Senator’s white paper suggests distributed ledger to stop trade-based money laundering

“So, if exported goods move from the U.S. to Country 1, but the invoice is routed through Country 2 and the reported value on the invoice is lowered in Country 2 without the knowledge of parties in the U.S. or Country 1, Country 1 will collect fewer duties upon the imported good,” the paper says.

Such money laundering also can decrease tax revenue collected due to the sale of underpriced goods to consumers, putting legitimate businesses at a competitive disadvantage, and can spur the infiltration of counterfeits in supply chains, the paper notes.

In the paper, Cassidy calls for a legislative agenda to counter TBML and disrupt drug trafficking; development of an appropriate U.S. methodology and system to integrate necessary trade and intelligence data; prioritization by federal agencies in combating TBML through interagency and private-sector cooperation; and enhanced collaboration with trading partners to stop TBML.

Further, government agencies should partner with private-sector companies starting to deploy distributed ledger systems, the paper says.

Congress should task appropriate federal agencies with tracking and correlating shipping manifest and financial information from the public and private sectors in real time, using a public distributed ledger to accomplish this, according to the paper.

“Threat networks, terror groups and drug traffickers are often linked through social relationships and common facilitators, which means that despite different objectives, they share the same assets for shipping illicit goods, funneling money and bribing officials,” the paper says. “Those assets form part of a supply chain in which licit trade takes place. This makes TBML one of the most profitable and safe mechanisms to launder money, and it is imperative that Congress act.”