What is Financial Crime?
Financial crime refers to all crimes committed by an individual or a group of individuals that involve taking money or other property that belongs to someone else, to obtain a financial or professional gain.
Types of financial crime
Financial crime ranges from basic theft or fraud committed by single individuals to large-scale, global schemes masterminded by organized criminal syndicates. Financial crime is commonly considered as covering the following offenses:
- money laundering
- terrorist financing
- bribery and corruption
- insider trading
Low risk, high profits
Financial crime is a multi-trillion-dollar business for criminal organizations. According to the United Nations Office on Drugs and Crime, it is estimated that up to $2 trillion of illicit funds are laundered through global financial networks every year, representing between two to five percent of global GDP (and it is increasing each year). Of this, it is estimated that only one percent of illicit financial flows are intercepted globally.
Criminals are very creative in developing methods to commit such crimes and are heavily influenced by the economy, financial markets and anti-money laundering (AML)/counter financing of terrorism (CTF) regimes of the place where they operate. Increasingly, many exploit the complex nature of financial services, which makes detection and prevention even more difficult. Furthermore, large-scale syndicates such as organized crime groups operating at an international level take advantage of differences in national criminal legislations.
Fighting financial crime
Due to the impact that this typology of crime has on economy, governance, and society, the international community has made the fight against financial crime, with particular attention to money laundering and the financing of terrorism, a priority.
Financial crime has become a matter of concern to governments and other institutions throughout the world. Among the goals of this effort: protecting the integrity and stability of the international financial system, cutting off the resources available to terrorists, and making it more difficult for those engaged in crime to profit from their criminal activities.
But the capacity of both the private and the public sector to manage and assess financial crime depends on a closer collaboration between the different regulatory bodies and institutions
No firm is immune to the threat of financial crime or regulatory challenges, as criminals are growing more sophisticated and looking for new weaknesses in financial networks.