The Future of Anti-Money Laundering Efforts: Global Perspectives Introduction

Money laundering is the process in which illicit or illegally obtained money is made to look legitimate. It is a concern across the globe and it often goes hand in hand with criminal activity such as human trafficking, the drug trade, wildlife crime and terrorism financing. Some estimates suggest that the global volume of money laundering may be as much as 5% of global GDP each year. 

Technological advancements, the rise of cryptocurrencies and developments in artificial intelligence (AI) are changing the way we bank and the way we do business. These new trends are presenting both challenges and solutions for global anti-money laundering efforts.

The Growing Threat of Money Laundering

The methods used in money laundering are often complex, which can make trails harder to follow and patterns harder to identify. Common money laundering methods include multiple transactions, shell companies and offshore accounts to conceal the true source of illicit funds. 

Money laundering poses a growing threat to people around the globe because it:

• Finances organised crime
• Damages legitimate businesses
• Finances terrorism
• Promotes a culture of mistrust of financial institutions
• Undermines fairness and equality
• Damages the economy

Money laundering is often linked with other types of financial crime such as extortion, fraud, online scams and illegal gambling.

When companies (or sometimes countries) are exposed for allowing, or failing to notice, money laundering activities it can be extremely damaging to their reputation. The ease of information sharing with social media and online news sites means that such scandals are able to be played out over the international stage in a very short space of time. 

Individuals or organisations can face a multitude of consequences if found guilty of money laundering offences, including sanctions, fines and imprisonment. 

The Role of International Cooperation

The rise of online banking as well as the growing popularity of digital money means it is easier than ever to move money across borders and between international financial institutions. To reduce the risks of money laundering and identify suspicious transactions, a collaborative effort is crucial. 

International cooperation is essential in closing down routes available to criminals who want to exploit weak links in the financial chain. 

Some strategies to improve communication between banks and other financial companies include:

• Developing strategies for record sharing
• Following existing regulatory frameworks
• Using new technologies and tracking systems

Strengthening international cooperation is vital in tackling international money laundering and reducing the estimated £1.8 trillion that is laundered around the world every year.

Innovation in AML Technologies

To support anti-money laundering (AML) efforts, we can harness the power of advancements in technology, such as:

• Blockchain
• Artificial intelligence
• Machine learning
• Biometric verification

Using new technologies can save money and free up human time that can be better used elsewhere. Technological innovations can also make processes more streamlined, reliable and efficient, as well as easier to replicate elsewhere. 

AI and machine learning programs operate without the same biases or error rates as humans and they can rapidly produce reliable results from vast datasets. 

In addition to adopting new technologies in the fight against money laundering, it is important to keep up with how advancements in technology are changing the way criminals operate. Cryptocurrency, for example, is often attractive to criminals due to its decentralised nature, relative anonymity and ease in which it can be used to facilitate cross-border transactions. 

Adopting fresh and ground-breaking technologies is key in counteracting the new and innovative ways criminal networks are able to operate. 

Case Study 1 – AML Initiatives in the European Union 

All EU member states and 17 of Europol’s partner countries joined forces to contribute data to help identify Europe’s most threatening criminal gangs. Data was collated and analysed on over 800 criminal networks. This analysis was used to write the 2024 report titled Decoding the EU’s Most Threatening Criminal Networks. 

Some worrying figures Europol’s report exposed include:

• 86% of the most threatening criminal networks infiltrate legitimate business structures (LBS)
• 41% of the most threatening criminal networks launder money through property
• The most threatening criminal networks contain nationals of all 27 EU member states and are active across all of the member states
• Money laundering activity takes place in over 80 countries

Possibly the most concerning statistic is how prominent these criminal networks appeared to be in infiltrating the business world to disguise their criminal activity and launder their profits. This includes members of criminal networks infiltrating existing business (often at senior levels) or by setting up their own companies.

Some of the business sectors identified as most vulnerable to infiltration include:

• Construction
• Hospitality
• Logistics

Popular money laundering methods included misusing real estate, making investments in high value goods within retail and misappropriating funds within cash intensive businesses. 

The research concluded that serious and organised crime is now both borderless and global:

• 68% of the most threatening criminal networks are active and present in both EU and non-EU countries

And of these networks:

• 49% were laundering money exclusively within the EU
• 32% were laundering money in the EU and outside of the EU
• 19% were laundering money exclusively outside of the EU

The aim of creating the report was to help law enforcement to better understand how and where these gangs operate, the types of crime they are involved in and the measures they use to ensure their activities go undetected. 

The unique dataset provided by the 2024 Europol report could be key to helping organisations to:

• Understand just how prominent criminal gangs are in the business world
• Improve operational effectiveness (including within business, financial institutions and law enforcement)
• Identify safeguards that need to be actioned
• Identify targets who need investigating
• Recognise ‘at risk’ businesses and business models
• Enhance cross-border police cooperation
• Promote a culture of collaboration and intelligence sharing

Case Study 2 – International Collaboration Against Illicit Funds

The Financial Action Task Force (FATF) is an intergovernmental body that promotes the adoption of international standards aimed at preventing money laundering across the globe. Their aim is to introduce a consistent system across the world to target money laundering and the financing of terrorism to improve global security.  

