Report warns of money-laundering risks in Asia-Pacific
Shell companies and a growing market for cryptocurrency have become the new hotbeds for money laundering across AsiaPacific, but new technologies such as artificial intelligence have emerged as effective tools to counter the crime, according to Forrester Research.
Varied regulatory frameworks and enforcement across countries in the region had led to a proliferation of shell companies, allowing criminals to exploit loopholes and conceal illicit funds, the US-based researcher said in a report.
Meanwhile, growing interest around cryptocurrency in Asia, which now makes up 70 per cent of the bitcoin trading volume in the world, as well as the absence of a coherent regulatory framework have also created opportunities for criminals to “exploit the perceived anonymity and ease of cross-border transactions that cryptocurrencies offer”.
“Money launderers employ techniques like ‘smurfing’, service mixing, offshore transactions and exchange hopping to obfuscate transaction history and conceal funds’ origins,” analysts said.
Smurfing is the act of breaking a large sum of money into several smaller parts to avoid detection by authorities.
The report also said tradebased money laundering was “especially prevalent” in Asia, owing to the region’s status as a hub for global commerce, noting the region’s complex network of suppliers, intermediaries and financial institutions involved in cross-border trade gave criminals ample opportunity to manipulate invoices, overvalue goods and transfer illicit funds.
“Cross-border trade involves multiple entities, so banks need to access more external data to analyse risks, adding the challenge of finding reliable external third-party data providers and sources,” the analysts said.
A report in January by the United Nations Office on Drugs and Crime identified cryptocurrency and casinos as the main drivers of money laundering in East and Southeast Asia.
The office estimated more than 340 licensed and unlicensed land-based casinos were active in Southeast Asia as of early 2022, and most of them had shifted online.
The global online gambling market is projected to grow to more than US$205 billion by 2030, with Asia-Pacific forecast to expand by 37 per cent, according to the report.