Reported by  JERRY HAAR

(Excerpt shared below. To read full report, go to: https://thehill.com/opinion/finance/5462780-the-higher-the-tariffs-the-greater-the-money-laundering/amp/)

U.S. trade policy is now synonymous with tariff policy. President Trump’s latest round of higher taxes on imports went into effect on Aug. 7, and the 40 countries with which the U.S. runs a trade deficit now face a 15 percent rate. Some will be hit with even steeper rates — Brazil, for one, faces a 50 percent total tariff.

While trade and tariffs have been a dominant economic policy issue since Trump took office in January, one related domain has been completely overlooked: the connection between high tariffs and trade-based money laundering, which disguises the proceeds of crime through the use of trade transactions in an attempt to legitimize their illicit origins.

Some sources estimate that trade-based money laundering could account for as much as $1.6 trillion of the total amount laundered globally each year. In a study cited by the Financial Action Task Force, trade mis-invoicing accounted for roughly 80 percent of illicit financial flows in developing countries.

The relationship between tariffs and money laundering represents one of the most complex challenges facing global trade and financial systems today. As tariff rates increase, so too does the incentive for both legitimate businesses and criminal organizations to engage in customs fraud and trade-based money laundering. This symbiotic relationship creates a dual threat: higher tariffs directly incentivize evasion schemes, while these same schemes provide convenient vehicles for laundering illicit proceeds from other criminal activities.

Simply stated, the fundamental relationship between tariffs and financial crime is straightforward: High tariffs create greater incentives to cheat.