The international organisation works closely with the IMF, World Bank and 200+ member organisations and jurisdictions who have all agreed to implement FATF standards to try to tackle financial crime, including money laundering and terrorist financing. 

Other key international organisations within AML include:

• International Monetary Fund (IMF)
• United Nations (UN)
• Council of the European Union’s Anti-Money Laundering Directive (AMLD)

Many countries across the world have published laws and legislation relating to money laundering and economic crime. 

Legislation in the UK that covers money laundering includes:

• Proceeds of Crime Act 2002 (as amended by the Serious Organised Crime and Police Act 2005)
• Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017)
• Terrorism Act 2000 (TA 2000) (as amended by the Anti-Terrorism, Crime and Security Act 2001 (ATCSA 2001) and the Terrorism Act 2006 (TA 2006)
• Economic Crime and Corporate Transparency Act 2023

The USA has federal and state laws relating to financial crime and money laundering. Key Legislation covering AML includes: 

• The Anti-Money Laundering Act 2020 (AMLA)
• National Defence Authorization Act (NDAA)
• 2001 US Patriot Act
• US Bank Secrecy Act

There have been some well-known names associated with money laundering activities in the past two decades. Here is a snapshot of some of the big cases that have played out on the international stage in recent years:

• In 2012, HSBC bank was accused of laundering money for drug cartels and countries that had been sanctioned by the USA. A settlement of 1.9 billion dollars was reached in the case.
• In 2018, Denmark’s largest bank Danske Bank ended up embroiled in a money laundering scandal that involved illicit funds totalling around 200 billion euros flowing through their Estonian branch. Two individuals were sentenced to a combined 16 years in prison for their role in the scandal.
• Last year, ten arrests were made in relation to one of the biggest money laundering cases in Singapore’s history. This resulted in a total of around a billion dollars being confiscated from the suspects’ bank accounts, plus several million seized in cryptocurrency, property and luxury items. The suspects hailed from China but held multiple passports. The seized funds were allegedly the illicit proceeds of various scams and illegal online gambling operations. International reporting of this case brought into question Singapore’s alleged ‘zero tolerance’ reputation on money laundering. The Singaporean authorities passed a bill in May 2023 to make it easier for banks to share information regarding potentially risky clients.
• In 2018 news broke that the former Prime Minister of Malaysia was being investigated for money laundering offences. This is sometimes referred to as the 1MDB scandal. In 2020, Malaysian courts instructed the former leader to begin a 12-year jail sentence for his part in the crimes.
• A managing director of Goldman Sachs, one of the world’s biggest investment banks, was also sentenced to jail time in relation to the 1MDB multibillion-dollar money laundering and bribery scheme. 1MDB was a state-owned investment and development fund in Malaysia that should have benefitted the Malaysian people. However, bribery and corruption offences meant that billions of dollars were illegally rerouted to private individuals. Goldman Sachs also had to pay $3 billion for their role in the scandal, stating that they failed to show due diligence and ignored red flags in the case.

Emerging Challenges and Future Trends

Financial institutions have a key role to play in combatting money laundering. AML strategies include customer due diligence (CDD) and know your customer (KYC), which if used properly can help to verify your client’s identity and risk level. It is also important to risk assess your business for potential money laundering and know how to report suspicious activities (and who to report your findings to). Even with these procedures in place, traditional anti-money laundering tactics are becoming insufficient against the backdrop of: 

• Constantly evolving technologies
• Stricter regulatory requirements

Manual investigations, background checks and risk assessments for criminal activity are tried and tested methods in the fight against money laundering and financial crime. However, they can also be time consuming, expensive and have a risk of false-positive results which can lead to wasting both time and resources. 

The FATF has published guidelines to help individual countries to conduct risk assessments to further understand the specific risks they face, in relation to money laundering and terrorist financing. On the back of these frameworks, government bodies should also ensure organisations within the banking and business sectors have the knowledge and resources they need to reach any targets set relating to AML. 

Emerging trends in AML efforts include the integration of new technologies and artificial intelligence. The technologies can support human analysis and investigation techniques as they can analyse vast amounts of data quickly and efficiently to:

• Find patterns and/or deviations
• Identify suspicious activity
• Quickly pick out specific transactions
• Predict trends

Tips to support global anti-money laundering efforts:

• Embrace new technologies (such as AI or biometric verification)
• Invest in staff training and new technology
• Keep up to date with changes and follow emerging trends
• Use established frameworks (such as those from FATF) for a comprehensive approach
• Collaborate with international organisations and share information
• Take a ‘risk based’ approach
• Establish AML compliance policies (and update them in line with key changes)

To continue to combat the global issue of money laundering, it is essential to promote an approach that favours understanding, collaboration and regulation. This means sharing information, making legislative changes and supporting regions that are at risk or already have vulnerabilities in their financial frameworks. 

One significant challenge in dealing with global economic crime is the differences between countries and regions in how financial institutions and governments operate, contrasting cultural attitudes towards corruption and fraud and the unfair distribution of resources to tackle criminal activity. 

Although emerging technologies can make significant improvements in accuracy and efficiency, stronger safeguards and more unified legislation need to be applied across the board to support global anti-money laundering efforts moving forward.