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Key Trends in the Fight Against Money Laundering in Asia-Pacific

A Report by CYS Global Remit FinTech Development Unit 



The Asia-Pacific (APAC) region faces significant challenges in combating money laundering due to its diverse economies, extensive cross-border trade, and varying levels of regulatory enforcement. However, a new report by Forrester Research, titled "Top Trends Shaping Anti-Money Laundering in Asia-Pacific in 2024," offers promising insights into addressing these challenges. Here, we explore four major trends identified in the report. 


1. Shell Companies as Money Laundering Hotspots 

Shell companies are increasingly used for money laundering in APAC. These entities often lack significant operations and are misused for illicit activities such as money laundering and tax evasion. Criminals exploit regulatory loopholes across the region to disguise illicit funds. Companies like CYS Global Remit are implementing stricter checks on corporate beneficiaries to ensure legitimate business activities and close these regulatory gaps. 


2. Rise of Crypto and Trade-Based Money Laundering 

The report highlights the growing use of crypto and trade-based money laundering. Trade-based money laundering involves manipulating trade transactions to conceal illicit funds. Companies like CYS require supporting documents for all trade-based transactions to ensure their legitimacy, crucial in identifying and preventing illicit activities veiled as legitimate trade. 


3. Adoption of AI and Behavioural Biometrics 

To counter sophisticated money laundering techniques, financial institutions in APAC are adopting advanced technologies such as generative AI, explainable AI, and behavioural biometrics. Unlike traditional biometrics, behavioural biometrics analyse unique patterns of behaviour to enhance security and prevent unauthorized access. Companies like CYS are monitoring these technologies and plan to implement them as necessary. 


4. Increased Public and Private Collaboration on Data Sharing 

Collaboration between financial institutions and regulators through data sharing is a major trend in tackling money laundering in APAC. For instance, the Monetary Authority of Singapore's COSMIC platform, launched in April 2024, facilitates the sharing of customer information to combat financial crimes. Compliance costs in APAC are significant, with LexisNexis estimating nearly US$45 billion in 2023. This collaboration aims to bolster defences against money

laundering and terrorist financing. 


Conclusion 

The fight against money laundering in APAC is evolving with enhanced regulatory measures, technological advancements, and increased public-private collaboration. By addressing the misuse of shell companies, tackling crypto and trade-based money laundering, adopting advanced AI and biometric technologies, and fostering collaborative data sharing, the region is making significant strides in combating financial crime. As these trends continue to develop, APAC is poised to strengthen its defenses against money laundering and ensure a more secure financial environment. 




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Published by Fintech News Singapore, June 7, 2024 Fintechnews 

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