Is tackling Trade Based Money Laundering (TBML) through stricter reporting regulation the most effective response?

Purpose This paper (written in August 2015) aims to discuss the regulatory approach to detecting and preventing trade-based money laundering (TBML) by using the example of Financial Crimes Enforcement Network (FinCEN) and its use of geographic targeting orders. Design/methodology/approach The paper uses both theoretical and empirical reports on TBML to explore whether increased regulation will ultimately achieve the ends it claims to offer. Findings The main findings from the analysis are that increased regulation has been found to have a negative impact on improving TBML detection. There is evidence that it causes an over-defensive response from banks that leads to a decrease in useful information to financial intelligence units. Research limitations/implications The research topic is very new and an emerging topic; therefore, analysis papers and other academic writing on this topic are limited. Practical implications This paper has implications for both the regulatory and the banking/financial service sectors. Originality/value The originality of this paper is the deeper analysis of a specific TBML case, and the focus is on both the theoretical and empirical implications of the approach being used.