If financial crime were a sector of the U.S. economy, it would be on par with accommodation and food services—money laundering activity would account for 3.1% of national GDP in 2023.
Despite its scale, financial crime remains a largely hidden epidemic, spanning jurisdictions and borders and underpinning many of society’s most serious crimes: financial exploitation of the elderly, fraud, human trafficking, drug trafficking, and terrorist financing.
Research we conducted A new study finds that financial crime is a significant burden on our economy. Our analysis shows that annual U.S. GDP growth would be more than 0.5 percentage points higher if fraud losses were reincorporated into the economy.
While financial crime is a massive problem, its impacts are very local and personal – and often disproportionately affect the most vulnerable in our society. About 15% of American households They fell victim to scammers, suffering average losses of $575 – a major setback for the company. 37% of all households in the United States The losses that may result from such losses, such as defaulting on debt, can lead to lower credit scores, which restricts the ability to obtain credit in the future, hinders home ownership, and may even reduce the opportunity to transfer wealth to future generations.
Creating a fair, reliable and robust global financial system that supports growth and protects the most vulnerable is a global imperative. Financial criminals exploit the complexity of the financial system and regulatory frameworks to their advantage. They use sophisticated techniques to hide their illicit activities, skillfully evade financial crime controls and thrive in the gaps between silos.
But if we can agree on key priorities for addressing this problem, use collaboration to break down barriers on a global scale, and leverage technology more effectively, we can outpace criminal activity to protect the financial system and the people it serves. Importantly, this will also unlock GDP growth across our economy.
First, it is critical that all stakeholders, including regulators, supervisors, law enforcement agencies, and banks, come together on a shared vision for tackling financial crime that focuses more on outcomes than strict compliance activities. While there is early progress in this direction – with jurisdictions around the world, including the United Kingdom, the European Union, Canada, and the United States, developing their regulatory regimes – much more remains to be done.
Promoting active engagement among policymakers, regulators, the private sector, and law enforcement will be critical to ensuring that the regulations and supervisory standards implemented deprioritize lower-value tasks and technical compliance and focus on higher-quality outputs that provide actionable intelligence to law enforcement. A regulatory framework that prioritizes financial crime and identifies common measures of effectiveness will reduce regulatory complexity and establish a framework that enhances real outcomes from anti-financial crime efforts.
Second, we can enhance information sharing within and between the public and private sectors to break down the barriers that help financial criminals evade detection. When criminals interact with the traditional financial system, they leave traces in the data that advanced analytics can uncover and report to the authorities. If we can better connect these dots across banks and jurisdictions, we can thwart fraudsters more effectively, particularly through the deployment of AI-powered technologies.
Third, clear efforts should be made to prioritize the use of advanced data-driven technologies that can enable targeted detection of specific patterns of crime. For example, the evidence left by financial criminals linked to human trafficking is different from the evidence left by fraudster networks. Focused efforts to adopt these innovative approaches, without unwarranted regulatory constraints stemming from the use of AI, would help banks provide more actionable intelligence to law enforcement on the crimes that have the greatest impact on our system.
The social and economic costs of financial crime are enormous. It funds the darkest corners of society and undermines trust in the global financial system. It robs individuals of economic and emotional security. And it prevents our economy from reaching its full potential.
Banks have long been on the front lines of the fight against financial crime. We are proud to partner with more than 2,500 financial institutions of all sizes—from community banks to global systemically important banks—in this fight. But make no mistake: combating financial crime is a collective responsibility that must be shared by the private sector, policymakers, and law enforcement officials around the world.
Only through collaboration and joint action can we break down silos, formulate urgent policy and technological responses, and develop a more secure, resilient and productive economy for all.
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