Maritime Fraud

August 09, 2007 (LBO) – Trade finance involving shipment of goods by sea could lend itself to money laundering, a top international maritime fraud investigator has warned Sri Lanka’s shipping community. Companies involved in the transport of goods by sea and related business like banks should take more care in their transactions and know better the people with whom they have transactions, said P Mukundan, director of the International Maritime Bureau of the International Chamber of Commerce.

“Trade finance depends entirely on documents,” he said in a presentation on shipping and trading frauds at a shipping conference organised by the Sri Lanka branch of the Institute of Chartered Shipbrokers to mark its 20th anniversary this week.

Substantial amounts of money can be paid out by banks whose only obligation is to verify that the documents comply with the terms of the credit.

“Any system which depends entirely on documents will be vulnerable to abuse by money launderers.”

Once credit complying documents have been presented and payments have been made, purportedly for an international trade transaction, the money thus released would leave a documentary trail and hence, facilitate the i