Are Price Checking Controls Plausible?
The price of goods involved in a trade finance transaction is sometimes manipulated by those wishing to launder the proceeds of crime through the financial system. Depending on the methods used, this is called either over- or under-invoicing or over- or under-supplying. As such, some regulators have suggested that a simple way to identify such activities is by banks implementing a price-check on all their trade transactions.
This paper outlines the various potential methods for checking the price of goods, and their feasibility, demonstrating that there are significant difficulties in implementing effective price checking for trade finance transactions: