05/15/2025 | News release | Archived content
Trade-based money laundering (TBML) is one of the most complex and elusive financial crimes, as sophisticated supply chains and increasing globalization create fertile ground for illicit transactions. Understanding how TBML works and leveraging advanced technology to prevent it are crucial to protecting institutions from financial, regulatory and reputational risks.
Financial crime detection empowered by artificial intelligence is emerging as an effective tool in overcoming the challenges of TBML. At the same time, however, the use of AI is a top concern for compliance and risk executives within the banking industry. In this blog, I'll share some insights on the use and benefits of AI-driven financial crime detection as banks seek ways to combat TBML.
At its core, TBML exploits trade transactions to move illicit funds across borders. This is primarily done through invoice manipulation, such as the following:
Additional TBML tactics include the use of Hawala networks, shell companies and offshore accounts, which add layers of complexity and hinder financial institutions' ability to track transactions effectively.
Financial institutions must be vigilant in detecting TBML, despite limited access to trade documents. Key TBML indicators include the following:
TBML enforcement is intensifying worldwide. The Financial Action Task Force (FATF), U.S. AML Act (2020), EU AML Directives, and Basel Committee Guidelines emphasize stringent due diligence, transparency and cross-border collaboration. However, inconsistent regulations and data privacy constraints remain obstacles, making proactive detection strategies essential.
Traditional compliance measures struggle to keep up with the sophistication of TBML schemes. Banks are under pressure to integrate AI-driven solutions to enhance risk management. AI and machine learning offer the following advantages:
Banks can more effectively advance their TBML mitigation efforts with the expertise of a partner that delivers cutting-edge financial crime prevention solutions, including AI-powered solutions. The ideal solution is a modular detection platform that delivers the following capabilities:
As financial crime continues to evolve, leading banks are staying ahead with AI-powered compliance, cross-border intelligence sharing and advanced due diligence frameworks. At CGI, we have a team of experts who specialize in helping financial institutions navigate these challenges and implement state-of-the-art AML strategies, as well as advanced, AI-driven solutions such as CGI Hotscan360.
Contact me for a conversation on how your organization can enhance its TBML detection capabilities and safeguard against emerging threats.
Henry is a seasoned financial services professional with more than 30 years of experience working for private equity-financed small to medium enterprises (SMEs). His career is marked by versatility and insights-driven leadership, underpinned by a robust understanding of business operations, including auditing and accounting standards ...