Strengthening Defences: Addressing Product Vulnerabilities to Combat Money Laundering and Terrorist Financing
As the global financial system continues to evolve, so do the methods deployed by criminals to exploit its gaps. Products and services designed to enhance customer convenience, cross-border access, and financial inclusion often carry hidden vulnerabilities that can be misused for money laundering (ML) and terrorist financing (TF). For financial institutions, recognising these vulnerabilities is no longer optional — it is an essential part of building resilience.
In this context, Fintelekt Advisory Services and the Asian Bankers Association recently hosted a virtual workshop on Identifying and Mitigating Product Vulnerabilities for ML and TF on 25th June 2025. The session brought together compliance professionals from across Asia to unpack the risks that lurk beneath seemingly benign product features and service channels.
Sharad Nair, a seasoned banking professional with extensive experience leading AML functions across India and the Middle East, led the discussions. The session served as a platform to share practical insights, real-world examples, and frontline experiences from the fight against financial crime. Arpita Bedekar, Chief Operating Officer at Fintelekt, hosted the session.
At the heart of the workshop was a crucial reminder: financial crime rarely announces itself loudly. Instead, it thrives in the shadows of complexity, opacity, and weak controls. To counter this, compliance teams must not only understand regulatory requirements but also stay several steps ahead by proactively identifying product-specific vulnerabilities.
Sharad began by demystifying terms that have become part of the AML lexicon but which still require deeper comprehension to be effectively addressed. Concepts like layering, wire-stripping, dark web, nesting, shell companies, and willful blindness were explored through an applied lens, highlighting how these mechanisms manifest in day-to-day operations.
The discussion then turned to real-world examples of vulnerabilities within specific banking and financial services products, from non-resident accounts to prepaid cards, demat accounts, insurance products, online gaming apps, and respondent banking relationships. Each of these, while legitimate and valuable in their own right, can be manipulated by bad actors when oversight is weak or product features are misunderstood.
A case in point: prepaid cards, often marketed as a convenient, low-risk financial tool, can, in the absence of robust controls, serve as vehicles for cross-border movement of illicit funds. Such nuances are critical for compliance teams to internalise.
Importantly, the session underscored that financial crime typologies such as money mules, shell companies, and structuring are everyday realities that ripple across jurisdictions, exploiting both regulatory blind spots and institutional complacency.
Perhaps the most valuable takeaway from the workshop was the emphasis on cultivating a risk-sensitive mindset. Beyond rulebooks and checklists, frontline teams must be trained to spot the unexpected transactions that defy economic rationale, customer behaviours that don’t align with known profiles, or complex structures that obscure true ownership.
In financial crime detection, curiosity and skepticism remain our most reliable tools. Anything out of the ordinary must be investigated, though it may not always lead to a suspicious transaction report being filed.
– Sharad Nair, Trainer, Fintelekt
As the regulatory environment tightens and criminals grow more sophisticated, the industry must respond with not just better systems, but sharper awareness. Workshops like this are not just training exercises — they are part of an ongoing, collective effort to close the gaps that criminals exploit.
For financial institutions across Asia and beyond, the message is clear: understanding your products and their hidden vulnerabilities is fundamental to protecting the integrity of the financial system.