Targeting Trade-Based Money Laundering in APAC

Understanding the ubiquitous threat of TBML

Global trade moves across a complex ecosystem of fragmented regional supply chains, competing economies and a range of country-specific regulatory expectations. APAC plays an integral role in this ecosystem with the region accounting for nearly 39% of global exports and over 36% of imports in 2024¹. The complexity and often, the lack of transparency, of trade transactions create ideal conditions for organised criminal groups and bad actors to obscure and move criminal proceeds through trade-based money laundering. The Financial Action Task Force defines trade-based money laundering as the process of disguising the proceeds of crime and moving value using trade transactions in an attempt to legitimise their illicit origins². The impacts of recent tariffs, expanding sanctions, trade restrictions and geopolitical pressures on the current global trade outlook are only compounding the TBML issue.

Estimates show TBML is 10 times more efficient than other laundering methods for moving large sums internationally³. Enterprising criminals employ a variety of tactics to facilitate TBML, ranging from mis-declaring goods and values of shipments, manipulating invoices, using shell companies and fake entities as intermediaries and rerouting shipments to restricted jurisdictions. TBML activity is often disguised within legitimate business transactions making it difficult to uncover and extremely challenging to stop. The economic, societal and global security ramifications of TBML are perilous:

• TBML is used to proliferate transnational organised crimes, including human trafficking, wildlife trafficking, narcotics trade, terrorist activity and arms trade and smuggling.
• TBML disparately impacts emerging economies, representing up to 80% of capital flight from developing nations⁴.
• TBML significantly disrupts global supply chains and raises the risks of financial losses, reputational damage and non-compliance for multiple stakeholders and parties across the trade value chain:
  • Corporates and export/import companies can experience financial losses tied to unknowingly transacting with illicit parties, costly operations disruptions and increased regulatory scrutiny.
  • Financial Institutions face heavy compliance burdens, expensive penalties and reputational risk from undetected TBML activity.
  • Logistics/cargo companies are vulnerable to legal liability and shipment disruptions.
  • Customs/border control struggle with revenue loss and detection challenges.
  • Governments/regulators experience economic distortion and weakened financial crime controls.

Growing trading strength in APAC equals greater risk exposure

The APAC economy’s strong growth trajectory places the region at the epicentre of the TBML challenge. APAC recorded real GDP growth of 4.0% in 2024, outpacing the global average of 3.2%¹. Developing and emerging Asian economies, led by India, Indonesia and Vietnam, charted GDP growth above 5%¹. The APAC region is outpacing global export growth of 1.8%, charting robust gains in export trade of 3.4%, while emerging APAC economies posted even larger export gains last year, including Vietnam (14.1%), Malaysia (7.9%), Bangladesh (6.3%) and India (5.1%)¹. These impressive increases bring opportunities to the region, yet they also represent greater exposure to TBML risks. Diverse and trade-heavy markets like India, Singapore, Malaysia, Indonesia, Hong Kong and Vietnam, where free trade zones, cross-border flows and layered ownership structures are common face increased vulnerabilities.

The region’s rapid trade growth is hitting at a time of heightening, and often fragmented, regulatory scrutiny and enforcement around trade compliance on both a global and regional level. Businesses are navigating the real-time evolution of plurilateral sanctions targeting people, entities and ports-of-embarkation combined with trade restrictions covering an unprecedented level of granularity around Dual-Use Goods, Airspace, Technologies and Export Controls. Some APAC companies are facing record-breaking enforcement actions for sanctions and export control violations, including one $20 million OFAC penalty levied against a Thailand-based company for violating Iran-related sanctions⁴.

Preventing damaging impacts with a proactive TBML stance

Fines and enforcements are only the initial impacts of a TBML violation which can introduce ongoing operations ramifications and inflict lasting reputational damage that adds up to staggering opportunity costs. The trickle-down damage a TBML violation can have on legitimate trading and supply chain relationships can be equally devastating. The first line in a fortified TBML defence is leveraging global risk intelligence and intuitive screening tools that reflect the immediate scope and specificity of current sanctions requirements and trade restrictions.

Businesses that aren’t using real-time data and advanced technologies to risk-assess global trade transactions are left open to increasing TBML risk as criminal organisations creatively leverage AI and technology to circumvent traditional controls. Addressing TBML concerns without introducing operations delays or expense constraints can be accomplished with solutions that effectively:

• Automate KYC, KYCC and KYB due diligence to support efficient decisions
• Identify risks tied to global sanctions, PEPs, REPs and high-risk entities across the life cycle of the trade 
• Define Ultimate Beneficial Ownership (UBO) to uncover potential shell companies or regional risks
• Assess digital identity indicators to isolate third-parties that may present location-based sanctions risk or export restrictions risk
• Detect dual-use goods, sanctioned vessel activity and AIS anomalies in real time
• Integrate with core trade platforms to centralise visibility and promote efficiency 

Adding advanced decision technology, global risk intelligence and proven analytics to automate and better align risk decisions across the life cycle of a trade helps level the field against the transnational organisations profiting from TBML. 

Combating TBML with more global collaboration

Our interconnected global economy makes understanding and stopping TBML risks a collective effort. The natural gaps, delays or disparate processes inherent in cross-border transactions often provide an unintended shield for TBML activities to escape notice. Greater collaboration, cooperation and information sharing between countries, industries, regulatory agencies, customs and law enforcement can create a shared strategic advantage for combating TBML challenges.

Closing vulnerability gaps as global trade volatility continues

Prioritising trade transaction integrity is integral to sustainable success for any business. Applying “just enough” trade oversight is not an adequate way to keep pace with the escalating TBML problem. Evaluating your risk stance and solution approach to TBML can protect your bottom line and business reputation. Target TBML with the latest intelligence and technology and stay positioned to thrive in the uncertainty and complexity of the current global trade climate.

1. https://repository.unescap.org/items/f44b55b7-1437-4e79-9c1e-cbfbb2dc0fa3
2. https://www.fatf-gafi.org/en/publications/Methodsandtrends/Trade-basedmoneylaundering.html
3. And 4. How trade-based money laundering will rise with tariff wars - Finance Derivative
5. Settlement Agreement between the U.S. Department of the Treasury's Office of Foreign Assets Control and SCG Plastics Co., Ltd. | Office of Foreign Assets Control