Trade facilitation involves three main dimensions:
- Integration-based. Customs procedures, tariffs, regulations, and documentation handling. They ensure that trade flows abide by the rules and regulations of the jurisdictions they cross. Cross-border clearance, particularly in developing economies, can be a notable trade impediment with border delays, bottlenecks, and long customs clearance times. This underlines the need for enforcing revenue collection so that income from trade is collected according to established rules. Customs fraud often takes place where revenue collection is lacking and requires accurate product valuation and labeling.
- Distribution-based. A multimodal and intermodal freight transport system composed of modes, infrastructures, and terminals that spans across the globe. It ensures physical capacity and connectivity to support trade and its underlying supply chains.
- Transaction-based. Banking, finance, legal, and insurance activities where accounts can be settled and risk mitigated. They ensure that sellers of goods and services receive agreed-upon compensation and that purchasers have legal recourse if the outcome of the transaction is judged unsatisfactory, or are insured if a partial or full loss is incurred. Improving the transactional efficiency of trade can also lead to more opportunities for fraud. Trade misinvoicing is a common form of transactional fraud and is reported to be the largest source of illicit financial outflows in the world. It can be used for money laundering when a larger sum than the actual reported trade transaction is paid to a third party, with the surplus diverted to another foreign account. It can also be used for tax evasion when a lower transactional value is reported, while the real transactional value is settled through a third party.