applicant can actually delay the payment though inconsistent
with its nature of goods or local regulations. In other word, there might be
collaboration between the buyer and seller beyond the knowledge of the bank.
57
Appendix B: TBML Alerts — Slide 12 PDF page 66
Appendix B
Bank that issues LC with applicant control documents should be aware about
requirement of applicant control and underlying transaction. Such as: import of
capital machinery may be done with provision of split presentation as under:
- 15% advance payment
- 70% upon presentation and
- The rest 15% after proper installation of the capital machinery
supported by applicant certificate
For import of capital machinery, the above split payment is customary. But
split presentation or shifting payment obligation from beneficiary’s
presentation to applicant control document for trading items or industrial raw
materials import, may need further analysis.
Alert # 24 Claimed/lodged shortly while Long tenor guarantee is normally issued
guaranty validity is a long against a long term contract/
tenor. project/performance (i.e 24 months
period). The guarantee claim is supposed
to be placed after a reasonable long
period of time when applicant fails to
execute that long term project/contract. If
situation arises that a claim is lodged
within a short time after the guarantee is
issued, e.g. one month, the guarantee
issuing bank should take it as an alert and
should perform proper due diligence by
confirming the genuineness of the claim
from the beneficiary office.
Alert # 25 Issuance of fraudulent Letter of Bank should have independent policy in
Undertaking (LoU). place to operate SWIFT system which
includes checker and maker system and
periodic auditing, both by internal and
external auditors.
In addition, SWIFT system should be
integrated with their core banking system
(CBS).
Illustration Two employees of ‘XYZ Bank’ send unauthorized Letters of Undertakings
(LoUs), essentially bank guarantees, to foreign banks, on behalf of their
customer M/s. ‘ABC Gems Ltd’. owned by “Mr. X”. The LoUs were
undertaken to make payment in favor of foreign beneficiary for imports if on
58
Appendix B: TBML Alerts — Slide 13 PDF page 67
Appendix B
maturity, importer fails to pay, ‘XYZ Bank’ would make the payment.
On receipt of guarantee foreign bank provides loan to the importer. The tenure
of this loan varies from ninety days up to even five years for capital goods.
The money gets used to settle the payment for imports.
The money raised through this guarantees is not used to make payments for
imports rather used to settle loans taken earlier. In fact, every time a firm
related to Mr. ‘X’ asks for a bank guarantee, it is to settle an older loan taken
through a previous bank guarantee. Thus, the amounts go up to around BDT
11,4000 million.
LOUs were issued without any collateral or any usual process of the bank
through colluding two bank officials of ‘XYZ Bank’ and the ‘XYZ Bank
employee sends these guarantees in the absence of credit limits and collateral
security. Secondly, he does not make an entry in the bank’s Core Banking
Software (CBS). In some cases, a corresponding entry is made in the core
banking system, but for lower amounts. Even regular audits may not find it.
Bank’s reconciliation department also could not find out the mismatch.
It is revealed that in the said Bank, there is no SWIFT operating procedure in
place, SWIFT is not integrated with the Bank’s CBS and the SWIFT operation
of that is not centralized and absence of proper auditing system i.e. IT audits
did not take place.
On this pretext, the ill motive customer was able to complete the evil scheme
with the support of colluding employees of the Bank. Using such valid tools,
dishonest officials of the bank in collusion can launder money.
The goods and size of shipment
Alert # 26 There are no goods (Phantom Banks should be aware that under these
Shipment) circumstances the beneficiary or
applicant refuses to provide documents to
prove shipment of goods (possible
phantom shipping or multiple invoicing).
For Example: LC or bank guarantee
purportedly covers the movement of
goods but fails to call for presentation of
transport documents. LC covers steel
shipment but allows a forwarders cargo
receipt (FCR).
Alert # 27 No goods description mentioned Not having goods’ description is itself an
in documents/ alert. Bank should know the goods or
59
Appendix B: TBML Alerts — Slide 14 PDF page 68
Appendix B
Descriptions of the services of underlying transaction from
goods/services are not clear or the related trade documents, such as LC,
are coded or disguised. BL, invoice etc.
Illustration As we know from documentary credit operation that Banks deal with
for Alerts documents not with underlying goods, service or performance, issuance of LC
26 & 27 without asking for transport document or allowing copy of transport document
to be presented may facilitate phantom shipment. In addition to that
documentary credit containing a condition “document acceptable as presented”
or “all discrepancy accepted except value and quantity” may also have similar
implication.
Client may approach for issuance of local LC with above clause or without
mentioning description of the goods. The inherent agenda in such cases may
be to avail loan from the bank under the banner of trade finance.
Alert # 28 The customer deviates Banks need to understand the customer’s
significantly from its historical traditional business patterns as part of the
pattern of trade activity (in trade specific customer due diligence
terms of markets, monetary process that reviews and examines the
value, frequency of customer’s business activity, such as the
transactions, volume, or frequency of shipments, the value,
merchandise). volume, types of products and/or services
in which the customer typically deals.
Banks should have processes that will
identify significant variations in these
trading patterns.
Alert # 29 Transaction involves obvious Dual use items are goods, software,
dual use goods. technology, documents and diagrams,
which may have both civil and military
applications. Identification of dual use
goods is difficult given their possible
complex and technical nature. While
banks may be in a position to identify
obvious dual use of goods, corporate
clients should be best suited for making
this determination. Each bank should
refer to its own policies and procedures
on how to appropriately identify and
address the identification and handling of
such goods.
60
Appendix B: TBML Alerts — Slide 15 PDF page 69
Appendix B
Illustration Though most of the banks are aware of obvious sanctioned country under
UNSCR lists and generally do not open LCs where shipment is made from
sanctioned port, company ‘X’ opened LC for import of bitumen from UAE
mentioning any port of UAE and the respective transport document i.e. Bill of
lading also mentions shipment from Jebel Ali, a UAE port inconsistent with
the LC terms. But later on upon analysis of shipment routing, it is revealed that
the ship indeed started its journey from the Jebel Ali but instead of moving
toward Chittagong, it went to Bandar Abbas (an Iranian port) then came back
to Jebel Ali and then started journey towards Chittagong.
