Trade-based financial crime transformed by invasion of Ukraine, pandemic impacts and digitalisation

Russia’s invasion of Ukraine, pandemic-related supply chain disruptions, digitalisation and online trading have transformed the nature and scope of trade-based financial crime according to panellists at a recent Regulation Asia webinar.

The webinar aimed at banks in the Asia-Pacific region discussed the need for greater vigilance of trade-based money laundering (TBML) risks and how workflow enhancements can improve outcomes.

Supply chain awareness

The unprecedented slew of sanctions and trade bans imposed on Russia has made it clear that an understanding of supply chains is necessary to prevent Russian defence companies buying technology products for military equipment according to senior director at LexisNexis Risk Solutions, Douglas Wolfson.

As well as cutting off the Russian defence company, he says banks need to be aware of all of the parties around them, and better understand their own customers to make sure that they are not financing trade channelled through an intermediary or an associated party that is ultimately destined for a potentially sanctioned entity.

Related entities

The need for banks to look beyond their immediate customer was also highlighted by vice president for financial crime compliance and Asia trade finance at MUFG Bank, Hermione Tay, who says that where the documents indicate the involvement of multiple parties, banks should be identifying any related companies with common directors or shareholders.

Banks should make sure they know not only their own customers, but their customers’ counterparties. If the goods in a transaction could be dual-use for example, banks should establish the identity of the end-user and assess whether they are comfortable with the transaction she says.

Scanning tools

Digital document scanning tools can be effective in detecting anomalies, and there are many technologies to automate document checking workflows according to managing director and regional head of trade finance and group transaction banking at CIMB Bank, Azeem Azmi.

These tools can allow banks to redeploy staff in areas where human expertise is needed, such as investigations he says, and adds that there is also a need to upskill the staff conducting document checks.

The webinar, TBML 2022: Is the war against trade-based financial crime lost?, is available on demand here.


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