Risk is embedded in the trade finance landscape. Law firms handling cross-border transactions often face challenges involving entities that may be engaged in fraud, linked to financial crimes or controlled by high-risk beneficial owners. This leaves law firms and their clients vulnerable to legal repercussions, financial losses and reputational damage.
Trade-based financial crime is a global problem, costing economies $1.6 trillion every year[1] – funds that could instead be used to support development, improve infrastructure and strengthen financial systems. Trade finance lawyers are on the front lines of defending against these crimes, but it remains a difficult battle.
Recent findings from a pilot programme led by the Asian Development Bank (ADB)[2] have revealed that trade-based money laundering remains a vast and underreported financial crime in Asia. The 18-month pilot, conducted in partnership with the United Nations Office on Drugs and Crime (UNODC), found that transactions involving shell companies and illegitimate related parties are among the top three most common approaches to trade-based money laundering in the region.
However, verifying the legitimacy of every entity and individual involved in a transaction can be incredibly challenging. The types of information and documents required for KYB (Know Your Business) and UBO (Ultimate Beneficial Ownership) checks vary greatly between jurisdictions, especially in markets as diverse as those in the Asia-Pacific.
How can law firms manage complex data regulations?
Complying with data regulations across multiple countries can be challenging when laws vary widely. For example, some jurisdictions mandate that personal data must be stored locally, restricting access from outside the country. Definitions of what constitutes personal data also differ between regions, adding another layer of difficulty.
Beyond that, data regulations are constantly evolving, requiring firms to stay informed to ensure compliance. These issues can make it time-consuming to collect and verify information on all parties involved in a deal. The process of gathering necessary data is further complicated by the fact that it’s often spread across different sources and presented in multiple languages.
The need for local expertise
To manage these challenges, firms may choose to consult with local experts who can provide insights into:
- How data is structured, stored, and accessed in each country.
- The most authoritative sources for specific information, like business registration and ownership details.
- The most efficient and reliable methods to acquire necessary data.
All these factors can greatly impact the speed and accuracy of the verification process.
The value of technology
Embracing technology can significantly streamline complex, cross-border due diligence programmes. Automation of data collection, verification and analysis not only speeds up these processes but also enhances accuracy and reduces the risks linked to manual and paper-based approaches, human error and data inconsistencies.
By using solutions that comply with local data regulations and adapt seamlessly to the ever-changing legal landscape in the region, law firms can enhance efficiency while ensuring they meet all legal requirements.
How AsiaVerify helps
As a well-established and trusted business search platform built specifically for markets across the Asia-Pacific, AsiaVerify offers law firms deep expertise in local regulatory and compliance landscapes.
The verification and monitoring platform is designed to streamline and accelerate KYB, KYC, UBO and ongoing monitoring processes in China, Japan, India, Indonesia, Australia, Taiwan, the Philippines and other jurisdictions throughout the region. By providing access to all relevant data and documents, from all relevant jurisdictions from a single trusted source, firms can completely transform the way they manage these critical processes.
Key features:
- Access to 344 million entities and 2.9 billion individuals across 13 APAC jurisdictions.
- Direct connections to government registries and other official sources ensure accurate and timely data coverage.
- Sophisticated machine learning and AI capabilities detect irregularities and blind spots.
- Accurate UBO insights are derived directly from trusted, real-time registry information.
- In-depth knowledge of Asian entity structures supports informed onboarding and compliance.
- Source-verified and translated legal documents are readily available for ease of use.
- Effective support in local languages provides impactful assistance in challenging regions.
How can we support your firm?
If you believe your firm could benefit from these capabilities in your trade finance practice or other areas of your business, our team is ready to answer any questions you may have.
[1] https://www.finextra.com/researcharticle/314/the-global-fight-against-trade-based-financial-crime/
[2] https://www.tradefinanceglobal.com/posts/adb-initiative-to-combat-trade-based-money-laundering-through-collaboration-technology-and-intelligence-rich-data/