Moreover, Bank should also be careful in importing goods from certain
country where underlying goods is not within the exportable basket of the
exporting country.
Alert # 30 Different HS Code is used. In trade documents (i.e. LC, Invoice, EXP
etc.) different HS code may be used to
avoid high rate of customs duty. Bank
should identify the goods description with
appropriate HS Code as per Customs First
Schedule of Bangladesh.
Alert # 31 Quantity of goods exceeds the Under shipment, over shipment, no
known capacity of the shipping shipment might occur when quantity of
containers or tanker capacity or mentioned goods exceeds the capacity of
abnormal weights for goods are the shipping containers/ tanker. Bank
suspected. should try to know apparent capacity of
the container, tanker etc.
Alert # 32 High risk goods/services are Goods/Services are assigned as high risk
involved. when those particular items of
goods/services are used for illicit
purposes.
Bank management should make relevant
officials aware of the high risk goods and
services from time to time.
Transport
Alert# 33 Transportation route/ Commercial banks should take into
information is inconsistent with consideration whether the transport
underlying transaction. route appearing in documents is unusual
or inconsistent. It may be that the
transport route does not make sense for
the purpose of the customer/goods
61
Appendix B: TBML Alerts — Slide 16 PDF page 70
Appendix B
shipped. It may also be that the actual
transport route is inconsistent with the
expected and documented transport
route.
Alert# 34 Transshipment through a Nature of goods, applicant & beneficiary
country for no apparent reason. country distance/location does not
justify transshipment or transshipment
from a country which is geographically
absurd.
For example: Shipment of raw cotton
from Singapore, which is unusual.
Alert # 35 The mode or method of If the mode of shipment and shipping
shipping is unclear or the route is not clear or kept hidden, there
shipping route is unclear. might be involvement of some sanctioned
/embargoed country/port/location/entities
Banks should perform due diligence to
identify the mode and route of the
shipment.
Alert # 36 Goods to be shipped from one Bank should check the valid reason for
country/place but supplier/ the shipment from a third country where
beneficiary is located in another beneficiary is not located. There might be
country/place. underlying illicit arrangement between
the beneficiary and the party in third
country from where shipment is made.
Alert # 37 Vessel/Container number Container number consists of an
cannot be tracked through web internationally standard format.
search. The number includes four letters and
seven digits, with the last digit referred to
as the check digit. (i.e. XXXU1234567).
It is used for documentation purposes,
including invoice, consular statement, bill
of lading and others. Vessels can also be
tracked through web link. Banks should
check the vessel tracking /container
tracking through web link to ensure that
the vessel/ container number appearing in
the documents is valid.
62
Appendix B: TBML Alerts — Slide 17 PDF page 71
Appendix B
Alert # 38 The bill of lading describes If bill of lading/shipping document does
containerized cargo but not contain the container number while
without container numbers or the goods are shipped through
with sequential container containerized cargo, banks need to
numbers. further scrutinize and ensure that the
shipments appearing in the document is
valid.
Country/Jurisdiction/Geographical Location/Sanction
Alert # 39 Customer shipping items to, Banks should understand where the
through, or from higher money customer undertakes business and on
laundering risk jurisdictions what basis as part of trade specific
including countries identified by customer due diligence activities. As
FATF as stated in FATF Public some countries, entities and individuals
document. present heightened risk for financial
crimes, care should be exercised to
understand the rationale for the customer
conducting business in higher risk
jurisdictions. To the extent possible,
banks should determine if there is a valid
Alert# 40 Transaction involves high risk
reason, and if the business is within their
jurisdiction/country.
risk parameters.
Banks should maintain a list of
Alert# 41 Transaction involves sanctioned jurisdictions identified by relevant bodies
entities /countries /individuals. (e.g. FATF) that present high risk in
terms of money laundering, terrorist
financing or other financial crimes.
Transaction with UN sanctioned
countries, individuals and entities should
be avoided. Transaction or relationship
with local sanctioned individuals and
entities should also be avoided. All the
lists should be made available to the trade
operations area and updated as necessary.
Discrepancies
Alert # 42 Goods’ description in the Examples:
documentary credit. There are significant discrepancies
between the description of the goods
on the bill of lading (or invoice) and
63
Appendix B: TBML Alerts — Slide 18 PDF page 72
Appendix B
the documentary credit, i.e. it is
apparent that they are not the same
type of goods.
Alert# 43 Clauses in the documentary If clauses in the documentary credit are
credit. not examined and addressed carefully by
the bank, colluding parties may abuse
trade and perpetrate TBML.
Illustration Clauses in the documentary credit:
Bank ‘I’ issued LC for or on behalf of the customer ‘X’ in favour of the
beneficiary ‘Y’ for import of raisin. After issuance of LC, the customer
remitted 15% of actual goods value through informal channel. As soon as the
beneficiary ‘Y’ received fund, the beneficiary ‘Y’ demanded an amendment
for addition of clause “document acceptable as presented” or “all discrepancy
acceptable except value and quantity”. Bank ‘I’ issued the amendment
reluctantly. Later on, the beneficiary made presentation except pre-shipment
inspection certificate and phytosanitary certificate. Upon analysis, it was
revealed that quality of the shipped goods was inferior and not fit for human
consumption but the fact is that the presentation was complying due to the
amendment.
Alert # 44 Essential documents presented Essential documents such as invoices or
in copy form or not presented. transport documents are missing or
presented in copy form.
Alert # 45 Waivers: Amount significantly The documentary credit / guarantee is
overdrawn, Advance waivers significantly overdrawn; i.e. the drawing
provided etc. under the documentary credit/ guarantee
is significantly above the outstanding
amount of the documentary credit /
guarantee.
Illustration Essential documents presented in copy form or not presented:
44 & 45 Waivers: Amount significantly overdrawn, Advance waivers provided etc:
Bank ‘I’ issued LC favoring the beneficiary ‘Y’ for its new customer ‘X’
under 50% margin. The beneficiary made presentation of copy of bill of lading
instead of original. The customer approached banks to waive the discrepancies,
which later on agreed after depositing 100% margin. Bank ‘I’ effected
payment accordingly.
