The use of loan service businesses to cover costs while waiting for payments for goods or services is increasingly being exploited by money launderers based in Latin America, say analysts. With lines of credit from banks having dried up because of the global recession, some businesses are selling their accounts receivable at a discount to a "factor" â€“ an invoice finance company â€“ to cover operating costs. "Factoring," which involves purchasing debt from the businesses and collecting on the invoices, can easily be used to launder money, they said. "Money launderers use the same routes that businesses use, and with...
Latin America's economic growth has outpaced its development of institutions tasked with fighting financial crime, according to Monica Arruda de Almeida, an adjunct assistant professor for the Center for Latin American Studies at Georgetown University who researches transnational regulation.
Though headlines are focused on the subprime mortgage crisis and recessionary fears, criminals are still finding ways to launder funds, including through trade-based finance , says Elaine Carey, Senior Vice President and National Director of Control Risks, an independent risk consultancy office.
Technological developments offer governments unprecedented ability to address trade-based crime. But there's a problem, according to Nikos Passas, a professor who studies financial crime at Boston-based Northeastern University: governments aren't utilizing available tools.