Working hard at the wrong things: how TBML exposes the rituals of modern AML

Dr. Mariola Marzouk challenges compliance leaders to move beyond box-ticking and confront systems designed for regulatory comfort rather than real protection. Using Trade-Based Money Laundering as a lens, she calls for a shift from ritualistic AML to meaningful disruption.

On paper, the risk-based approach (RBA) to Anti-Money Laundering (AML) promises flexibility, proportionality, and intelligent effort. In practice, it has devolved into a managed performance: a theatre of compliance saturated with symbols of vigilance but thin on actual disruption. Banks pour billions into AML defences by building large compliance teams, investing in technology, and funding remediation programmes. Yet criminals continue to generate vast wealth with little sustained interference. The result is a system that rewards being visibly busy over being meaningfully effective, where ‘good AML’ often means adhering to process rather than challenging the flawed assumptions baked into regulations, best-practice guidelines, and regulatory compliance technology (RegTech) roadmaps.

Regulatory theory vs frontline reality

The gap between regulatory theory and frontline reality is not abstract: it is structurally embedded, nowhere more clearly than in the policing of Trade-Based Money Laundering (TBML). This gap stems from a fundamental disconnect in understanding. As one senior banking compliance professional observed, ‘Regulators don’t really know how to tackle the elephant in the room.’ Another expert added, ‘Policymakers don’t want to hear about TBML because enforcement is complicated, it’s expensive, and they want that magic fix – and the magic fix doesn’t really exist.’

TBML functions as a stress test for this disconnected system, exposing its core weaknesses. For example, the narrow-minded rules and risk indicators are designed around traditional, document-heavy trade finance, while actual laundering flourishes in less glamorous spaces: domestic trade, open-account flows, service-based sectors, informal value transfer systems, barter arrangements, and other hybrid methods.

In truth, TBML encompasses a broad continuum of abusive practices, characterised by the intentional information asymmetry associated with the exchange of goods or services to disguise origin, transfer value, shift ownership, or evade fiscal obligations. It spans overt criminal schemes to ‘grey-area’ practices like aggressive corporate transfer pricing, blurring the line between illegal laundering and technically legal manipulation. This continuum allows illicit value to flow through the very mechanics of global and domestic trade, often right under the noses of a system looking in the wrong places.

As one frustrated senior AML expert summarised: ‘We are not really chasing the real big whales and sharks of trade-based money laundering, and they are really sitting in the same country, they’re just avoiding tax…I am speaking the truth, and they know it.’

AML professionals in the crossfire

Frontline AML professionals are not complacent; they are trapped. Told to be ‘risk-based,” they are punished for deviating from prescriptive expectations. Urged to innovate, they are fined when innovation diverges from familiar checklists and threatening regulatory letters. Unsurprisingly, regulated institutions default to the safest strategy: follow regulatory red flags, buy the tools everyone else buys, hire the same Big Four consultants, and treat peer practice as both shield and compass; even when internal experts know serious laundering rarely resembles the training slides.

This dynamic creates a perverse paradox in which the private sector is burdened with a public policing role it cannot effectively fulfil. As one senior AML practitioner explained, proposals for improved detection methods often encounter pushback from senior compliance leadership, who prefer a ‘comforting framework’ that allows them to say: ‘I’m not introducing new risk, I’m going to find things, and the cost will not be prohibitive.’

Empirical research illustrates the problem. Heavily documented trade finance products attract intense scrutiny, yet practitioners rarely find serious laundering there - criminals avoid these channels precisely because of their rigorous controls. As one expert observed, ‘The one thing that a money launderer doesn’t want is scrutiny . . . even under normal circumstances, it is difficult for most companies to get a consistent set of documents, even without having fraud or money laundering or tax evasion or anything on their mind.’

When regulators and politicians treat banks as wilfully lax rather than structurally constrained, they ignore a crucial truth: many AML teams want to chase the right risks but cannot afford to ‘rock the boat’ in a system that punishes originality more than failure.

