How would you characterise today’s global financial crime landscape? How is the scale and sophistication of fraud evolving – and are you seeing a shift in how its converging with organised crime groups?
The global financial crime landscape is facing unprecedented challenges. Since the 2024 United States election, and the start of President Trump’s second term in office we have seen several announcements which have resulted in the US ‘backsliding’ on its commitments towards tackling financial crime. Examples of this include Presidential Executive Orders limiting the ability the US Department of Justice to investigate and prosecute cases under the Foreign and Corrupt Practices Act (FCPA). Furthermore, we have seen the disbandment of the Department of Justice’s Financial Crime Cryptocurrency team. Worryingly, the United Kingdom is about to embark on another era of financial deregulation, which has the potential to increase the threat presented by financial crime. The unprecedented scale, structure and industrialisation of fraud represent an extraordinary challenge for law enforcement agencies. The increased use of artificial intelligence has contributed to significant increases in fraud. There is a stronger association between fraud and serious organised criminal gangs and terrorist groups. Fraud represents an ideal opportunity for organised criminal gangs to exploit regulatory and legal loopholes to increase their so-called champagne lifestyle.
Is the use of legitimate business structures – such as front companies and professional enablers – becoming a more entrenched method for concealing illicit activity? Which sectors are proving most vulnerable to this, or rapidly emerging as strategic channels for abuse?
Financial criminals will always use legitimate business structures to hide in disguise their proceeds of crime and there is evidence that they are increasingly used in professional enablers. This point has been raised on numerous occasions by academic commentators and international financial crime stakeholders, such as the Financial Action Task Force. Within a UK context, the most vulnerable sectors would be the legal profession, social media platforms, and the property sector. Research has suggested the levels of compliance within these three sectors varies and there is a need to improve the levels of regulation.
Sanctions have become central to geopolitical enforcement, but how effective are existing legal and regulatory frameworks at detecting and prosecuting circumvention? What specific evasion techniques should compliance teams be proactively scanning for today?
Following the Russian invasion of Ukraine in 2022, nation states have imposed sanctions on a wide range of individuals. The effectiveness of sanctions is debatable and a variety of NGO’s have raised concerns regarding the negative consequences of sanctions on the citizens of countries they are imposed on. There are numerous mechanisms by which sanctions can be avoided and their universal and consistent use is of great importance.
Technology continues to be both a catalyst for financial crime and a tool for prevention. Where are the most critical digital vulnerabilities in current compliance frameworks, and how are criminals exploiting innovations to launder funds or avoid detection?
Technology plays a dual role in financial crime, which is increasingly evident as existing financial crime compliance frameworks tend to struggle to keep pace with innovation. Digital deficiencies stem from outdated systems, fragmented data sharing, and insufficient real-time monitoring. This leaves gaps in the traditional Customer Due Diligence (CDD) and Know Your Customer (KYC) protocols.
There is evidence that criminals continue to exploit weaknesses by leveraging decentralised finance (DeFi), cryptocurrency mixers, synthetic identities, and deepfake technologies to obscure beneficial ownership and to launder illicit funds across borders.
The anonymity complicates detection. The problem is exacerbated by professional enablers and money mules, who are frequently recruited via social media to facilitate the laundering of the proceeds of crime into the legitimate economy. As financial crime becomes more algorithmic and AI-driven, traditional compliance tools need to consistently evolve.
What key shifts are you observing in terrorist financing methods in the digital age, particularly with decentralised, low-cost operations? How can institutions enhance cross-border intelligence sharing with both the public and private sector to better detect and disrupt these evolving threats?
Some of the key shifts in terrorism financing link into the threat presented by cryptocurrencies and social media platforms. The global regulation of cryptocurrencies is fragmented on the implementation of the Financial Action Task Force (FATF) Recommendations.
Research has suggested that an increasing number of terrorist groups have used cryptocurrencies to potentially fund acts of terrorism. This is clearly illustrated by several terrorist financing cryptocurrency related criminal convictions in the US and the United Kingdom.
We have also seen reports that the Islamic Republic of Iran has provided financing to several terrorist groups via cryptocurrencies. It is of paramount importance that institutions seek to improve cross-border intelligence sharing and the continued use of the public and private partnerships is essential to disrupt the threats of terrorist financing via new forms of technology.
Are current global frameworks, such as FATF recommendations, still fit for purpose in tackling modern terrorist financing risks? What practical role can compliance professionals play in identifying threats and patterns that increasingly mimic low-value, everyday transactions?
The current global standards that are aimed to tackle the threat presented by terrorist financing have never been fit for purpose to address. For instance, the FATF Recommendations were initially aimed at addressing the threat presented by money laundering. The Recommendations were extended to include terrorism financing after the terrorist attacks in the US in September 2001. However, the so-called Financial War on Terrorism, which the FATF Recommendations are a key part of, is incorrectly based on adopting the global anti-money laundering (AML) strategy to tackle terrorist financing.
Part of the problem with the Recommendations is illustrated by the inconsistency on the application of the methodology and review via the mutual evaluation reports. For example, in 2018 the FATF concluded that the UK has the best AML and CTF legal framework out of the then 60 countries who had been subjected to a mutual evaluation review. Research has challenged these conclusions. For instance, a 2024 study has concluded that the UK’s data sharing provisions to address the threat presented by terrorists financing are not fit for purpose.
The practical role that compliance professionals can play in identifying the threats and financial patterns of terrorists is to be fully compliant with the AML and CTF reporting obligations and to ensure that their staff are up to date with modern terrorist-financing typologies. However, it is important to note that a large percentage of terrorist attacks can be classified as microfinancing. This simply means that the amount of money used to fund an act of terrorism is very low and will not necessarily form part of a suspicious activity report for identifying suspected terrorist-financing transactions.
Another important reform would be to amend the Online Safety Act 2023 and to place the online fraud charter onto a statutory footing. The current commitment by social media and telecommunications companies is based on a charter which has no legal basis and could be regarded as a soft law form of regulation.
Which legal or jurisdictional ‘loopholes’ continue to facilitate illicit activities and the laundering of fraudulent proceeds, despite multilateral initiatives? Are there specific gaps in enforcement or cooperation that remain persistently exploited?
There are numerous legal and jurisdictional loopholes that are much bloated by financial criminals. We have recently seen a significant increase in the amounts of fraud committed where fraudsters in one jurisdiction will target the victims in other jurisdictions, that’s making it very difficult if not impossible to identify, arrest, and prosecute the individual concerned.
To address this threat, it is essential that multilateral and international initiatives are used to address the global threat presented by fraud. One possible solution here would be to re-evaluate the mutual legal assistance agreements between nation states to focus more on the threat presented by fraud.
What emerging blind spots should financial institutions and regulators be preparing for right now? And what legal or policy reforms could significantly strengthen the UK’s and the EU’s position to combat financial crime in the next five years?
There are a number of important legal and policy reforms that could be used to strengthen the UK’s efforts to tackle financial crime over the next five years. For example, the UK is due to publish its new Fraud Strategy in December 2025, replacing the 2023 Strategy. The 2023 strategy failed to recognise the association between terrorist financing and fraud, despite a plethora of cases illustrating this strong connection.
One recommendation would be for the government to produce a national risk assessment that focuses exclusively on the link between fraud and terrorist financing. There remains an intelligence gap on the UK’s understanding of the threat presented by fraud. For example, the National Crime Agency (NCA) has reported that 86% of fraud in the UK is never reported. The current reporting mechanisms for suspected fraud in the UK are no longer fit for purpose. For example, successive governments have promised to address the deficiencies of Action Fraud, the UK’s national fraud reporting centre. One possible option could be for the reporting of suspected fraud to be mandatory and that these suspicious activity reports could be sent to the NCA. The UK government is keen to promote financial deregulation and to make the UK’s financial crime regulations more business friendly, and therefore it is very unlikely that this recommendation will be implemented by the UK government.
Nicholas Ryder is Professor of Law at Cardiff University and an internationally recognised expert in financial crime, with a focus on fraud, money laundering, and terrorism financing. He has advised a wide range of national and international bodies, including the UK Home Affairs Select Committee, the National Crime Agency, NATO, Europol, Cepol, the United Nations, and Transparency International. He served as Special Advisor to the Home Affairs Select Committee during its 2023–2024 inquiry into fraud. His research has attracted over £2 million in funding and informed both policy and professional practice across government, law enforcement, and the private sector. Nicholas is also the founding editor of Routledge’s Law of Financial Crime series, co-editor-in-chief of the Journal of Economic Criminology, and the author of five monographs and numerous journal articles.
