Counterfeiting

The imitated item can be banknotes, branded products, medicines, identity papers, cheques or share certificates. Counterfeit goods cost brands and tax authorities money and can harm health, as with fake medicines or electrical parts. Counterfeit currency undermines trust in money and is often handled by central banks and specialist police. For financial crime teams, counterfeiting plays two parts. It is a predicate offence (a crime whose proceeds can be laundered), so the money it earns is criminal property. It can also be a laundering tool: false invoices, forged certificates and fake goods may be used to justify payments or to move value across borders in trade-based schemes. Banks meet it through forged documents in loan or trade finance files, through customers who deposit suspicious notes, and through trade flows where goods do not match their description. A review that treats a forged certificate as a paperwork slip lets the sale proceeds into the bank; spotting the fake early protects customers and gives police something to act on.

The trade finance team at a regional lender reviews a letter of credit for imported luxury watches. The invoice price is far below the normal market price for the brand, and the importer's records show several earlier shipments from the same supplier, who has no record of brand authorisation. The desk escalates its concern that the goods may be counterfeit and files a suspicious report.