After a few days, the bank received another presentation under documentary
collection with payment instruction to deliver documents against payment for
64
Appendix B: TBML Alerts — Slide 19 PDF page 73
Appendix B
different customer of the Bank ‘I’. After checking documents, it was found
that the original bill of lading of the earlier LC related documents had been
presented. Moreover, the beneficiary was also different from the LC. In the
meantime, the new customer also disappeared. Bank should take into
consideration the type of discrepancy they are given waiver and should have
an understanding of its after effect.
Sometimes, it is also seen in local documentary credit practice that bankers
generally allow 10% excess payment on the plea of 10% tolerance level with
or without LC conditions. While affecting such type of payment, bank should
take due care of nature of goods, applicability of tolerance and change in unit
price etc.
Alert # 46 The customer is overly keen to Banks need to understand the motive
waive discrepancies. behind the customer’s keenness to accept
the discrepancies and the gravity of the
discrepancies. Although this is not related
to trade rules, additional responsibility in
respect of KYC (Know Your Customer),
DD (Due Diligence) and EDD (Enhanced
Due Diligence) have been vested on the
bankers. When acceptance is provided by
the importer to the discrepant documents,
the banker should verify the kind of
discrepancy accepted and whether this
may pose money laundering risk.
Unusual Documentation
Alert # 47 Documents required or Banks should be cautious if documents
presented is unusual to related appear to have been altered, fraudulent,
trade transaction. are inconsistent or illogical, or when
documentary presentations do not include
required transport documents, as this
Alert# 48 There are indications that could be an indication of unusual
documents have been reused. activity.
Although the failure of documents to
appear on their face to comply with the
terms and conditions of an LC may be
routine discrepancies, certain unusual
discrepancies may require additional due
diligence.
65
Appendix B: TBML Alerts — Slide 20 PDF page 74
Appendix B
Examples include the presentation of
documents showing a place of origin,
loading, transshipment or destination
entirely inconsistent with what is
expected, the presentation of documents
showing goods description entirely
inconsistent with the expected goods, and
the presentation of documents showing
much higher or lower values or costs than
expected.
66
Appendix C: Product-wise TBML alerts, relevant lists and examples
Correct-format source content: The content below is added from the uploaded guideline as separate page-wise slides to avoid missing appendix/annexure material. Use the slide buttons to move through the full section.
Appendix C: Product-wise TBML alerts, relevant lists and examples — Slide 1 PDF page 75
Appendix C: Product wise TBML Alerts, Some Relevant Lists and
Examples
Some of the important Products specific TBML alerts are given below. They do not
eliminate the alerts mentioned in Appendix B.
TBML Alerts common to almost all the products below and therefore should be guarded
against are:
i. Under Invoicing(against market price)
ii. Over Invoicing (against market price)
iii. Underlying goods is not in line with the customer’s line of business.
iv. Descriptions of the goods are not clear or are coded or disguised.
v. The method of payment appears inconsistent with the risk characteristics of the
transaction.
vi. The transaction involves sanctioned entities.
Issuance of LC/LCAF
Price, Quantity and descriptions of Goods:
a. High risk goods or high risk jurisdiction/country is involved.
b. Transaction involves restricted or banned items of goods.
c. Different HS Code is used
Mode and Location of Shipment:
Goods to be shipped from one country/place but supplier/beneficiary are located in
another country/place and payment to be made to a different 3rd country/place.
The mode or method of shipping is unclear or the shipping route is unclear.
Payment Method:
a. Changing the LC beneficiary or collection payee name and address just before payment is
to be made. Including requests for assignment of proceeds or transfer at the time
documents are presented.
b. LC transfer or assignment of proceeds request names a transferee or assignee in an
offshore financial haven. Request for transfer, assignment or other financing under an LC
which has expired or not in effect.
c. The customer offers to pay unusually high fees to the Bank.
67
Appendix C: Product-wise TBML alerts, relevant lists and examples — Slide 2 PDF page 76
Applicant, Beneficiary and Other Parties/Entities Involved:
a. Supplier’s credit report is not available.
b. Supplier’s line of business is not in congruence with the goods imported.
c. Transaction is not in line with the customer’s TTP (Trade Transaction Profile) or when an
exporter steps outside normal business activities.
d. Any of LC parties are known to be owned or controlled by senior public
figure.Transaction involves an unusual intermediary (e.g. middleman is travel agency
handling shipment of machine parts) or too many intermediaries making transaction
overly complex.
LC Clauses and Required Documents:
i. Unusual/non-standard clause is inserted in the LC.
ii. LC without regulatory required documents.
iii. Significantly amended letters of credit without reasonable justification or changes to
the beneficiary or location of payment.
Import Bill (Scrutiny/Acceptance/Payment/Financing) & Export Bill (Scrutiny/
Financing/ Payment)
Price, Quantity and Descriptions of Goods:
Under Shipment (in terms of quantity)
Over shipment (in terms of quantity)
Discrepancies in Goods description, quantity and shipment locations.
Where the quantity of goods exceeds the known capacity of the shipping containers or
tanker capacity. Or where abnormal weights for goods are suspected.
Invoice:
There are indications of double invoicing.
Invoice showing significant amount of misc. charges e.g. handling charges.
The documentation appears illogical, fraudulent and/or improperly modified from its
original content, or certain documentation is absent that would be expected given the
nature of the transaction.
Transport & other Documents:
i. The bill of lading describes containerized cargo but without container numbers or
with sequential container numbers.
ii. Phantom shipment - where no goods are shipped at all and the documentation is
completely falsified
iii. The mode or method of shipment is unclear or the shipping route is unclear.
68
Appendix C: Product-wise TBML alerts, relevant lists and examples — Slide 3 PDF page 77
iv. Vessel / Container number cannot be tracked through web search.
v. There are indications that documents have been re-used.
vi. There are dubious unauthorized alterations or amendments to the documents.
