A Balancing Act of Trade Based Money Laundering Compliance

Over the years, regulators and standard setting agencies categorised trade finance as a “higher risk” business for money laundering, terrorist financing and potential breach of sanctions. Growing complexities and volumes of trade flows create opportunities for criminal organisations to launder proceeds of crime through the international trade system.

Consequentially, Financial Institutions (“FIs”) have been facing much difficulty in monitoring and implementing controls in their trade finance business to combat trade based money laundering (“TBML”). The problem has been further exacerbated by lack of clarity in the compliance requirements and regulatory expectations in many jurisdictions.

Some key challenges highlighted here include those provided in the ICC, BAFT and Wolfsberg Paper on TBML and our experience of working with the industry. Deloitte believes that these resonate with FIs given the operational difficulties they encounter. This also follows the release of the industry paper ‘Best Practices for Countering Trade Based Money Laundering’ on 14 May 2018 by Singapore’s ‘Anti-Money Laundering and Countering the Financing of Terrorism Industry Partnership (ACIP).