New whitepaper by Regulation Asia and LexisNexis Risk Solutions provides an analysis of the evolving TBML landscape and a roadmap to help FIs strengthen their defences.

Asia’s vast trade networks are a double-edged sword – driving global commerce and economic growth while at the same time exposing the region to increasingly sophisticated financial crime. As a global trade and financial hub, Asia sits at the crossroads of legitimate commerce and illicit activity, where bad actors exploit its interconnected supply chains, regulatory gaps, and friction points between markets and institutions to evade sanctions, finance terrorism, and conceal illicit wealth.

Trade-based money laundering (TBML) continues to evolve into a major vector for these crimes, with criminal networks and state-sponsored actors manipulating complex corporate structures and fragmented oversight frameworks to obscure their operations.

What makes Asia particularly vulnerable is the interplay between its economic scale, jurisdictional diversity, and the misalignment of regulations across borders. These friction points create opportunities for illicit actors to exploit inconsistencies, disguise illicit transactions as legitimate trade, and evade detection with alarming precision.

For financial institutions, this presents a dual challenge – facilitating seamless trade while addressing hidden threats – which requires not only vigilance but also a recalibrated, collaborative approach to safeguarding the integrity of trade and finance across the region.

In response to this growing threat, Regulation Asia and LexisNexis® Risk Solutions have released a new whitepaper titled "Navigating the Complexities of Trade-Based Money Laundering in Asia”. The paper provides a detailed analysis of the evolving TBML landscape and outlines a practical roadmap to help financial institutions strengthen their defences, adapt to emerging risks, and stay ahead of these increasingly sophisticated schemes.

The New Face of TBML

Building on the urgency of rising TBML threats, the modern geopolitical landscape has added a new layer of complexity, with sanctions evasion emerging as a core driver of illicit trade activity. “The newest risk in TBML is sanctions evasion. It’s really tricky,” says Salim Thobani, Executive Vice President and Head of TBML at Pakistan’s Meezan Bank, in the paper.

Criminal networks and state-sponsored actors are leveraging classic TBML techniques to circumvent trade restrictions, making detection a significant challenge. The paper highlights several key methods, including the use of opaque corporate structures to hide the true parties to a transaction, transshipments through non-sanctioned third countries to disguise origin and/or destination, and AIS manipulation to conceal vessel movements.

Compounding this is the growing challenge of export controls, particularly concerning dual-use goods that have both civilian and military applications.

As one trade finance veteran notes in the paper, there is a regulatory expectation for banks to do more, yet "there is often a lack of in-depth knowledge by processing teams as to whether such goods are restricted, prohibited, or controlled."

Data and Technology

The paper also delves into the critical role of technology in combating TBML, pointing to tools for vessel tracking, price verification, and dual-use goods screening. However, these systems are only as effective as the data they rely on. High-quality, multi-dimensional data – integrating trade documents, shipping records, and financial transactions – is essential to generate actionable intelligence.

“Effectively combating financial crime in trade finance hinges not only on access to accurate, complete, and timely data – but on the ability to transform that data into actionable intelligence,” says Rohit Mittal, Director for Financial Crime Compliance at LexisNexis® Risk Solutions.

While highlighting the importance of technology for TBML threat detection, the paper emphasises that this is not a silver bullet. The success of technology depends on both the quality of data and the expertise of human analysts.

While automation flags anomalies, human judgment is essential to interpret results and distinguish between legitimate trade and suspicious activity. Financial institutions must balance investments in technology with the training and retention of skilled professionals to maximise effectiveness.

The Human Element: A Looming Crisis

One of the most critical and often-overlooked vulnerabilities in the industry’s defence against TBML is the loss of human expertise. The paper sounds the alarm on high staff turnover among experienced trade finance and compliance professionals, leading to a dangerous erosion of institutional knowledge and capabilities.

“It’s tough to train processors to catch these nuances if they lack experience or haven’t dealt with a broad range of transactions,” warns one senior AML officer quoted in the paper. “Banks often treat them like low-paid clerks, leading to high turnover and a lack of seasoned professionals.”

Nathanael Lin, Partner for Shipping & International Trade at law firm Rajah & Tann, echoes this concern, noting that valuable lessons are often lost when contract-based staff leave after only a few years.

The paper highlights that advanced technology alone is not enough. Without proper investment in training and retaining skilled professionals, subtle red flags and complex schemes are likely to go unnoticed, it says.

Breaking Silos and Balancing Regulation

Addressing the growing threat of TBML requires moving beyond fragmented approaches and reactive measures to adopt a more unified, strategic framework.

Bad actors thrive on institutional blind spots – where AML, sanctions, and trade finance teams operate in silos – and on regulatory gaps that criminals exploit to move illicit funds undetected. Without systemic collaboration, clear communication, and a balance between security and accessibility, these vulnerabilities will persist, undermining the integrity of global trade.

Breaking down internal silos between AML, sanctions, and trade finance teams is a critical first step. As one practitioner notes, “With more cross-cutting issues, it’s unclear who to escalate to, highlighting the need for greater communication and coordination.” Unified processes and shared intelligence across these functions are essential to detect, disrupt, and prevent TBML schemes before they can take root.

The paper also warns of the unintended consequences of regulatory overreach. Overly cautious interpretations of AML/CFT rules can often result in legitimate trade finance becoming more expensive and complex – particularly for SMEs, which form the backbone of global trade.

This has led to widespread de-risking, where institutions exit higher-risk sectors altogether, inadvertently pushing legitimate businesses toward less-regulated and more dangerous channels. This trend has fuelled the rise of "service-based money laundering”, a sophisticated and harder-to-detect method that uses fictitious services to obscure illicit funds.

Ultimately, combating TBML demands a continuous, multi-dimensional approach. While advanced technology has its role in uncovering hidden risks, so too do skilled professionals in interpreting insights and taking decisive action.

Breaking down silos within and across organisations is critical to fostering collaboration and ensuring no vulnerabilities are overlooked. Global trade’s integrity is a shared responsibility, and unless we take action, the risks will only continue to grow.

The full whitepaper is available here.