Bonded Warehouses

By storing illicit goods alongside legitimate shipments, forging or repeatedly amending shipping documents, and exploiting minimal on-site oversight, bonded warehouses introduce multiple layers of transactional complexity that obscure the true origin and ownership of criminal proceeds.

Criminals exploit the warehousing and shipping channels by taking advantage of minimal on-site inspections and frequently forging or altering shipping documents. They mix legitimate and illicit goods, relabel contraband, and manipulate supply chain data to obscure the origin and ownership of illicit assets. This distinct operational tactic goes beyond geographic laxity, directly abusing the transport and storage processes as a means for layering and concealment.

Bonded warehouses often operate in free-trade or duty-free zones with relatively lax customs scrutiny and reduced regulatory oversight. Criminals exploit these lightly regulated areas to complicate audits, obscure beneficial ownership, and evade detection of illicit goods and financial flows. This is the central vulnerability enabling them to store, re-label, and misrepresent high-value or restricted items without triggering sufficient governmental or financial institution scrutiny.

• Maintains official records on imported and exported goods, including shipping routes, tariffs paid, and customs declarations.
• Facilitates detection of repeated amendments, forged filings, re-labeled goods, or suspicious changes in product descriptions within bonded warehouses, indicative of possible illicit layering or misrepresentation.

• Consolidates information on jurisdictions with high AML/CFT risk, including known regulatory weaknesses or inadequate customs oversight.
• Assists in prioritizing investigations when bonded warehouses operate in regions prone to minimal enforcement or higher incidences of illicit trade.

• Contains historical and current prices, types, and valuation references for commodities.
• Allows comparison of declared values for precious commodities stored in bonded warehouses, aiding in spotting inconsistencies or forged certifications that may signal laundering activities.

• Comprises shipping logs, bills of lading, cargo manifests, and related documents essential for cross-border commerce.
• Enables investigators to track repeated amendments, discrepancies between declared and actual goods, or inconsistencies in declared values, which are key red flags for money laundering via bonded warehouses.

Provides detailed records of commodity purchases, sales, and exchanges, including transaction dates, parties involved, commodity types, quantities, and prices. For bonded warehouses storing precious commodities, these records enable investigators to trace the final disposition of goods, cross-check reported valuations, and identify discrepancies indicative of potential layering or misrepresentation.

• Provides official or aggregated details on business registration, shareholders, directors, and beneficial owners.
• Supports investigations into the ownership history of entities using bonded warehouses, helping to identify shell or front companies with minimal operational footprints and uncover hidden beneficial owners.

Apply targeted Enhanced Due Diligence (EDD) on clients or counterparties utilizing bonded warehouses. Specifically, verify cargo documentation, declared valuations, and beneficial owners of warehoused goods. Investigate abrupt or repeated changes to shipping or ownership records to detect attempts at layering or concealing contraband.

Validate product certifications and documentation related to warehoused goods against recognized industry databases, public registries, and reputable third-party sources. Conduct spot-checks for forged or expired certificates (e.g., precious stones or commodities) and identify flags in adverse media that indicate warehouse-based smuggling or laundering schemes.

Continuously monitor bonded warehouse activities for unusual changes in item valuation, extended holding periods, or frequent ownership transfers. Investigate unexplained revisions to cargo details to detect layering efforts and identify potential black market redirection of goods.

Implement specialized reviews of shipping documents, cargo manifests, and commodity codes for goods in bonded warehouses. Investigate repeated amendments, inconsistent or re-labeled goods, and significant tariff discrepancies to uncover fraudulent repackaging or undervalued high-duty products used for layering.

• Bonded warehouse schemes often involve forging or altering trade documents, such as bills of lading, to disguise the true nature and value of stored goods.
• Criminals exploit these instruments to present misleading information to financial institutions, complicating due diligence on cross-border shipments.
• Repeatedly revised shipping records mask beneficial ownership and hinder authorities' ability to identify suspicious trade transactions.

• Criminals specifically use bonded warehouses to store high-value items like raw diamonds under forged or repeatedly altered certifications.
• This allows launderers to 'layer' illicit funds by misrepresenting the precious commodities' value, origin, or ownership before arranging a final brokerage or sale.
• Minimal direct oversight within bonded facilities enables ongoing manipulation of documents, hindering the traceability of these regulated commodities.

• Criminals may create or inflate invoices for goods held in bonded warehouses, misrepresenting actual quantities, values, or owners.
• These falsified receivables facilitate the layering process by justifying suspicious capital flows in trade-based transactions.
• Repeated amendments to invoices and cargo manifests obscure the genuine commercial rationale, complicating financial institutions’ scrutiny of payment flows tied to the stored goods.

• Criminals exploit the warehousing component of freight and shipping offerings to store contraband under bonded warehouse arrangements, mingling illicit goods with legitimate shipments.
• They repeatedly re-label or repackage items to disguise their true origin or classification, limiting effective oversight and frustrating auditors seeking to verify the legitimacy of stored goods.
• Minimal on-site verification and prolonged storage under customs supervision hamper the identification of beneficial owners.

• Criminals routinely forge or excessively amend shipping and trade documents to misrepresent the contents, value, or owners behind goods stored in bonded warehouses.
• By modifying bills of lading, certificates of origin, and other records, they conceal the true nature of contraband shipments, frustrating customs oversight and complicating beneficial ownership tracing.

• By coordinating customs procedures and handling bonded warehouse details, trade facilitators can inadvertently enable criminals to obscure goods' ownership, valuation, and end destinations.
• The extended time goods can remain in bonded warehouses, coupled with reduced or suspended duties, makes it easier for criminals to rewrite or falsify shipping data.
• These services add complexity to transactions, hindering regulatory scrutiny and inhibiting the accurate tracking of suspicious shipments.

Organized crime groups exploit bonded warehouses to:

• Conceal and store illicit goods (e.g., contraband alcohol, tobacco, or high-demand items) alongside legitimate shipments, frustrating audits and supply chain tracking.
• Re-route or funnel these goods near exit borders to black markets, further complicating regulatory oversight and customs controls.
• Manipulate shipping records, obscure beneficial ownership, and repeatedly alter cargo manifests, making it difficult for financial institutions to identify suspicious flows associated with inventory financing or trade-based transactions.

Document forgers support money laundering through bonded warehouses by:

• Creating or altering customs, shipping, or certification documents, masking the true nature and value of goods stored under bonded arrangements.
• Forging or repeatedly revising certificates for precious commodities (e.g., raw diamonds), complicating financial institutions’ efforts to verify asset legitimacy.
• Amending bills of lading, invoices, and ownership records, thus concealing true beneficiaries behind warehoused assets and disrupting risk assessment.

Shipping and logistics companies often become unwitting facilitators when:

• Criminals hide contraband or misclassified items in bonded warehouse sections managed by these firms, commingling illicit products with legitimate cargo.
• Minimal on-site verification and extended storage terms enable repeated re-labeling or re-packaging of goods before final transport.
• Financial institutions providing trade finance or transactional services to such companies face heightened risk, as fraudulent documents and inconsistent cargo details may go undetected in routine shipping operations.