Payment Methods:
a) Payment is to be made to beneficiary’s account held in another country other than the
Beneficiary’s stated location.
b) Payment is to be made to personal A/C of beneficiary instead of company A/C.
Others:
The customer is overly keen to waive discrepancies.
Transaction involves an unusual intermediary (e.g. middleman is travel agency handling
shipment of machine parts) or too many intermediaries making transaction overly
complex.
Export LC Advising
High risk goods or high risk jurisdiction/country is involved as per Appendix B.
Transaction involves restricted or banned items of goods.
Export LC/Contract Lien and Pre-shipment financing (B2B facility/Packing
Credit/Working Capital Loan):
Price, Quantity and descriptions of Goods:
High risk goods or high risk jurisdiction/country is involved.
Transaction involves restricted or banned items of goods.
Mode and Location of Shipment:
Goods to be shipped from one country/place but supplier/beneficiary are located in
another country/place and payment to be made to a different 3rd country/place.
The mode or method of shipment is unclear or the shipping route is unclear.
Payment Method:
Applicant, Beneficiary and Other Parties/Entities Involved:
Bonafides of buyer is not known.
Buyer’s line of business is not in congruence with the underlying goods.
Transaction is not in line with the customer’s TTP (Trade Transaction Profile) or when an
exporter steps outside normal business activities.
Any of LC parties are known to be owned or controlled by senior public figure.
69
Appendix C: Product-wise TBML alerts, relevant lists and examples — Slide 4 PDF page 78
Transaction involves an unusual intermediary (e.g. middleman is travel agency handling
shipment of machine parts) or too many intermediaries making transaction overly
complex.
LC Clauses and Required Documents:
Unusual/non-standard clause is inserted in the LC.
LC without regulatory required documents.
Significantly amended letters of credit without reasonable justification or changes to the
beneficiary or location of payment
Shipping Guarantee
IDO/Shipping Guarantee is just copy document endorsement by bank and in addition bank
issues a shipping guarantee favouring shipping company. While issuing IDO/Shipping
Guarantee, TBML alerts relevant to IDO/Shipping guarantee mentioned below should be
taken into consideration:
Price, Quantity and Descriptions of Goods:
i. Under Shipment (in terms of quantity)
ii. Over shipment (in terms of quantity)
iii. Discrepancies in Goods’ description, quantity and shipment locations.
iv. where the quantity of goods exceeds the known capacity of the shipping containers or
tanker capacity. Or where abnormal weights for goods are suspected.
Invoice:
i. There are indications of double invoicing.
ii. Invoice showing significant amount of misc. charges e.g. handling charges.
iii. The documentation appears illogical, fraudulent and/or improperly modified from its
original content, or certain documentation is absent that would be expected given the
nature of the transaction.
Transport & other Documents:
i. Original import documents against the LC are already in the bank.
ii. There are indications that documents have been re-used.
iii. Transport document is not endorsed to the order of the bank as per LC terms.
70
Appendix C: Product-wise TBML alerts, relevant lists and examples — Slide 5 PDF page 79
Guarantee/Standby Letter of Credit (SBLC)
i. Guarantee/ Standby LC fails to reference underlying project or contract (except for
insurance related LCs, where the LC calls for a draft only. This is an acceptable
practice).
ii. Applicant and beneficiary are related party and there is common interest.
iii. Claimed/lodged shortly whilst guaranty validity is a long tenor.
iv. Fake underlying transactions.
v. In case of transfer, there is a possibility to effect payment to a sanctioned or AML
related party.
Service Export
a) Swift message does not mention any purpose of the transaction.
b) The reference number of underlying service contract/LC/Invoice is not mentioned in
the Swift payment message.
c) Importer and exporter are related parties.
d) Description of service is not clear.
e) Exporter and importer line of business do not support the services.
f) Exporter is not capable of providing those underlying services.
g) Payment received from a third party not mentioned in underlying contract.
h) Price of service unusually high or low.
NOTE: All the TBML alerts stated above are subject to change based on change in the
nature and magnitude of trade based ML/TF.
71
Appendix C: Product-wise TBML alerts, relevant lists and examples — Slide 6 PDF page 80
1. Sample Trade Transaction Profile (TTP)
General Information:
Customer Name & Address:
IRC number:
ERC number:
BEPZA/EZ permission no:
BIN No.:
Vat reg. No.:
TIN No.:
Particulars of Business Details
Type of Business (Commercial/Industrial/Others)
Nature of Business (RMG/Textile/
Pharmaceuticals/Trading/Agro etc.)
Import items [including service/performance]
Export items [including service/performance]
Types of Trade Loan from bank and other FIs
Types of Guarantee/Standby LC
Importing Countries
Exporting Countries
Transaction Information:
Details of Transactions Monthly Average Monthly Average Value of
Volume of Transactions transactions in Million USD
Details Minimum Maximum Minimum Maximum
Import LC Issuance
Import through Collection/Contract
Import payments
Export LC/Contract
Export Proceeds realization
Other invisible receipt ( inward
remittances)
Other invisible payment ( outward
remittance)
Guarantee/Standby LC
Import Loan (EDF/UPAS/LATR
/MPI/MIB/Bai Muazzal/ etc)
72
Appendix C: Product-wise TBML alerts, relevant lists and examples — Slide 7 PDF page 81
Details of Transactions Monthly Average Monthly Average Value of
Volume of Transactions transactions in Million USD
Details Minimum Maximum Minimum Maximum
Import Under Aid/Barter/or any
other special arrangements
Import payment through FC
account
Term Loan for Machinery Import
Export Loan foreign (Discounting/
Purchase/Bai As sarf/)
Local Export Loan (Discounting/
Purchase/Musharaka Documentary
Bills etc.)
Others
I/We the undersigned hereby confirm that the anticipated transaction amount and frequency
are my/company’s normal transactions. I/We further confirm that if necessary, I/we will
revise our transaction profile from time to time.
