Global Trends That Will Shape Financial Crime In 2024

As we start the second week of 2024, it is time to welcome back the determined and focused faces multitasking on video calls.

With the new year underway, I wanted to share some key global trends that will directly impact our work in Financial Crime Compliance (FCC):

1. Political polarities between those who seek to open and trade and those who seek to protect, control, or even close, are on the rise. It is not surprising that some feel disenfranchised and end up aligning with those who work against them by wanting to protect their interests with more control and less openness, while global elites tend to be happy to work together: stats show that the top 10% earners in the US alone own over 82% of stocks in the country – a significant jump from 70% in 2019. Such trends create strong emotions, and it is difficult for governments to balance the need to stay in power vs. the need to bolster the economy, which only happens with more trade. Financial Crime fighters suffer because of this, both in the private and public sector because we need to rival the criminals for whom borders do not exist in the same way.
2. Nearly 4.5 billion people will be voting in 70 countries this year, the biggest election year in history, and most serious predictors like the Economist, FT, Ray Dalio, and others do not see democracy as an obvious winner. How will this affect us in the fight against financial crime? Despite efforts by governments to react with new regulations (e.g., AMLA in the EU), we are likely to see more fraud, cyber threats, and identity theft affecting customers and clients while being judged more harshly for the failures. Another manifestation of these polarities is sanctions regimes which are increasingly difficult to navigate not just technically, but also because they may put institutions in a position of having to choose which regime to abide by and which to deprioritise. These can be very tough choices with a sweet silver lining that the objectives of FCC and business may converge more easily than usual, as we have seen when CEOs were pulling out of Russia without much compliance pressure following the Ukraine invasion.
3. Climate change is definitely on the agenda of governments, while the private sector is adopting more and more ESG measures in response to it. According to research, over 70% of C-Suites favor ethical ways of working. For financial crime teams, it may mean more responsibilities for portions of the ESG frameworks and promises institutions make on their websites without always backing them with related controls. With ESG, there are a lot of useful and valuable overlaps that are surfacing with time.
4. The war in Ukraine and then in Israel are taking away US focus from the conflict with China that looked like the defining feature of the future – and tensions are growing across the globe. Change is so fast that a year’s horizon is significant regarding the quality and quantity of change. This accentuates existing business pressures where shrinking global trade, sanctions, and other regulatory difficulties are dampening gains from increased interest rates, with investors heading back into bonds. So, for FCC, this means a continued challenging funding environment and tough choices for transformation necessary to address regulatory and real crime-fighting priorities. What will you spend your precious dollars on this year?
5. Above all, but also in a much stealthier way – AI is on stage – learning from everything out there, and not all out there is fair, kind, or positive. With the IQ of current ChatGPT already at 155 vs. The average human at 100-ish and Einstein at 165, what happens when AI chats have amassed the knowledge and found pathways at an IQ of 1500 that we cannot even comprehend? I know regulators are nervous about the transparency of our decision-making, but when I think of this point, I laugh… what else? But despite that, I believe AI in FCC will not yet be a dominant force, even though we are all focused on various tech advancements that claim to be AI. AI is the most unpredictable area of change ahead of us because we cannot see what a being with an IQ of 1500 or 150000000 could do, but we can take some credit for creating it, right? 
   
   Either way, the change in FCC AI will not be drastic enough to render us obsolete, not yet anyway, so we shall continue to do our work in 2024 – and enjoy the fact!