Financial crime is on the rise. Criminal money funnelled through the UK or facilitated by UK structures amounts to hundreds of billions of pounds annually. According to a report by HM Treasury, serious and organised crime, much of which is driven by financial crime, costs the UK an estimated £37 billion a year.

Financial crime is a growing and lucrative business for criminal organisations. Criminals devise ever-creative techniques to evade law enforcement and advance their criminal activities, which threaten public safety and national security. These criminal activities, including fraud, money laundering, terrorist financing, bribery, and corruption, cause serious damage to both individuals and organisations.

The financial sector is a target-rich environment for criminals. Identifying and tackling criminal threats early on can help banks and financial institutions make strategic decisions and avoid troubles down the road.

What is financial crime?

Financial crime encompasses a range of criminal activities based on the misuse or abuse of financial systems and services. Criminals resort to deceptive and illegal practices generally associated with the following offences:

Money laundering and terrorist financing, in particular, can undermine the stability of our financial systems, increase volatility of international capital flows, and lead to potentially disastrous global consequences.

Financial crime is a serious issue that can have far-reaching consequences. By understanding the links between financial crime and money laundering, we can mitigate the risks and protect our financial systems from exploitation.

There are strong links between financial crime and money laundering. The explanation is simple. Criminal money cannot enter the legitimate financial system until it goes through the three stages of money laundering: placement, layering, and integration. Hence, financial crime doesn’t end with the crime itself, rather, it is perpetuated and compounded by money laundering.

Money laundering techniques are constantly evolving, as criminals adapt to new technologies and changes in the geopolitical landscape. Here are some of the most common money laundering techniques:

Looking at the pace and sophistication of recent advances in financial technology, it is not surprising that financial criminals and money launderers are constantly innovating to stay one step ahead, and move on to new crimes. To address new and emerging threats, law enforcement agencies have ramped up their efforts, introducing anti-money laundering (AML) and counter-financing of terrorism (CFT) legislation and imposing stricter penalties for non-compliance.

How organisations can detect and prevent financial crime?

Organisations can take a number of steps to detect and combat financial crime, namely, implementing effective AML/CFT controls, and ensuring compliance with all relevant laws and regulations.

By ensuring compliance with jurisdictional AML/CFT regulations, such as the UK’s Proceeds of Crime Act (POCA), the EU’s anti-money laundering directives (AMLD), the US’ Bank Secrecy Act (BSA) and the Australia’s AML/CFT Act, organisations can mitigate the risks of money laundering and terrorist financing, and demonstrate their commitment to protecting their customers and employees.

Financial crime is a major threat to our global economy, and it is up to all of us – individuals, organisations, and governments alike – to work together to prevent it. By paying attention to the warning signs, implementing effective safeguards and controls, we can reduce financial crime and create a safer world now and for future generations.

With Salv’s financial crime compliance solutions, organisations can leverage their data and insights, and fight financial crime more effectively, while staying compliant with data protection and privacy requirements. Curious? Don’t wait, talk to our experts.