London Daily

Focus on the big picture.
Friday, Aug 08, 2025

Fighting Financial Crime in a Global Pandemic

Fighting Financial Crime in a Global Pandemic

If financial institutions consider the global trade of physical commodities as a higher-risk product, that's not without reason.

The complexities that arise from the involvement of multiple jurisdictions and various stakeholders throughout several stages of a global trade transaction can be exploited by organised criminal networks to launder money, evade taxes, commit fraud through document alteration or breach sanctions. Common typologies for such schemes include over-pricing, under-pricing, variable volumes, phantom shipments, false description of goods, misrepresenting the actual beneficiaries and making payments to unrelated parties.

While identifying such schemes can be difficult enough in more ordinary times, the Covid-19 pandemic has further complicated compliance efforts for financial institutions in a very real way.

Covid challenges


Among the biggest challenges created by Covid-19 is the limited access to trade documents for physical inspection. In response to social distancing guidelines, paper documents have been replaced by their electronic counterparts. Yet most of the important documents linked to a trade finance transaction require physical inspections, including checking watermarks and wet-ink signatures on bills of lading, certificates of origin and inspection certificates. While many bank staff based in the developed world are able to work from home, the physical documents are delivered to corporate office locations, limiting the ability of trade operations staff to vet them.

The pandemic has also raised issues related to limited staff availability. With some working from home and, to a lesser degree, others out of the office because they are either self-isolating or sick, financial institutions are learning to make due with less. This challenge has substantially increased the risk for financial institutions as there is a continual build-up and backlog of alerts pending review. Some financial institutions have introduced tactical solutions through tweaking their sanctions screening software in the form of screening only selective parties instead of screening all parties to a trade transaction. Although firms may decide on a risk-based approach to modify their screening approach, this tactic of reducing the scope of screening may expose them to a significant residual risk of failing to identify bad actors.

Staffing issues also apply to the offshore centres typically based in developing countries. A number of large financial institutions have thousands of staff members in offshore operations centres that do not have comparable technological resources, including work-laptops and access to high-speed Internet connectivity. The additional hurdle of limited staff ability can hinder crucial documentary checks. Due to the large volume of trade transactions, staff in developed countries (who represent a small fraction of total staff that are located in offshore jurisdictions) may not be able to perform all applicable checks on the legitimacy of trade transactions. Consequently, several financial institutions have modified their procedures to reduce the checks performed on trade transactions.

The pandemic has also contributed to significant price volatility and large-scale fluctuations in terms of supply and demand perspective. Even before the pandemic, it could be difficult for financial institutions to effectively mitigate their over/under pricing risks. As volatility has grown, so have the risks that criminals may be exploiting trade deals for illicit purposes.

Financial scandals


A number of scandals have been exposed over the last few months involving organised criminal groups attempting to launder substantial sums of illicit funds through over/under pricing of underlying products and attributing the price disparity to a significant shift in supply and demand.

Bolivia’s health minister, Marcelo Navajas, was arrested in May for authorising the purchase of medical equipment (ventilators) at the price of €27.6k per unit through an intermediary, who had bought the ventilators for €9.5k per unit from the manufacturer. The payment totaled nearly €5 million–three times higher than the actual value of goods–and was allegedly intended to benefit the intermediary, which is based in a foreign country. .

It is of paramount importance for financial institutions to raise awareness among their staff members around emerging typologies of financial crime through global trade. Whether firms choose to engage in bespoke training or take other precautions, mitigating the risks of criminal exploitation is a goal we all should share.

