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Leveraging AI to manage financial risk in trade operations

The intricate nature of global maritime trade creates ample opportunities for exploitation by bad actors who seek to perpetrate financial crimes such as fraud and trade-based money laundering (TBML). The United Nations Office on Drugs and Crime estimates that the amount of money laundered globally per year is between USD 800 billion to USD 2 trillion. When it comes to maritime-related financial risks, financial institutions tend to think primarily in terms of sanctions compliance.

Considering the fact that the majority of the world’s traded goods are carried onboard vessels at some stage of the transaction, we can assume volumes are high. As maritime trade inevitably grows, financial institutions must move towards an all-encompassing risk approach and harness advanced maritime intelligence as part of their trade finance processes. By adopting this approach, institutions can better understand and evaluate risk exposure, beyond sanctions compliance.

The latest OFAC and OFSI advisories called on financial institutions to understand the risks involved with maritime trade and the need for regulatory systems. Deceptive shipping practices can be used to facilitate illicit trade. Currently, the use of maritime data is limited to supporting monitoring tasks related to commodity trade finance. And that is an additional source for investigations.

Financial institutions must pursue solutions that can effectively lower false positives without disrupting day-to-day business operations. The most effective solution for holistic maritime risk analysis lies in savvy AI implementation. Financial institutions are expected to comb through vast amounts of data to detect red flags. Implementing maritime AI into trade screening solutions can provide more visibility into each deal. This is key to supporting safe exit management and preventing onboarding new business with exposure to maritime risk.

Opening accounts is a holistic approach to maritime AI will help banks fight financial crime and enable more business opportunities. Different lines of business can enhance maritime due diligence without needing to develop further expertise. Currently, 90% of globally traded goods are transported via maritime shipping. This is with maritime trade volumes and are expected to triple by 2050.

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