Red flags for trade finance, importers and exporters

What supervisors and standard-setters expect

The FATF and Egmont Group of financial intelligence units call trade-based money laundering one of the most complex and widely used methods, because criminals use legitimate trade to disguise and move proceeds. Their March 2021 risk indicators report groups warning signs under four heads: the structure of the business, trade activity, trade documents and commodities, and account and transaction activity.

In the US and UK texts reviewed, binding duties fall on banks and other financial institutions, not ordinary importers and exporters. UK regulation 18 requires regulated firms to assess risk by customer, geography, product, transaction and delivery channel, and keep a written record. In the US, a bank must file a suspicious activity report for a transaction of at least $5,000 that it knows or suspects involves illegal funds or has no apparent lawful purpose, within 30 calendar days of detection (60 at most if no suspect is identified). The US examiners' manual adds that trade finance is document-based, that goods may be over- or under-valued to move value, and that an issuing bank should learn the identity, business and funding sources of applicants and beneficiaries. Industry practice follows the Wolfsberg, ICC and BAFT Trade Finance Principles, extended on March 27, 2019 to open account trade and bank-to-bank trade loans.

The latest large action shows what failure looks like. On October 13, 2026, Treasury announced a $1.2 billion FinCEN penalty, a $750 million OCC penalty and an $11.6 million OFAC settlement against Bank of America. FinCEN found over $5 billion in suspicious transactions not reported on time, including more than $1 billion involving priority risks such as potential trade-based money laundering with a southwest border link. The OCC found that, after a December 2024 order, the bank still processed potential trade-based money laundering because of a systemic monitoring gap. Treasury said the bank leaned on law enforcement inquiries instead of its own controls, and red flags went unaddressed even after compliance staff escalated them.

Mapping the page's red flags to these duties gives a practical test. Prices far from market, or goods that do not fit the customer's business, are failures of customer due diligence about what the customer really does. Reliance on payments from unknown third parties is a gap Treasury cited. Repeated letter of credit amendments belong to document review, where examiners expect banks to understand the paperwork. Volumes out of proportion to the company are a monitoring question, and the reporting clock starts at detection.

As of October 2026: Checked October 21, 2026. The Treasury release does not describe trade finance failures beyond the references to potential trade-based money laundering, and the Bank of America matter is a recent, admitted and settled action; details may be refined in the underlying consent orders, which were not read. The Wolfsberg, ICC and BAFT principles text itself was not opened, only the 2019 announcement, so their contents are not described. The statement that importers and exporters are not themselves obliged covers only the US and UK texts consulted, not every jurisdiction.