Trade misinvoicing is a form of trade-based money laundering, in which money is moved across borders illicitly through the deliberate misreporting of the value of a commercial transaction on a customs invoice (Global Financial Integrity, 13.11.2017).

The practice of trade misinvoicing is largely financially motivated, utilised by traders looking to avoid tariffs, take advantage of export subsidies and tax incentives, circumvent currency controls and bureaucratic hurdles and avoid red tape (UNCTAD, 26.12.2016). It is also utilised my criminals – both organised groups and individual corrupt public officials / businessmen – to launder funds gained from crime or corruption (Global Financial Integrity, 13.11.2017).

This practice is largely carried out through re-invoicing (use of a tax haven corporation to act as an intermediary between businesses and foreign customers), under-invoicing (thereby avoiding custom duties) or over-invoicing (to take advantage of export subsidies) (Global Financial Integrity, 06.05.2014). Traders are even known to misclassify products or mis-declare destinations in order to circumnavigate trade restrictions (Volker Nitsch, 02.2017).

This deliberate – and fraudulent – manipulation of the price, quantity or quality of a products on a customs invoice, is viewed as a quick, simple and fairly low-risk way to earn a little – or in some cases a lot of – extra money.