Luxury goods that were actually phantom shipments, with no goods ever delivered. Agricultural imports that were falsely declared, concealing narcotics hidden within legitimate trade. These are just two examples of how criminals exploit global trade to launder illicit funds, making it difficult for businesses to identify and prevent illegal activity within their supply chains. For businesses that operate internationally, the threat of Trade-Based Money Laundering (TBML) is real and growing. Hidden within complex supply chains and trade documentation, TBML allows criminals to move illicit funds across borders, all while disguising the true nature of the goods involved. With global trade becoming increasingly interconnected, the need for businesses to safeguard against TBML has never been more critical.
That’s why the recent release of HMRC’s Trade-Based Money Laundering Handbook is a crucial development for businesses in the UK and beyond. The handbook provides invaluable guidance on detecting, preventing, and addressing TBML risks in global trade.
Understanding TBML and its impact
Trade-Based Money Laundering refers to the process by which criminals exploit global trade to disguise the movement of illicit funds. This can involve various tactics, such as:
- Mis-invoicing: Under or over-valuing goods to move money undetected.
- Multiple invoicing: Using multiple invoices for the same goods to move money illicitly.
- False declarations: Misrepresenting the nature or origin of goods to evade regulatory scrutiny.
While these activities may seem difficult to detect, they have real-world implications for businesses that unknowingly become involved in TBML schemes. Apart from the obvious legal and financial risks, businesses exposed to TBML are also vulnerable to reputational damage, as customers, investors, and regulators expect companies to maintain ethical and transparent supply chains.
A game-changer for trade compliance
The HMRC Trade-Based Money Laundering Handbook marks a turning point in the UK’s approach to this growing risk. By consolidating information on TBML typologies, red flags, and investigative processes, the handbook equips businesses with the tools they need to combat this form of financial crime within their operations and supply chains.
The timing of the handbook’s release is particularly significant. With the UK’s Economic Crime and Corporate Transparency Act (ECCTA) now in force, companies are facing greater regulatory scrutiny than ever before. ECCTA introduces new Failure to Prevent Fraud provisions, which make companies liable for fraud committed by their employees or agents unless they can demonstrate reasonable fraud prevention procedures are in place. This includes fraud linked to TBML.
For businesses involved in international trade, this means that effective due diligence is no longer optional. It’s a regulatory requirement.
What’s inside?
The HMRC handbook provides an in-depth look at the mechanisms behind TBML, offering clear definitions and identifying key risk factors businesses should watch for in their supply chains.
Some of the core topics it covers are:
- Trade fraud typologies: Understanding how criminals manipulate trade transactions to launder illicit funds.
- Red flags and risk indicators: How to spot the signs of TBML activity, including discrepancies in documentation, unusual shipping routes, and inconsistent invoicing.
- The investigative framework: How HMRC approaches TBML investigations and the steps businesses can take to ensure they aren’t inadvertently involved in illegal trade practices.
For any organisation that deals with global trade, whether through direct transactions, supply chain management, or logistics, understanding these risk factors is key to avoiding involvement in TBML.
A must read for your business
The release of the TBML handbook underscores the growing importance of compliance and due diligence in global trade. With heightened regulatory expectations, UK businesses that fail to address TBML risks could face severe penalties, including financial fines and potential legal action.
Moreover, businesses are increasingly held accountable for their supply chains under laws like POCA (Proceeds of Crime Act 2002), and future legislation such as the EU’s Forced Labour Regulation, which will hold businesses responsible for ensuring their supply chains are free from forced labour, a practice often linked to TBML schemes.
In addition to the risk of penalties, there is the risk of reputational damage. As customers and investors place increasing value on corporate transparency and ethical business practices, companies found to be linked to illicit activities such as TBML may face significant reputational fallout.
Who’s at risk?
Businesses involved in international trade or global supply chains are most at risk when it comes to trade-based money laundering (TBML). This includes companies in industries such as manufacturing, logistics, finance, and consumer goods, i.e., sectors that often rely on complex networks of suppliers, intermediaries, and international shipments.
Procurement and finance teams are also directly impacted, as they play a key role in assessing the legitimacy of trade transactions and ensuring compliance with anti-money laundering (AML) laws. In addition, companies operating in or trading with high-risk jurisdictions face heightened exposure to TBML risks, requiring extra due diligence and vigilance.
Ultimately, any business that handles cross-border transactions, imports, exports, or relies on international supply chains needs to be aware of the TBML risks and take proactive steps to prevent them.
Forced labour and TBML
In July 2025, the Joint Committee on Human Rights published a report highlighting the intersection of forced labour and trade-based money laundering (TBML) in global supply chains. The report revealed how criminal networks exploit forced labour to reduce costs, conceal illicit financial flows, and manipulate trade transactions. These practices often go undetected due to the complexity and lack of transparency in supply chains, particularly when goods are sourced from regions with weak labour law enforcement. The Committee urged stronger legal frameworks to combat these abuses, including import bans on goods made using forced labour and increased use of the Proceeds of Crime Act (POCA) to disrupt TBML operations.
The Government’s response, published in October 2025, acknowledged the issue but stopped short of committing to import bans for forced labour goods, leaving questions about urgency and enforcement. While the Government emphasised corporate responsibility for supply chain transparency and due diligence, businesses will face heightened scrutiny and pressure to ensure their operations are free from forced labour and financial crime. With new regulations like the EU Forced Labour Regulation set to take effect in 2027, companies must prepare for more rigorous compliance standards to manage the growing TBML and human rights risks in their supply chains.
Practical steps to take now
The release of HMRC’s TBML handbook is a wake-up call for businesses. Now is the time to act, especially if your company is involved in international trade. Here are key steps to prepare:
- Conduct a risk assessment: Review your supply chains and trade practices to identify any vulnerabilities to TBML. This includes verifying your suppliers, checking for discrepancies in trade documentation, and reviewing financial transactions for irregularities.
- Strengthen due diligence procedures: Implement stronger vetting processes for suppliers, intermediaries, and agents, especially those in high-risk jurisdictions. Ensure that your due diligence procedures are aligned with current AML and TBML guidelines.
- Train your team: Educate your staff, particularly those in procurement, finance, and logistics, about the red flags of TBML. Regular training will help your team recognise potential issues and take swift action.
- Adopt the right technology: Invest in tools that can help you monitor and track trade flows, invoices, and payments. Automated solutions can flag suspicious activity in real-time, helping you stay ahead of any potential issues.
The release of HMRC’s Trade-Based Money Laundering Handbook is a clear signal that the UK government is taking TBML seriously, and businesses must do the same. Packed with realistic scenarios, real-life case studies and customisation options, VinciWorks’ suite of AML courses will help you comply with all relevant regulations and stay protected. Our client onboarding solution streamlines risk assessments, client due diligence, and ongoing monitoring, offering unparalleled flexibility and industry-specific guidance.