Signature: ……………………………… Signature: ………………………………
Name: …………………………………… Name: ……………………………………
Designation: …………………………… Designation: ……………………………
Date: ……………………………………. Date: …………………………………….
For Bank’s Use Only
The Trade Transaction Profile (TTP) of the client has been reviewed in accordance with the
instructions of Bangladesh Financial Intelligence Unit (BFIU).
____________________________________________________
Designated bank official’s name (with seal), signature and date
73
Appendix C: Product-wise TBML alerts, relevant lists and examples — Slide 8 PDF page 82
2. Some Examples of Detection Scenarios based on TBML Alerts
Detection Scenarios Probable Rules
Transactions through Land lock Should be a Pre-transaction & Automated
countries detection; otherwise relevant officials should
check against list of land lock countries.
Unauthenticated Letter of Credits Should be a Pre-transaction & Partly
(LCs)/ Fake LCs Automated detection; Rest of physical
inconsistencies should be checked against a
trade-check-list by knowledgeable officials.
Round figure relatively big-bill- Should be a Post-transaction & Automated
amounts submission/ payment detection alert/ report.
Parties in Sanctions List/ High Risk Should be a Pre-transaction & Automated
Jurisdiction list detection; otherwise officials should check
manually at-least against the key list of
comprehensive –Sanctioned-country list (UN,
OFAC, EU, HMT(BoE)
Letter of Credit (LC) Overdrawn by Should be a Pre-transaction & Automated
large value detection; otherwise offcials to check
manually.
Future dated bill of lading/ Pre dated Should be a Pre-transaction & Automated
bill of lading detection; otherwise officials to check
manually.
Trend to high risk countries Should be a Post-transaction & Automated
detection alert/ report.
Inconsistency with customer business Should be a Post-transaction & Automated
i.e. not in line with customer’s regular detection alert/ report, however pre-checking
activities by knowledgeable officials is also highly
recommended.
Fraudulent documents/ Tampered Should be a Post-transaction & Automated
documents/ Phantom shipping detection alert/ report, however pre-checking
by knowledgeable officials is also highly
recommended.
Payment to a third party or to unrelated Should be a Post-transaction & Automated
party detection alert/ report, however pre-checking
by knowledgeable officials is recommended.
Same address of Beneficiary/ Should be a Post-transaction & Automated
Applicant, Drawer/ Drawee, Related detection alert/ report, however pre-checking
parties /other address inconsistencies by knowledgeable officials is recommended.
Discrepancies-that are Material in trade Should be a Pre-transaction & Partial
documents Automated detection alert/ report, however
74
Appendix C: Product-wise TBML alerts, relevant lists and examples — Slide 9 PDF page 83
Detection Scenarios Probable Rules
pre-checking by knowledgeable officials is
highly recommended.
Trade Transaction related or involving Should be a Post-transaction & Automated
parties in tax havens e.g. Bermuda, detection alert/ report, however pre-checking
Bahams, Monaco, Jersey, Isle of Man, by knowledgeable officials is recommended.
Luxembourg, Ireland, Mauritius,
Panama British Virgin Islands,
Cayman Island etc.
Note: The Frequency of Report (Real-time/Daily/ Monthly) and the risk priority (High/ Medium/
Low) of the Alert can be assigned by respective Bank based on their Risk-Appetite, system &
resource capacity. However, no need to mention that, High risk alerts like Sanction-violation – should
be detected & worked upon preferably on real-time basis or at-least on daily basis with top priority.
75
Appendix C: Product-wise TBML alerts, relevant lists and examples — Slide 10 PDF page 84
3. List of Landlocked Countries:
• Afghanistan • Mali
• Angora • Moldova
• Armenia • Mongolia Artsakh
• Austria • Nepal
• Azerbaijan • Niger
• Belarus • Paraguay
• Bhutan • Rwanda
• Bolivia • San Marino
• Botswana • Serbia
• Burkina Faso • Slovakia
• Burundi • South Ossetia
• Central African Republic • South Sudan
• Chad • Swaziland
• Czech Republic • Switzerland
• Ethiopia • Tajikistan
• Hungary
• Turkmenistan
• Kazakhstan
• Uganda
• Kosovo
• Uzbekistan
• Kyrgyzstan
• Vatican City
• Laos
• West Bank
• Liechtenstein
• Zambia
• Luxemburg
• Zimbabwe
• Macedonia
• Malawi
76
Appendix C: Product-wise TBML alerts, relevant lists and examples — Slide 11 PDF page 85
4. Example of Few Sanctioned Vessels/Shipping Lines that
changed names
Vessels:
Abila - IMO 9213399 * Alvan - IMO 9165798 *Amina - IMO 9305192
Arezoo - IMO 9165786 * Artin - IMO 9305221 * Aysan - IMO 9165803
Baseej-1 - IMO 8746301 * Basht - IMO 9346536 * Behnavaz - IMO
9346548
Behta - IMO 9349590 * Dadgar - IMO 9357729 * Deniz - IMO 9569700
Dew Drop - IMO 9569695 * Dusk - IMO 9569712 * Genco - IMO 9387798
Golsan - IMO 9165815 * Iran Noor - IMO 9079066 * Klos C - IMO 8918710
Lotus - IMO 9165827 * Manlai - IMO 9465851 * Orang - IMO 9051650
Oura - IMO 9387815 * Pendar - IMO 9209324 * Perarin - IMO 9209350
Rosemary - IMO 9209336 * Sana - IMO 9209336 * Sarvin - IMO 9209348
Shabdis - IMO 9349588 * Shahraz - IMO 9349576 * Touska - IMO 9328900
Zardis - IMO 9349679 * Ka Rim Chon - IMO 8314811 *
Sadaf Poshtiban - IMO 8422084
Shipping Lines:
Aran Asman * Arash Mehr International Transport Co
Caribbean Navigation Company * Hafez Darya Arya Shipping Line
IRISL * Payam Marand Tarabar
RAHVAND * SOUTH SHIPPING LINE IRAN
SEIBOW LOGISTICS LIMITED * NITC
The lists and examples mentioned above are not exhaustive. These are indicatives only.
