Trade-based money laundering (TBML) is a method to finance terrorism that involves falsifying transaction-related documents, such as invoices, contracts, bills of lading, or customs declarations, to conceal the origin, destination, value, or purpose of illicit funds. TBML can be used to move money, goods, or services to or from sanctioned or high-risk jurisdictions, to evade taxes, duties, or currency controls, to launder proceeds of crime, or to support terrorist activities. TBML can involve over- or under-invoicing, over- or under-shipping, multiple-invoicing, or falsely describing goods or services. TBML can also be linked to other methods of money laundering or terrorist financing, such as bribery, black market peso exchange, or informal value transfer systems.
References:
* ACAMS CAMS Certification Video Training Course, Module 2: Compliance Standards for Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT), Lesson 4: Trade-Based Money Laundering
* Money Laundering and Terrorist Financing Related to Counterfeiting of Currency, Financial Action Task Force (FATF), page 28
* Tracing terrorist finances, INTERPOL

According to Article 1(3) of Directive (EU) 2015/849 (4th Anti-Money Laundering Directive, 4AMLD),
"knowledge, intent or purpose" required as an element for money laundering may be inferred from objective factual circumstances. This means that the prosecution does not need to prove the actual state of mind of the offender, but can rely on the evidence of the surrounding facts and circumstances that indicate the offender's awareness or intention to launder money. This is consistent with the approach of the Financial Action Task Force (FATF), which defines money laundering as the intentional act of concealing or disguising the origin of criminal proceeds.
References:
Directive - 2015/849 - EN - Fourth Anti-Money Laundering Directive - EUR-Lex, Article 1(3).
Preventing abuse of the financial system for money laundering and terrorist financing, Summary.
New Directive on Criminalisation of Money Laundering - eucrim, Introduction.

the compliance officer should cooperate with the law enforcement investigation, but only after receiving a formal written request that specifies the scope and purpose of the information sought. This is to ensure that the compliance officer complies with the legal and regulatory obligations of the bank, such as confidentiality, privacy, and data protection. The compliance officer should also document the request and the information provided, and report the incident to the senior management and the board of directors as appropriate.
References:
FFIEC BSA/AML Assessing the BSA/AML Compliance Program - BSA Compliance Officer, section
"BSA Compliance Officer", paragraph 3: "The BSA compliance officer is responsible for ensuring that the bank's BSA/AML compliance program is implemented effectively, including timely updates in response to changes in regulations or business activities, and for managing all aspects of the BSA/AML compliance program. The BSA compliance officer is also responsible for ensuring that the bank's BSA/AML compliance program is communicated to all personnel and that adequate training is provided to appropriate personnel." Guidelines on the role of AML/CFT compliance officers, section "Guidelines on the role of AML/CFT compliance officers", paragraph 36: "The AML/CFT compliance officer should ensure that the institution cooperates with the competent authorities, including by providing them with all the information they require in a timely manner, in accordance with the applicable legal and regulatory framework." Anti-Money Laundering Compliance Officer Job Description, section "Responsibilities of an AML Compliance Officer", bullet point 6: "Cooperate with law enforcement and regulatory bodies as required."

This is a red flag of money laundering or terrorist financing that involves the use of non-profit organizations (NPOs) as conduits for illicit funds. NPOs may be vulnerable to abuse by criminals who exploit their legitimate activities, reputation, and access to funds and resources. A transaction monitoring process that would alert a bank for this red flag activity is to analyze the source, destination, frequency, and purpose of the funds transferred to and from the charity account, and to compare them with the expected profile and activity of the NPO. If the bank detects any inconsistency, discrepancy, or deviation from the norm, it should raise an alert and conduct further investigation.
References:
FATF Report: Risk of Terrorist Abuse in Non-Profit Organisations, page 9 Transaction Monitoring Processes for Red Flag Activity in Banking AML Red Flags - What are the Top 10 Indicators? - ComplyAdvantage, section "Red flags related to the nature of transactions"