TBML006 · TBML

Circular Trade

Circular Trade (round-tripping) cycles goods or funds through a chain of related parties so that value leaves an entity and returns to it with no genuine change of ownership or economic purpose. Each individual trade looks legitimate; only when the chain is assembled does the loop appear — the same goods, or the value they represent, come back to where they started.

It is used to:

• Inflate apparent trading volume and turnover
• Move and launder value under cover of genuine-looking trade
• Create fictitious commercial history for entities
• Support related-party value transfer
• Obscure the origin of funds

Risk narrative

A group of related entities trade the same commodity around a ring: entity A sells to B, B to C, and C back to A. Each leg carries an invoice, a payment and often a shipment, so no single trade is remarkable. Assembled, the trades form a closed loop that returns the goods and value to the originator. Where the parties share ownership and one is a shell, the ring is a laundering or value-transfer mechanism rather than genuine commerce.

Risk indicators

Risk

• Closed Trade Loop
• Common Control
• Round-Tripped Value
• High Value Trade
• Shell Company Structure
• High Risk Corridor

Investigation actions

1. Trace the goods and funds around the loop; confirm whether any genuine change of
2. Establish the economic purpose (or absence of one) for the ring.
3. Resolve common control and ownership across the parties.
4. Assess whether any party is a shell without commercial substance.
5. Package evidence for investigator review where the score is High or above.

Use cases

• Trade Based Money Laundering (TBML)
• Round-Tripping / Turnover Inflation
• Related Party Value Transfer
• Shell Company Abuse
• Sanctions Evasion

Related typologies

Curated from fc-04-tbml-analytics-toolkit/typologies/TBML006/TBML006_Circular_Trade.md