77
Annexure: Trade data and brief analysis
Correct-format source content: The content below is added from the uploaded guideline as separate page-wise slides to avoid missing appendix/annexure material. Use the slide buttons to move through the full section.
Annexure: Trade data and brief analysis — Slide 1 PDF page 86
Annexure: Trade data and brief analysis
Top 100 items Import LC/Contract opened during 2013-2017 in Bangladesh has been given
below for Guidance only. How tax structure impacted import into Bangladesh can be inferred
from the table.
SL LC Value
HS CODE Commodity Name TTI
No. (USD in Millions)
1 52010000 Cotton, not carded or combed 12,250.44 0%
2 99000000 Services 12,134.40
3 10011990 Wheat and Meslin-> Other 4,655.32 0%
Palm Oil (Excl. Cude)&Its
4 15119090 4,581.69 20.07%
Fractns....Nes.Incld.Refiend Palm Oil
Vessels and other floating structures for 1,500 BDT/MT +
5 89080000 4,258.56
breaking 800 BDT/MT 4%
Specific Customs
6 17011400 Other cane sugar 4,010.88 taxes and duties
based on SRO
7 27101262 High speed diesel oils, 3,651.20 34.07%
8 52094200 Denim, With >=85% Cotton, >=200g/M2 3,458.05 89.42%
Cement Clinkers, Imported by Vat
9 25231020 3,055.80 625.40%
Registered Manufacturers of cement
10 27101911 Other Fuel Oils, Furnace Oils, TV 2,982.42 34.07%
Cellular (Mobile/fixed wireless) te
11 85171210 2,814.81 28.50%
lephone set
Petroleum Oils And Oils Obtained From
Bituminous Minerals,Other Than Crude;
Preparations Not Elsewhere Specified Or
Included,Containing By Weight 70% Or
More Of Petroleum Oils Or Of Oils
12 27101150 2,793.63 34.07%
Obtained From Bituminous
Minerals,These Oils Being The Basic
Constituents Of The Preparation;Waste
Oils --> Other Medium Oils And
Preparations
13 15071000 Crude Oil, whether or not degummed 2,670.27 20.07%
78
Annexure: Trade data and brief analysis — Slide 2 PDF page 87
SL LC Value
HS CODE Commodity Name TTI
No. (USD in Millions)
14 62171000 Clothing Accessories, Nes 2,305.62 127.84%
F./hot-rolled ....Imp. by VAT
15 72083920 regdT.Former& pre-fab. building 2,077.77 37.07%
manufacind.
Soya beans, whether or not broken other
16 12019090 than Seed, EXCL. Wrapped/canned upto 1,844.28 0%
2.5 Kg
Petroleum Oils And Oils Obtained From
17 27090000 1,755.46 31.07%
Bituminous Minerals, Crude TV
1,500 BDT/MT +
18 72044900 Ferrous waste and scrap, nes 1,647.71
800 BDT/MT 4%
19 39021000 Polypropylene, In Primary Forms 1,597.70 31.07%
Semi-Products Of Iron/Steel, <0.25%
20 72071100 1,597.01 844.08%
Carbon, Of Squarish Section
Urea, Whether Or Not In Aqueous
21 31021000 1,524.80 0%
Solution
DiammoniumHydrogenorthophosphate
22 31053000 1,471.73 0%
(Diammonium Phosphate)
Rice --> Semimilled Or Whollymilled Variable (10%-
23 10063000 1,468.61
Rice,Whether Or Not Polished Or Glazed 28%)
Oil-Cake And Other Solid Residues, Of
24 23040000 1,265.00 15.57%
Soya-Bean Oil
25 27011900 Other Coal, Not Agglomerated, Nes 1,184.27 25.07%
Mineral Or Chemical
26 31031020 Fertilisers,Phosphatic --> Triple 1,177.73 0%
Superphosphates
Other gas oils (EXCL. Lithg diesel oil
27 27101269 1,166.35 86.42%
&high speed disel oils)
Wheat And Meslin --> Wheat/Mealing
28 10011090 1,163.21 0%
Wheat
79
Annexure: Trade data and brief analysis — Slide 3 PDF page 88
SL LC Value
HS CODE Commodity Name TTI
No. (USD in Millions)
29 10063090 Semi-Milled Or Wholly Milled Rice 1,117.10 10%
Preparations Of A Kind Used In Animal
30 23099010 1,115.87 10.32%
Feeding --> Poultry/Dairy/fish feed
Petroleum oils and oils obtained from
bituminous minerals,other than crude;
preparations not elsewhere specified or
included,containing by weight 70% or
31 27101169 1,084.21 86.42%
more of petroleum oils or of oils obtained
from bituminous minerals,these oils being
the basic constituents of the
preparation;waste oils --> other
Reactive Dyes And Preparations Based
32 32041600 1,079.40 31.07%
Thereon
Polyethylene having a specific gravity of
33 39011000 1,073.70 31.07%
less than 0.94
34 7031019 Onions, Fresh Or Chilled, Nes 1,072.91 0%
Combed Single Cotton Yarn, With >=85%
35 52052100 1,048.67 37.07%
Cotton, Nprs,>=714.29 Decitex(<=14mn
Flat Knitting Machines; Stitch-Bonding
36 84472000 1,040.97 11.12%
Machines
Unbleached Plain Woven Fabrics Of
37 52081100 1,026.36 89.42%
Cotton With>=85%Cotton, =<100g/M2
Polyvinyl Chloride, Not Mixed With Other
38 39041000 954.88 31.07%
Substances, In Primary Forms
39 7134090 Dried Lentils, Shelled, Nes 938.05 0%
Coloured Denim, With <85% Cotton,
40 52114200 874.12 89.42%
>200g/M2
41 7132090 Dried Chickpeas (Garbanzos) Shelled, Nes 826.24 0%
42 31042000 Potassium Chloride 825.21 0%
80
Annexure: Trade data and brief analysis — Slide 4 PDF page 89
SL LC Value
HS CODE Commodity Name TTI
No. (USD in Millions)
43 60011000 Long Pile Fabrics, Knitted Or Crocheted 825.21 89.42%
Coloured Plain Cotton Woven Fabrics
44 52084200 806.50 89.42%
With >=85% Cotton, >100g/M2
Other Maize, Excluding wrapped/canned
45 10059090 802.35 5%
upto 2.5 kg
Piston Engine,Capacity>50cc not
46 87112021 >250cc,Motorcycle,In CKD with four 781.91 89.42%
stroke engine
Dyed Woven Cotton Fabrics, With >=85%
47 52093900 779.32 89.42%
Cotton, >=200g/M2, Nes
Generating Sets With Compression-
48 85021300 770.07 26.27%
Ignition Engines, >375 Kva
Multiple Or Cabled Yarn, >=85% Acrylic
49 55093200 745.21 37.07%
Or Modacrylic Staple Fibres, Nprs
Recond.Motor Cars &oth.
