Trade misinvoicing Current Affairs - 2019
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United Kingdom’s National Crime Agency (NCA) in its report has listed Pakistan among top three sources for money laundering in the country. The other two countries are Nigeria and Russia. The NCA is non-ministerial UK government law enforcement agency.
Key Highlights of NCA report
UK is prime destination for foreign corrupt and politically exposed people (PEPs) to launder money. It has identified trade misinvoicing as one of the key mechanisms used for such operations. Investment in UK property, particularly in London, continues to be attractive mechanism to launder funds.
The true scale of PEPs’ investment in UK is not known, however source countries that are most commonly seen are Russia, Nigeria and Pakistan. Small number of UK-based professional enablers, such as accountants, solicitors, estate agents and trust and company service providers, assist such corrupt individuals in laundering their money.
The overseas jurisdictions that have most enduring impact on UK across majority of different money laundering threats are Russia, China, Hong Kong, Pakistan, and United Arab Emirates (UAE). Some of these jurisdictions have large financial sectors which also make them attractive as destinations or transit points for proceeds of crime.
There may be also increase in Brexit-related spike in corrupt activities between UK and countries outside European Union (EU). Due to this, UK businesses will come into contact with corrupt markets, particularly in developing world, raising risk they will be drawn into corrupt practices.
It is a form of trade-based money laundering. It is deliberately misreporting value of commercial transaction on invoice submitted to customs officials. This practice is adopted by traders to transfer money illicitly to foreign countries or in other words to keep their money in foreign accounts. It is largest component of illicit financial outflows measured by Global Financial Integrity.