Buying and selling high-value goods such as boats is attractive to criminals because such transactions can avoid interaction with the financial sector.
Boats can be purchased by criminals using illicit cash or a combination of credit and illicit cash. Where credit is obtained for the purchase, the loan can be repaid early using illicit cash and the vehicles can then be resold. Any losses made by the criminal on the loan or as a result of a decrease in the boats’ resale value are accepted as the cost of laundering illicit proceeds.
The Money Laundering and Terrorist Financing (ML/TF) risks associated with boat dealers include:
- High-risk red flags include significant or frequent use of cash to purchase valuable commodities and assets, which can then be resold to disguise the origin of illicit funds;
- Criminals may also use cash to buy high-value goods such as boats, then travel overseas with them to transfer value while avoiding detection by financial institutions; and
- Organised crime groups may use cash to purchase high-value goods then on-sell them for cash, so they can disguise the origin of the funds and deposit the money into the financial system without raising red flags
Boat dealers must ensure the organisation conducts a comprehensive ML/TF risk assessment to identify, assess, mitigate and manage ML/TF risk exposures as a critical first step in complying with AML/CFT laws.