50 87032211 Vehicles,incl.stn. wagons,CBU, 732.17 127.84%
cap.>1000cc,but=<1500cc
51 79011190 Zinc, Not Alloyed, >=99.99% Pure, Nes 723.53 31.07%
52 54023300 Textured Yarn of Polyezster 721.07 58.69%
Milk & cream in powd,gran or oth. solid
53 4022191 form fat..exceed1.5% imp by VAT 717.65 37.07%
reg.Milk&pr
Dyed 3 Or 4-Thread Twill (Incl. Cross
54 52093200 710.33 89.42%
Twill), With >=85% Cotton
Com.Sin.Cot.Yarn,With>=85%Cot.,Nprs,
55 52052400 <192.31de.But>=125de>52mn 709.19 37.07%
But<=80mn
56 54011000 Sewing Thread Of Synthetic Filaments 701.87 37.07%
57 84522100 Automatic Sewing Machines 677.77 26.27%
81
Annexure: Trade data and brief analysis — Slide 5 PDF page 90
SL LC Value
HS CODE Commodity Name TTI
No. (USD in Millions)
Other Paper & P.Board,Multiply Paper &
58 48109200 673.83 58.69%
Paperboard
Uncombed
59 52051100 Sin.Cot.Yarn,With>=85%Cot.,Nprs,=>714 669.69 37.07%
.29 Decitex (<=14mn).
60 27111300 Butanes, Liquefied 652.45 7.07%
Semi- Or Bleached Non-Coniferous
61 47032900 650.06 5.07%
Chemical Wood Pulp, Soda..., Nes
Finishing Agents Etc. Of A Kind Used In
62 38099100 647.41 31.07%
The Textile Or Like Industries Nes
63 7131090 Dried Peas Shelled, Nes 643.60 0%
64 76011000 Unwrought Aluminium, Not Alloyed 607.45 31.07%
Synthetic Staple Fibres, Of Polyesters, Not
65 55032000 596.96 10.32%
Carded, Combed Or Processed
Cathodes And Sections Of Cathodes Of
66 74031100 571.05 31.07%
Refined Copper
67 84118200 Gas Turbines, Of A Power >5000kw 567.90 26.27%
Com.Sin.Cot.Yarn,With>=85%Cot.,Nprs,
68 52052300 <232.56deci(>43mm)But>=192.31de(<=5 566.94 37.07%
2mn
Dyed Plain Cotton Woven Fabrics With
69 52083100 561.76 89.42%
>=85% Cotton, =<100g/M2
Washing, Bleaching Or Dyeing Machines,
70 84514000 554.40 26.27%
Nes
71 8081090 Apples, Fresh, Nes 539.49 89.42%
Semi-Products Of Iron Or Non-Alloy
72 72072000 512.69 844.08%
Steel, >=0.25% Carbon
Other reception, transmission app.(excl.
73 85176290 481.26 58.69%
modem, telephonic/telegraphic switch.
82
Annexure: Trade data and brief analysis — Slide 6 PDF page 91
SL LC Value
HS CODE Commodity Name TTI
No. (USD in Millions)
Parts Of Aircraft (Excl.
74 88039000 462.54 5.07%
Aeroplanes/Helicopters)
Yarn, <85% Acrylic Or Modacrylic Staple
75 55096200 456.73 37.07%
Fibres, Mixed With Cotton, Nprs
Lubricationg oil,that is oil such as is not
76 27101921 454.88 49.08%
ordinarly used..below 220 f.., tv
polyacetals, other polyethers and epoxide
39076090 resins, in primary forms; polycarbonates, 24.99%
77 454.71
39076990 alkyd resins, polyallylesters and other 26.07%
polyesters, in primary forms --> other
N/A, (87042217-
Motor Vehicles for the transport of goods- 37.06%,
78 87042219 453.79
> Other, CBU 87042216-
58.69%)
Weaving Machines For Weaving Fabrics,
79 84463000 447.83 11.12%
>30cm Wide, Shuttleless Type
80 84798900 Machines, having individual functions, nes 444.88 26.27%
Ferrous Products Obtained By Direct 1,000 BDT/MT +
81 72031000 442.55
Reduction Of Iron Ore, In Lumps... 800 BDT/MT 4%
Crude palm oil imported by VAT
82 15111010 431.30 32.07%
registered edible oil refinery industries
Portable Digital AdpMachines,Wt<=10
83 84713000 Kg,Comp.At Least 427.19 5%
Cpu,Keyboard&Display
Machines For Wringing, Dressing,
84 84518000 424.54 26.27%
Finishing... Textile Yarns, Fabrics...