The recycling of knowledge and the status quo machine

Perhaps the most provocative thread is not about criminals at all, but about how the AML system thinks. What presents itself as robust, triangulated knowledge - FATF reports, industry ‘best practice’, consultancy thought leadership, and academic citations - often turns out, under scrutiny, to be a closed echo chamber where the same thin evidence and inherited assumptions are recycled until they harden into gospel. This is painfully apparent in the tools practitioners are forced to use. As one participant dismissed a cornerstone of the regulatory toolkit: ‘This particular red flag that [regulators] like so much, it’s rubbish.’ Socio‑legal scholars describe this as pseudo‑triangulation: practitioners cite FATF, regulators cite practitioners, consultants cite both, academics cite all three, and the media amplifies the resulting ‘consensus’ without ever tracing it back to its shaky foundations.

The same pattern applies to scale estimates and typologies. Global money‑laundering figures rest on models and surveys with serious methodological weaknesses, repeatedly re‑used and rebranded until their speculative nature is almost impossible to see, while policy and compliance architectures behave as if the threat were precisely mapped. In parallel, the UK RegTech ecosystem - boasting 234 domestic firms and 335 international providers - has largely been captured by compliance optics where products are designed first to satisfy external expectations and reduce unit costs, not to challenge flawed risk models or force a rethink about where and how laundering actually flows through banks and beyond.

The status quo persists not because AML professionals are negligent or malign, but because perverse incentives align in its favour. ‘It’s a lot easier to fine a bank with a lot of money than it is to capture a criminal’; easier to sell ‘AI for AML’ that automates existing red flags than to admit that the red flags themselves may be wrong; easier for everyone to accept inherited definitions than to acknowledge, in more measured terms, that the intellectual foundations of the regime are far less robust than its rhetoric suggests.

Where do serious AML professionals go from here?

If this is the landscape, the question for serious professionals is simple: Do you just get through the next inspection, or do you actually try to reduce criminal harm? The call for change is echoing from within the system itself. One practitioner argued for radical overhaul: ‘The only way forward would be if you threw out the SARs regime and started again – building something that incentivises the private sector... to share intelligence collaboratively. A system where that intelligence is actually used by agencies to trigger real investigations into criminals. That’s clearly not what we have at the moment.’

The newly published book Trade-Based Money Laundering: Compliance and the Law offers a clear-eyed diagnosis and a way forward. It argues that meaningful reform requires moving from the illusion of control to the reality of disruption. The book’s nine recommendations form a deliberate arc:

1. Redefining TBML for the modern economy, moving beyond narrow typologies to encompass the full continuum of trade abuse.
2. Reorienting metrics from documentation volume toward measurable disruption: assets confiscated, networks dismantled, vulnerabilities closed.
3. Reimagining the Risk-Based Approach to reward genuine innovation and frontline expertise, not just checklist compliance.
4. Breaking epistemic homogeneity by bringing diverse voices - criminologists, data scientists, trade economists - into policy design.
5. Transforming public-private partnerships into true intelligence-sharing collaborations, not symbolic forums.
6. Breaking down governance silos and reinvesting confiscated assets into under-resourced public enforcement.
7. Anchoring reform in transparency, with independent evaluation of enforcement outcomes.
8. Mitigating the collateral damage of AML on financial inclusion and legitimate SMEs.
9. Reframing economic crimes as having systemic victims - eroded tax bases, distorted markets, and weakened public trust.

This is not another lecture on vigilance. It is a call to arms for policymakers, practitioners, and researchers. Bankers don’t need more rules; they need the permission to call out systems optimised for regulatory comfort over public protection.

Trade-Based Money Laundering: Compliance and the Law occupies that critical space. Using TBML as a lens, it exposes AML’s drift into ritual and provides the map from illusion to meaningful disruption. For those tired of working hard at the wrong things, this book is your essential guide.

About the author

 

Dr. Mariola Marzouk is a specialist in Trade-Based Money Laundering (TBML), having conducted PhD research in the field and authored the book Trade-Based Money Laundering Compliance and the Law. She has a background in forensic accounting and compliance technologies, with expertise in financial crime risk, regulatory frameworks, and trade compliance controls. Dr. Marzouk serves as an Honorary Lecturer at the University of Portsmouth and is a board member contributing to Coptic Orphans’ charitable mission of lifting children out of poverty through the power of education.