Thomson Reuters has launched a new solution designed to counter trade-based money laundering (TBML).
While the tool, pitched at banks and other financial sector organisations, manages risk across the trade finance cycle, the vendor is pushing its compatibility with the latest TBML guidelines from the monetary authorities in Hong Kong and Singapore, respectively.
Both authorities have been clamping down on TBML breaches of late, as part of a wider move to clean up their financial sectors. Earlier this year, the Hong Kong Monetary Authority (HKMA) collaborated with the Hong Kong Association of Banks (HKAB) to produce a guidance paper on combating the practice.
Banks that adopt the recommended practices will be seen by the HKMA as meeting their obligations in the jurisdiction. The Monetary Authority of Singapore (MAS) launched a similar initiative in 2015.
While other authorities have yet to catch-up, the connectivity of Hong Kong and Singapore and the fact that counterparties that trade in or out of each district will also have to comply, means their policies have far-reaching effects.
“The reality of global trade is that no one can really operate in isolation, Singapore has 195 direct trading partners and Hong Kong has 182 direct trading partners. What this essentially means is that both countries combined have direct trading relationships with 197 countries [including bilaterally with each other].
“Therefore, the MAS and HKMA guidelines have an immediate implication to essentially the entire global trade and supply chain,” BC Tan, head of client and third-party risk, Asia Pacific at Thomson Reuters, tells GTR.
The company’s Trade Finance, Regulations, Audit and Control (TRAC) tool’s functionalities include: screening of vessels and third-parties, shipment tracking, regulatory reporting and transaction monitoring.
It uses Thomson Reuters’ World-Check for compliance screening, Eikon for price validation and shipment tracking as well as OneSource for dual-goods screening.
It uses the company’s proprietary data on commodity prices, and allows companies to build in their own intelligence and knowledge on pricing benchmarking and variance.
Tan says: “The idea of TRAC is to replace the currently disparate activities of different departments within the trade finance business onto a single unified platform that efficiently links up all the interdependent activities of trade processing with strong market data, risk intelligence, audit functionality and controls.”
He confirms that the solution will be rolled out globally in 2017, by which stage he expects “increasing momentum for tighter controls following the lead of MAS and HKMA”.