Machinery For
85 84223000 Filling,Closing...Etc.Bottles,CansEtc,& 417.23 26.27%
Aerating Drinks
Dyed Woven Cotton Fabrics, With >=85%
86 52083900 409.51 89.42%
Cotton, Nes
Milk And Cream In Solid Forms Of
87 4021091 =<1.5% FAT imported by vat reg. Milk 400.77 37.07%
and
83
Annexure: Trade data and brief analysis — Slide 7 PDF page 92
SL LC Value
HS CODE Commodity Name TTI
No. (USD in Millions)
88 89061000 Warships 397.42 31.07%
89 84452000 Textile Spinning Machines 380.29 11.12%
Limestone flux;Limestone and other
calcareous stones,of a kind used for the
manufacture of lime or cement -->
90 25210000 370.75 68.89%
limestone flux;limestone and other
calcareous stones,of a kind used for the
manufacture of lime or cement
Generating sets with spark-ignition
91 85022000 370.36 26.27%
internal combustion piston engines
92 28362000 Disodium Carbonate 355.03 31.07%
Artificial Staple Fibres, Of Viscose
93 55041000 351.16 10.32%
Rayon,NotCarded,Combed Or Processed
Insecticides For Dairy, Poultry and
94 38089110 349.92 10%
Agricultural purposes
Semi-Products Of Iron Or Non-Alloy
95 72071900 349.60 844.08%
Steel, <0.25% Carbon, Nes
Durum wheat Seed, EXCL.
96 10011190 348.29 0%
Wrapped/canned upto 2.5 Kg
Petroleum Oils And Oils Obtained From
Bituminous Minerals,Other Than Crude;
Preparations Not Elsewhere Specified Or
Included,Containing By Weight 70% Or
27101200
97 More Of Petroleum Oils Or Of Oils 347.90 86.42%
27101239
Obtained From Bituminous
Minerals,These Oils Being The Basic
Constituents Of The Preparation;Waste
Oils --> Light oils & preparations.
Looped Pile Fabrics Of Cotton, Knitted Or
98 60012100 345.69 89.42%
Crocheted
99 52030000 Cotton, Carded Or Combed 336.91 26.07%
84
Annexure: Trade data and brief analysis — Slide 8 PDF page 93
SL LC Value
HS CODE Commodity Name TTI
No. (USD in Millions)
Unbleached Kraftliner, Uncoated Paper &
100 48041100 334.92 37.07%
Paperboard In Rolls Or Sheets
Total: 132,110.16
Source: Bangladesh Bank Dashboard
The table is an indication that zero tax, low tax and high tax goods are vulnerable to be
abused for TBML. Goods imported in huge/bulk amounts are also vulnerable in this
context.
a) In the table above we can see that the duty of the cane sugar (H.S Code 1701.14.00)
imported during 2013-2017 was BDT 2000, whereas the same type of cane sugar (H.S
Code 1701.99.00, 1701.91.00) in which import/customs duty was BDT 4500 was either
not imported or was reported as the H.S Code bearing low import duty.
b) Instances are there where even though HS Code was reported correctly price was quoted
so low (e.g USD 1.00 for hair drier) that market never justifies and the motive of which
was obviously to evade tax.
c) In some cases it has been found that price of the goods like Maize (H.S Code 10059090)
imported from China during 2017 ranged from USD 186 to 218 Per MT; the same goods
imported from Brazil also ranged from $184 to $222, and the ones imported from India
ranged from $210(March 2018) to $252 (Jan 2018). There are also examples where we
can see that a customer imported same goods (H.S Code 1302.32.00 for example) from
the same country at a price of $3.79/kg in January, 2018 and at a price of $37.55/kg in
February, 2018. Though in the later case the import was made through air the price was
significantly higher. On 1st January, 2017 while importing Onions (HS Code 0703.10.19)
from India price ranged from $130 to $350 and the import duty was 0%. In importing
Looped Pile Fabrics of Cotton, Knitted or Crocheted (HS Code 60012100,) from same
country and during the same week price fluctuated tremendously though TTI was
89.42%. There are ample evidences that price fluctuated significantly while importing
goods bearing no duty, less duty and high duty (where importer doesn’t bother for tax and
his motive is to siphon money). Therefore, even before access to a combined database by
the banks, they should conduct due diligence establishing and analyzing their own
database.
d) During 2016-2017 in some cases it was found that freight charges in the import of fruits
like apple ranged from around 26% to 55% of FOB Value. This sort of abnormality
should trigger TBML Alert and entails due diligence on the part of the bankers.
e) There are huge number of low value cases where under no commercial value goods are
imported which should trigger alerts and entail due diligence on the part of the customs
85
Annexure: Trade data and brief analysis — Slide 9 PDF page 94
officials. Before endorsing these type of documents bankers should conduct CDD. As
import is conducted though LCAF without opening LC, caution should be taken in these
sorts of cases by bank officials through proper KYC.
f) In some cases it has been seen that some EPZ companies were importing goods
(industrial salt etc. for example) from local suppliers and were again exporting to local
traders, lack of justification of which triggers alert.
Some of the factors derived from analysis of export data of several years:
a) Higher percentage of cash incentive contributes to boosting certain export goods. These
goods are vulnerable to be over invoiced as more proceeds ensure more cash incentive to
the exporters.
b) To ensure a stable forex reserve, exporter is not barred by the regulators to export even
for failure to repatriate export proceeds in time (within 4 months). Some exporters have
been seen to take advantage of this and continue exporting to same country/beneficiary
for a few years even though most of the proceeds were not realized. Non-repatriation or
even long delay in repatriation may increase vulnerability to TBML.
c) Sometimes it has been seen that during the same period and within the same market
products with same features and quality have significant differences in price.
d) Use and import of old machineries by the exporters to produce export goods triggers
TBML alert.
e) Irregular products or commodities prices of which are not easily available are vulnerable
to TBML.
86
AD Bank Checklist
Use this checklist for internal learning, branch self-assessment and trade compliance discussion.
Quiz: TBML Guideline Learning Check
25 scenario-oriented MCQs based on the BFIU guideline. Submit to generate score and certificate.
Certificate of Completion
Enter participant name and submit quiz. Certificate shows score and correct/incorrect count.
Certificate of Completion
This certifies that
Participant Name
has completed the quiz on the session
Guidelines for Prevention of Trade Based Money Laundering
BFIU • Bangladesh Bank
Score
0/25
0/25
Correct
0
0
Incorrect
0
0
Prepared for learning and internal control review based on BFIU Guidelines for Prevention of Trade Based Money Laundering, 2019.