A new report by the Asian Development Bank (ADB) reveals a dramatic rise in trade-based money laundering (TBML) in Pakistan.
Data from Pakistan’s Financial Monitoring Unit (FMU) shows that the volume of suspicious trade reports related to TBML has skyrocketed by an average of 398 percent from July 2023 to June 2024.
This alarming increase was identified through a pilot project conducted by the ADB’s Trade and Supply Chain Finance Programme, which included data from 10 of Pakistan’s largest banks.
The report also highlights a significant 143% rise in TBML cases in Bangladesh during the same period.
The FMU’s investigation has pinpointed five key commodities linked to suspicious trade activities which includes solar panels, textiles, chemicals, rice, and industrial equipment.
These goods are reportedly being used by criminal networks to mask the movement of illegal drugs and other contraband, presenting a façade of legitimate trade.
Trade-based money laundering involves disguising illicit funds through trade transactions by manipulating the price, quantity, or quality of goods.
While previous efforts by the Financial Action Task Force (FATF) have largely concentrated on financial system abuses and physical cash movements, TBML has emerged as a significant concern due to its growing complexity.
The International Finance Corporation has highlighted a concerning $8.7 trillion disparity in export and import declarations between developing and advanced economies from 2008 to 2017, reflecting the broader impact of TBML on global trade and revenue.
As traditional methods for combating money laundering and terrorism financing become more stringent, criminals are increasingly turning to sophisticated trade-based schemes, according to the World Bank.
Despite these developments, the International Monetary Fund (IMF) has not yet released specific studies or policy decisions regarding TBML.
However, it is anticipated that future financial aid conditions from international donors could address this issue.
For Pakistan, already facing significant economic challenges, the rise in TBML poses a severe threat to revenue streams.
Immediate and effective measures are crucial to combat this growing problem and prevent further financial losses.
The need for decisive action is urgent as the country navigates its current economic difficulties.
The Star
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