Ghost Shipping

Ghost shipping involves the use of fictitious trade documentation and nonexistent shipments to create the appearance of legitimate commercial transactions. By cycling illicit funds through these false invoices and bills of lading, criminals introduce additional layers of complexity that obscure the origin of proceeds, fulfilling the core layering objective.

Ghost shipping exploits the inherent vulnerabilities of trade finance and related documentation-based products. Financial institutions often rely solely on bills of lading and invoices rather than physically verifying shipments. As a result, criminals can submit falsified records indicating cargo that never actually moves. This tactic enables the layering of illicit funds under the appearance of legitimate trade transactions, taking advantage of the product's document-centric processes.

Official records maintained by customs and border authorities track the movement of goods across ports or borders.

• By comparing declared shipments in trade documentation with actual customs entries or exits, investigators can reveal discrepancies that signal ghost shipments.
• Identifies cargo that was never physically processed, indicating artificially constructed shipment paperwork.

Information on commodity prices, typical market rates, and standard volumes enables institutions to compare declared shipment values and volumes against prevailing market benchmarks. This comparison can reveal inflated or unrealistic valuations often used in ghost shipping schemes.

Aggregated data from government registries and private providers contains identity details, addresses, and background information on individuals and entities. It cross-checks addresses, contact information, and ownership data with shipping documents, identifying fictitious or unverifiable listings commonly seen in ghost shipping schemes.

Includes official shipping documents (e.g., bills of lading, invoices, certificates of origin) used in cross-border trade.

• Allows detection of ghost shipping by verifying the authenticity and consistency of container numbers, shipping addresses, and invoice references across multiple transactions.
• Helps identify repeated reuse of identical documentation, last-minute alterations, or mismatches in declared goods and volumes, all of which may indicate nonexistent shipments.

Internal files contain verified identities, business details, and historical transaction data for customers.

• Confirms declared addresses, ownership structures, and trade activities, helping to detect suspiciously incomplete or contradictory details that may indicate ghost shipping.
• Ensures alignment of the actual customer profile with shipping claims.

Records detailing official incorporation data, shareholders, directors, and beneficial ownership for registered entities.

• Verifies legitimate operations, physical premises, and real beneficial owners, exposing shell or nonexistent companies used to mask ghost shipping transactions.
• Identifies inconsistencies between declared shipping entities and their actual corporate information.

During onboarding and routine reviews, verify that the customer’s shipping activities align with legitimate business operations by confirming physical premises, prior shipping history, and credible references. Corroborate their claimed trade routes or products with external data to ensure the cargo and shipment volumes are realistic.

Implement dedicated monitoring scenarios for trade finance payments that cross-reference shipping details (e.g., bills of lading, invoice numbers) across multiple transactions. Flag repeated use of the same documentation, sudden or unjustified high-value shipping references, or invoice data mismatches. Investigate any anomalies suggesting artificial or non-existent shipments.

Hold trade-related funds in escrow until independent confirmation of physical cargo movement is obtained, such as through third-party inspections or port authority verifications. If no legitimate shipment can be verified, halt disbursements to prevent the layering of illicit funds via fictitious shipments.

Cross-check container numbers, port entry records, and shipping addresses using public databases, freight registries, and port authority schedules. Investigate mismatches or unverifiable routes that suggest no actual cargo movement. Document all findings and escalate any sudden or unusual changes in shipping details.

Compare purported shipment documents with independent shipping logs, vessel tracking services, and port data to confirm actual freight movement. Look for duplicate or inconsistent documentation, such as bills of lading and container numbers, that may indicate phantom shipments. Immediately escalate discrepancies for further validation or corrective action.

• Fraudsters submit fraudulent bills of lading and shipping records as proof of goods shipped under a letter of credit.
• Once the documentary conditions are ostensibly met, banks disburse funds, effectively laundering illicit money under the guise of legitimate trade finance.
• Reusing or duplicating falsified documents in multiple letter-of-credit drawdowns further obscures the paper trail, complicating accurate fund tracing.

• Criminals forge or manipulate core trade finance instruments—most notably bills of lading—to present nonexistent shipments as authentic.
• Large sums of illicit funds are then laundered via these fictitious cargo transactions, with the paper trail making it appear as normal cross-border trade.
• Because there is no physical cargo to inspect, purely document-based checks often fail to detect the phony nature of these deals, aiding the layering process.

• In documentary collection schemes, a bill of exchange is drawn for goods purportedly in transit, though they do not actually exist.
• Participating banks release funds upon receiving these documents, unaware that the shipment is fabricated.
• Without robust verification of the underlying cargo, the bill of exchange payment seamlessly integrates illicit proceeds into seemingly legitimate trade flows.

• Fictitious invoices for non-existent goods or services are generated, creating receivables that appear legitimate in trade finance.
• Criminals reuse or replicate these same invoices across multiple transactions, artificially inflating trade volumes and layering illicit funds.
• Since external parties rely on documentation rather than physically verifying goods, the phantom nature of these invoices often remains undetected.

• The exporter’s bank forwards nonexistent or falsified shipping documents to the importer’s bank, releasing payments under the assumption that goods are en route.
• This allows layering of illicit funds by fabricating trade activity with no corresponding physical cargo.

• Fraudsters present fabricated or altered bills of lading to fulfill the documentary requirements of a letter of credit, triggering the bank’s payment despite no real shipment.
• Reusing or multiplying the same false shipping documents can inflate transaction values, further obscuring illicit proceeds.

• Collusive or negligent freight forwarders may knowingly accept or facilitate forged documents indicating cargo movement when none occurs.
• This enables perpetrators to claim a legitimate logistics chain for ghost shipments, disguising the absence of real goods and complicating detection of illicit fund flows.

• Criminals create or manipulate commercial invoices, bills of lading, and other paperwork to reflect phantom shipments, making the transfer of funds appear legitimate.
• The same set of doctored documents can be reused for multiple transactions, artificially inflating the appearance of trade volume and irretrievably intertwining illicit proceeds.

• Criminals submit fictitious shipping records or invoices to obtain financing for goods purportedly in transit, although no actual shipment exists.
• By presenting falsified bills of lading, they justify large fund transfers or repeated draws on letters of credit, layering illicit funds under the guise of legitimate trade transactions.

Import-export companies (legitimate, shell, or front) facilitate ghost shipping by:

• Presenting fabricated commercial invoices and bills of lading to financial institutions, purporting to move goods that do not actually exist.
• Reusing or replicating the same paperwork across multiple transactions, artificially inflating trade volumes and layering illicit proceeds.

Their involvement misleads financial institutions into financing or processing payments for nonexistent cargo.

Illicit operators plan and execute ghost shipping schemes by:

• Coordinating the creation or use of falsified shipping documents (e.g., bills of lading) to claim nonexistent cargo.
• Leveraging these phony transactions to layer illicit funds, making them appear as legitimate trade payments.

Their activity complicates financial institutions' due diligence, as it creates a convincing paper trail with no tangible goods to verify.

Document forgers produce or alter shipping records, invoices, and bills of lading for phantom shipments. By falsifying essential trade documentation, they:

• Enable criminals to justify fund transfers for nonexistent goods.
• Undermine financial institutions’ ability to confirm the reality of cargo, as due diligence often relies on paper-based documentation rather than physical inspections.

Shipping and logistics companies can be unwittingly exploited or collusive by:

• Issuing or validating shipping records that detail cargo which never leaves any port.
• Accepting documentation at face value without physically verifying the shipment.

This enables criminals to construct a purported supply chain. Financial institutions, relying on these records, face increased difficulty detecting fraud when no actual goods move.