Newsletter

Related Articles

0:00
0:00
Close
British Labour Government Utilizes Counter-Terrorism Tools for Social Media Monitoring Against Legitimate Critics
OpenAI Launches GPT‑5, Its Most Advanced AI Model Yet
Embarrassment in Britain: Homelessness Minister Evicted Tenants and Forced to Resign
President Trump nominated Stephen Miran, his top economic adviser and a critic of the Federal Reserve, to temporarily fill an open Fed seat
The AI-Powered Education Revolution: Market Potential and Transformative Impact
Chikungunya Virus Outbreak in Southern China: Over 7,000 Hospitalized
French wine makers have seen catastrophic damage to vines that were almost ready to be harvested after the worst fires in more than 70 years burned through the south of the country
US Lawmaker Probes Intel CEO’s China Ties Amid National Security Concerns
Brazilian President Lula says he’ll contact the leaders of BRICS states to propose a unified response to U.S. tariffs
Trump Open to Meeting Putin as Soon as Next Week, with Possible Trilateral Summit Including Zelenskiy
Katy Perry and Justin Trudeau spark dating rumors, joining high stakes world of celeb-politician romances
US envoy Steve Witkoff arrived in Moscow to seek a breakthrough in the Ukraine war ahead of President Trump’s peace deadline
WhatsApp Deletes 6.8 Million Scam Accounts Amid Rising Global Fraud
Nine people have been hospitalized and dozens of salmonella cases have been reported after an outbreak of infections linked to certain brands of pistachios and pistachio-containing products, according to the Public Health Agency of Canada
Karol Nawrocki Inaugurated as Poland’s President, Setting Stage for Clash with Tusk Government
Trump Signals JD Vance as ‘Most Likely’ MAGA Successor for 2028
US Charges Two Chinese Nationals for Illegal Nvidia AI Chip Exports
Texas Residents Face Water Restrictions While AI Data Centers Consume Millions of Gallons
U.S. Tariff Policy Triggers Market Volatility Amid Growing Global Trade Tensions
Tariffs, AI, and the Shifting U.S. Macro Landscape: Navigating a New Economic Regime
Representative Greene Urges H-1B Visa Cuts Amid U.S.-India Trade Tensions
U.S. House Committee Subpoenas Clintons and Senior Officials in Epstein Investigation
Sydney Sweeney Registered as Republican as Controversial American Eagle Ad Sparks Debate
Trump Accuses Major Banks of Politically Motivated Account Denials and Prepares Executive Order
TikTok Removes Huda Kattan Video Over Anti-Israel Conspiracy Claims
Trump Threatens Tariffs on India Over Russian Oil Imports
German Finance Minister Criticizes Trump’s Attacks on Institutions
U.S. Proposes Visa Bond of Up to $15,000 for Some Applicants
U.S. Farmers Increase Lobbying Amid Immigration Crackdown
Elon Musk Receives $23.7 Billion Tesla Stock Award
Texas House Paralyzed After Democrats Walk Out Over Redistricting
Mexican Cartels Complicate Sheinbaum’s U.S. Security Talks
Mark Zuckerberg Declares War on the iPhone
India Rejects U.S. Tariff Threat, Defends Russian Oil Purchases
United States Establishes Strategic Bitcoin Reserve and Digital Asset Stockpile
Thousands of Private ChatGPT Conversations Accidentally Indexed by Google
China Tightens Mineral Controls, Curtailing Critical Inputs for Western Defence Contractors
OpenAI’s Bold Bet: Teaching AI to Think, Not Just Chat
Tesla Seeks Shareholder Approval for $29 Billion Compensation Package for Elon Musk
Nvidia is cutting prices on its RTX 50-series graphics cards after sales slowed and inventories piled up
Ghislaine Maxwell Transferred to Minimum-Security Prison Amid Ongoing DOJ Discussions
U.S. Tariffs Surge to Highest Levels in Nearly a Century Under Second Trump Term
Matt Taibbi Slams Media for Role in Russiagate Narrative
Pilots Call for Mental Health Support Without Stigma
All Five Trapped Miners Found Dead After El Teniente Mine Collapse
Ong Beng Seng Pleads Guilty in Corruption Case Linked to Former Singapore Transport Minister
BP’s Largest Oil and Gas Find in 25 Years Uncovered Offshore Brazil
Italy Fines Shein One Million Euros for Misleading Sustainability Claims
JPMorgan and Coinbase Unveil Partnership to Let Chase Cardholders Buy Crypto Directly
Declassified Annex Links Soros‑Affiliated Officials and Clinton Campaign to ‘Russiagate’ Narrative
×