The role of freight forwarding companies in detecting and investigating trade-based money laundering

Ilse Maritha Makkink, Blanche Steyn and Hannes Christo Bezuidenhout

Journal of Money Laundering Control, 2024, vol. 27, issue 7, 26-42

Abstract: Purpose - This study aims to investigate the role of freight forwarding companies in detecting and reporting trade-based money laundering. The proximity of freight forwarding companies to shipping-related trade-based money laundering red flags places them in an ideal position to detect suspicious transactions. Design/methodology/approach - The study used semi-structured interviews with expert participants in freight forwarding shipping and compliance aspects around freight forwarding. This study focuses on the South African context. Findings - Freight forwarding companies are well-positioned to detect, investigate and report on trade-based money laundering schemes. However, the companies are not always aware of the guidelines designed to assist in identifying trade-based money laundering schemes. Thus, freight forwarding companies develop internal processes to identify trade anomalies but are often unable to link trade anomalies to illegal financial flows and trade-based money laundering schemes. Research limitations/implications - The current regulations on money laundering can be extended to freight forwarding companies by the respective regulators for enhanced anti-money laundering protection. This study is limited to freight forwarding companies in a South African context. Practical implications - Increased awareness among staff in freight forwarding companies can assist them in identifying trade-based money laundering red flags to detect and prevent trade-based money laundering schemes. Social implications - This paper assists other role players and policymakers in the trade process to create a better awareness of trade-based money laundering. The limited obligations on freight forwarding companies to comply with anti-money laundering regulations lead to a more volunteer-like compliance practice. Originality/value - To the best of the authors’ knowledge, this is the first paper that offers insight into the role of freight forwarding companies in detecting trade-based money laundering in South Africa.

Keywords: Trade-based money laundering; Red flags; Freight forwarding companies; Illicit financial flows (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jmlcpp:jmlc-04-2024-0069

DOI: 10.1108/JMLC-04-2024-0069

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