Financial Crime Compliance: Navigating the Evolving Landscape of Money Laundering and Fraud in 2024

Euronews Business - In the intricate and ever-changing world of financial crime compliance, staying informed about emerging trends is essential. With geopolitical tensions on the rise in 2024, concerns over money laundering, cybercrime, and transnational organized crime networks have never been more pressing. LexisNexis Risk, a leading provider of regulatory compliance analytics, has identified the top trends that organizations must be prepared for as the financial crime compliance landscape continues to evolve.

Challenges in a Period of Global Uncertainty

Financial crime compliance faces new challenges in the midst of global uncertainty. The ongoing Russia-Ukraine and Israel-Hamas conflicts, and the resulting cyberattacks and disinformation campaigns, have raised concerns about money laundering and other criminal activities used to fund or profit from these conflicts.

Cybercrime on the Rise: Cybercrime is projected to cost the global economy $9.5 trillion in damages in 2024 [1].
Digital Assets and Dark Web Marketplaces: Digital assets and the dark web provide criminals with new ways to shield their identities and facilitate illegal activities.

real-time monitoring has become indispensable in enforcing sanctions and trade compliance regulations in the complex and rapidly changing landscape of financial transactions.

The Significance of Real-time Monitoring: The number of real-time transactions increased by 63.2% in 2022, accounting for 27.8% of all electronic transactions [2].
Enforcing Sanctions and Trade Compliance: New technologies can help enforce sanctions more effectively and ensure trade compliance for banks, NBFIs, and corporations.

Data and Analytics: Strategic Assets for Financial Crime Compliance

Leveraging data and analytics to support financial crime compliance continues to grow in importance.

Adopting Advanced Data Analytics: With an increasing emphasis on big data management and sophisticated analytics, more companies are investing in advanced data analytics for better decision-making and proactive risk management.
Predictive Analytics: Predictive analytics, which forecast risks related to financial crimes, are becoming increasingly popular for tracking transactions and enforcing regulatory requirements.

Fighting Wildlife Trafficking: Addressing a Global Issue

As the fourth largest illegal sector globally, wildlife trafficking is a significant financial crime challenge.

Profits from Wildlife Trafficking: The profits generated by wildlife trafficking are used to fund further criminal activities.
Countries of Concern: India, China, Indonesia, and Malaysia are significant players in wildlife trafficking.

Compliance with Changing Sanctions: Adapting to Regulatory Demands

The evolving landscape of international sanctions places tremendous pressure on financial crime compliance teams to keep up.

The Need for Continuous Risk Assessment: With the ongoing Russia-Ukraine conflict leading to an increased number of sanctions, organizations have had to adapt quickly to remain in compliance.
Automated Compliance Checks: Continuous risk assessment and automated compliance checks ensure that companies remain abreast of the latest regulations.

Unveiling UBOs: Increasing Transparency

Understanding the ultimate beneficial owners (UBOs) of organizations has become increasingly important for financial crime compliance teams in identifying and preventing money laundering and other illicit activities.

Global Initiatives to Increase Transparency: Global initiatives to increase transparency around UBOs, such as the European Union’s 5th Anti-Money Laundering Directive, are gaining traction.
Effective UBO Identification and Verification Processes: Implementing more effective UBO identification and verification processes will help organizations stay up to date with regulatory changes and mitigate the risks of financial crime.

[1] Cybersecurity Ventures, “The Cost of Cybercrime is Estimated to Reach $10 Trillion Annually by 2025,” Forbes, December 4, 2019, https://www.forbes.com/sites/forbestechcouncil/2019/12/04/the-cost-of-cybercrime-is-estimated-to-reach-10-trillion-annually-by-2025/?sh=3a5f917b4f36.

[2] Mastercard Index of Global Transaction Reports, “Global Transactions Reach Record Highs in Q4 2022,” Mastercard, February 15, 2023, https://newsroom.mastercard.com/press-Releases/Global-Transactions-Reach-Record-Highs-in-Q4-2022/default.aspx.