[Coinfest Asia] TRM Labs APAC Compliance Lead Claudia Hui Explains Crypto Risk Blind Spots for Traditional Banks

Traditional financial institutions often operate under a dangerous assumption: if they do not offer crypto trading or digital asset custody, they are immune to digital asset risk. Former regulator and current TRM Labs APAC Compliance Lead Claudia Hui warns that this creates a massive operational blind spot, as high-net-worth clients, payment gateways, and corporate accounts are already exposed to on-chain flows.

This is an interview conducted during Coinfest Asia 2026. Check out more Coinfest coverage here. For more interviews, click here.

“The crypto exposure is already here,” Hui explained during an interview with BitPinas at Coinfest Asia. “Whether you actually offer crypto products or not, somebody among your clients is definitely exposed to crypto. It’s not something where you can just say, ‘Okay, we don’t offer crypto products or brokering, and therefore we don’t need this.’”

The Blind Spot of Indirect Risk

The fundamental disconnect stems from how traditional banks assess counterparty exposure. Standard financial systems monitor single-hop transactions, which is the direct interaction between a bank and its client. Blockchain ecosystems, however, move value across complex, multi-hop pathways that obscure the origin and destination of funds unless properly indexed.

“The concept of indirect risk is something that doesn’t exist in the traditional finance space,” Hui noted. “In traditional finance, you basically have like, ‘Okay, this is my customer. I can see only the transactions of my customer with me.’ But in the crypto space, that’s not it. You can basically trace back many, many hops back and see through the chain what they have been exposed to.”

While critics often cite digital assets as anonymous tools for illicit finance, Hui emphasized that public ledgers offer far more auditing precision than fiat currency.

“Is crypto anonymous? Not entirely. It’s pseudonymous, but you can trace back using blockchain intelligence tools to understand the risk profile a lot better than sometimes your customers using traditional finance. Cash is a lot better if you want to hide.”

Claudia Hui, TRM Labs

Regulatory Trickle-Down and Law Enforcement

Hui brings a multi-sided regulatory perspective to compliance strategy. Before taking over TRM Labs‘ APAC Compliance Advisory practice, she served as Assistant Director at the Monetary Authority of Singapore (MAS), helping implement Singapore’s Payment Services Act, and later headed compliance at Revolut Singapore.

Regional regulators across APAC, including the Philippines’ Securities and Exchange Commission (SEC), are tightening oversight on VASPs, privacy coins, and token listing standards. This regulatory shift is forcing traditional banks to address exposure proactively.

“From a regulator perspective, they’re acknowledging that crypto is growing throughout the financial ecosystem. This trickles down to all licensed financial institutions. We get proactive reach-outs to understand how they can put in controls to make sure they can expand in this space commercially while onboarding such clients safely, because it’s becoming unavoidable.”

Claudia Hui, TRM Labs

Beyond commercial banks, TRM Labs works directly with law enforcement agencies and central regulators across the region to track and recover illicit funds. “We work with financial regulators as well as law enforcement,” Hui said. “We do a lot of partnerships to share intel so that they can seize assets, recover assets, and catch bad actors.”

Deploying AI Copilots and Threat Intelligence

To tackle increasingly sophisticated financial crimes, risk intelligence is shifting from manual ledger reviews to automated, AI-driven analysis.

• TRM Labs utilizes tools like the Beacon Network to link law enforcement attributions directly with financial institutions, along with ChainAbuse, a community reporting platform.
• “You can go and report a scam, and it shows up in our platform,” Hui said. “Financial institutions can see it immediately and say, ‘Okay, maybe I need to think about whether this customer or address could be a potential scammer.’”

For complex investigations, TRM has integrated AI agents to assist compliance officers in real-time. “We have a Co-Case Agent where you can ask it, ‘Does my investigation make sense? Can you help me check whether I’m tracing correctly?’” Hui detailed.

“Blockchain investigations can get very messy and complicated, so this helps train new analysts and provides quality control on ongoing cases.”

Claudia Hui, TRM Labs

TRM also deploys specialized threat intelligence units that monitor covert channels directly. “We have specialized teams that go and dig for intel in darknet markets to figure out what addresses scammers or sanctioned entities are using,” Hui added. “Once they identify those addresses, they flag them in our system so institutions get an early warning before funds are sent.”

Building Bridges in the Philippine Market

As digital asset adoption grows across Southeast Asia, TRM Labs is expanding its advisory footprint in emerging hubs like the Philippines. Connecting commercial banks, local VASPs, and enforcement bodies remains central to its strategy.

“We are definitely looking for partners in the financial institution space as well as regulators and law enforcement. Connecting both sides of the ecosystem is critical. Educating larger, traditional financial institutions like banks helps the ecosystem at large understand and manage crypto risk responsibly.”

Claudia Hui, TRM Labs

For traditional banks across APAC, acknowledging indirect exposure is no longer optional. As crypto infrastructure merges further into everyday banking, relying on legacy compliance frameworks leaves financial institutions blind to risks already sitting inside their ledgers.

This interview is published on BitPinas: [Coinfest Asia] TRM Labs APAC Compliance Lead Claudia Hui Explains Crypto Risk Blind Spots for Traditional Banks

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