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The FATF has examined money laundering associated with VAT carousel fraud. VAT carousel fraud involves an organised criminal attack on common duty tax systems to defraud governments of money that should be paid in VAT. The activity is characterised by fraudulent VAT claims made when goods cross a common duty area border.
Substantial proceeds can be earned by well organised VAT Carousel frauds. These schemes can also be used to launder and/or raise funds for investment in other types of crime. This project used the European Union as an example region. However, the project team also discovered cross border schemes operating in other countries such as Mexico and the Ukraine. The findings of this study may also be relevant to other countries with common duty agreements.
The report identifies the global impact of money laundering generated by the fraud and details the characteristics of the money laundering cycle from the proceeds of the fraud to investment into legitimate economy. It explores a number of ways in which the private sector and governments can combat these money laundering schemes.
This report is one in a series of thematic studies carried out by the FATF to provide an in-depth look at money laundering and terrorist financing typologies. A full text of the report is available on the FATF website. Click here to download a copy.
For further information, journalists are invited to contact Helen Fisher, OECD Media Relations (tel.: +33 1 45 24 80 97 or helen.fisher@oecd.org or spencer.wilson@oecd.org) or the FATF Secretariat, 2, rue André-Pascal, 75775 Paris Cedex 16 (tel: +33 1 45 24 79 45, fax: +33 1 44 30 61 37 or email: contact@fatf-gafi.org).
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