Unraveling the Nexus of Green Finance, Trade Openness, and Money Laundering in Asia

Abstract

Green finance in Asia has emerged as a crucial tool for driving economic development and environmental protection. However, does the expansion of green finance truly strengthen or unintentionally weaken the effectiveness of anti-money laundering (AML) measures? This study explores the impact of green finance on AML effectiveness while examining the moderating role of trade openness. The findings indicate that green finance can support AML in environments with transparent governance systems and robust regulatory oversight. Trade openness plays a dual role: in economies with strong anti-corruption controls, it enhances transparency and reinforces AML efforts; conversely, in countries with unstable political environments, liberalized trade may be exploited to obscure illicit financial flows. These findings offer important implications for policymakers in balancing green finance development, trade integration, and money laundering control to ensure the transparency of financial systems.

Keywords: anti-money laundering, Asia, financial development, green finance, trade openness