Dirty money from crime or sanctions-evasion smears every financial institution that touches it and has the potential to inflict serious penalties on any organisation that fails to identify and address financial crime risks.
In the UK for example, the Financial Conduct Authority (FCA) last year fined Barclays £42m for poor handling of financial crime risks relating to two companies connected to money laundering and fraud. Four men involved in one of these organisations received substantial prison sentences for offences relating to a £266m money-laundering operation that used 12 couriers carrying cash in holdalls and carrier bags.
Combatting money-laundering is increasingly becoming a major priority around the world. Last year, US regulators imposed $1.1bn in anti-money-laundering (AML) and counter-terrorism finance penalties, while sanctions-related penalties hit $238m. In 2024, US regulator Financial Crimes Enforcement Network (FinCEN) heaped a $1.3bn AML penalty on a single bank.
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The UK faces a similar scale of threat. According to the National Crime Agency (NCA), it is a realistic possibility that over £100bn is laundered in the UK each year, including £12bn of it in cash. Analysis published last September shows there was a 36% increase in prosecutions for money-laundering offences in England and Wales in 2024, amounting to 6,845 prosecutions (and 3,756 convictions). Along with international fraud, money-laundering was among nine priorities agreed by the UK’s National Crime Agency (NCA) and Financial Conduct Authority (FCA) last year.
The task facing financial crime investigators is a daunting one, with international criminal networks using encrypted channels, crypto-currency exchanges, social media platforms – both mainstream and obscure – along with the deep and dark web. The NCA estimates 70% of the fraud perpetrated against UK citizens or businesses originates abroad, for instance.
These networks collude with corrupt bank employees or game due diligence processes to wash the proceeds of drug, wildlife and people-trafficking, or to support terrorism and facilitate sanctions-evasion. Payments and money transfer businesses, securities firms, casinos and gaming companies and any kind of bank or company engaged in trade can be included.
Spotting suspicious activity in the fog of information
With so much data to analyse and verify, almost all investigatory and enforcement agencies around the globe need better tools if they are to be successful. In the NCA and FCA’s statement on their new priorities, the use of social media and online platforms to commit romance and other types of fraud was highlighted. To investigate these platforms where criminals collaborate or target victims, agencies need technology that filters out the noise and provides focused insights from a mass of information.
Insights gleaned need to correlate at speed with information from public databases and registries, criminal and court records, commercial data sources and information from other investigations. Such is the volume of data that investigators are unlikely to achieve results without new approaches and more advanced technology, such as AI-powered open-source intelligence (OSINT). Honed by use in the intelligence world, this technology analyses social media and the dark web more thoroughly, accurately and far more quickly than humans.
Crypto-currency investigations
Even in the obscurity of the crypto-currency world, AI-powered OSINT enables investigators to spot suspicious overlaps between crypto-currency activity and social media in individuals’ digital footprints, offering vital clues to illicit online activity. Crypto-currency exchanges are significant platforms for money-laundering. Last year, for example, the US government imposed $927m in fines on such entities for money-laundering infringements.
By collecting and analysing data across the broadest dataset possible, law enforcement, government agencies and financial institutions can develop a complete picture of crypto-currency crime, threat actors involved and their networks.
Other criminal activities such as romance fraud take place on public platforms but still need to launder the significant proceeds. Along with money-laundering, romance fraud was one of the most prolific crimes that INTERPOL worked on last year across 40 countries, recovering US$342m in currency and US$97m in physical and virtual assets, blocking more than 68,000 bank accounts and freezing nearly 400 crypto-currency wallets.
Financial institutions need advanced intelligence to protect their customers and themselves
OSINT technology can detect cross-border connections in romance and other types of fraud, identifying perpetrators and their bosses at speed and at scale.
It is not only law enforcement agencies that need OSINT technology. Banks face much stricter compliance and risk-management requirements from multiple regulations such as the UK’s 2017 Money Laundering Regulations and the Economic Crime and Corporate Transparency Act of 2023. In the US, watchdogs like the US Treasury and FinCen are now hot on due diligence and have imposed unprecedented consent orders.
The EU has also stepped up its fight against money laundering and terrorist financing by expanding guidance and definitions under EU AMLD6, with an emphasis on access to wide-ranging information and the extension of criminal liability.
Helping banks identify AML risks better
Discovering connections between entities can be difficult for financial institutions conducting due diligence because of the distancing tactics criminals use to disguise themselves in corporate registries and public records. If, however, their due diligence functions have access to surface, deep and dark web data combined with the ability to quickly correlate data across many different sources to build a digital footprint, they can reveal a customer’s true risk profile.
With criminals so eager to launder their dirty money through institutions, there is now considerable urgency for organisations to adopt more advanced techniques, including AI-powered OSINT in order to ensure compliance and mitigate risk exposure.
By using the power of generative AI and machine learning, an OSINT platform can comb through billions of data points and provide the necessary insights. Once they have those insights, professionals can make a judgment that is not only faster but based on far better evidence – evidence that might never come to light by any other means.
This is a technology that complements the skills of investigators and compliance teams but does not replace them with total reliance on automation. The professional must always have the final say, but given the scale of the challenges, AI-driven OSINT analysis is now indispensable for tracking down those involved in generating, hiding and laundering dirty money, thereby protecting financial institutions and society at large.
Chad Longo, Financial Crime Compliance Director, Fivecast
