FinTech AML and Financial Crime in Turbulent Times: What’s Changing and Why It Matters
- FinScan
- 3 days ago
- 5 min read
Financial crime is evolving alongside AI, digital payments, and fintech innovation. Here’s what compliance teams need to know.
In our recent FinScan webinar, “Turbulent Times: The New Era for FinTech AML Compliance,” moderator and renowned fintech author and speaker Leda Glyptis joined panelists Seth Sattler (Oscilar), Jacqueline Hite (Worldplay), Becki LaPorte and Steve Marshall (FinScan) to explore how financial crime risks are evolving alongside rapid changes in payments, digital finance, and artificial intelligence.
The discussion highlighted a core reality facing compliance teams today: the financial crime landscape is becoming more complex, more technologically sophisticated, and more dynamic than ever before. At the same time, fintech innovation continues to accelerate, creating new opportunities for both legitimate financial services and criminal exploitation.
Below are the key takeaways from the conversation.
Risk Doesn’t Disappear — It Redistributes
One of the most important insights from the discussion is that regulatory or technological changes rarely eliminate financial crime risks. Instead, they shift to where those risks are more prevalent.
As Jacqueline Hite noted during the discussion, “You don’t eliminate risk, you redistribute it.”
For example, proposed policy changes affecting credit markets could limit access to traditional lending for some consumers. When that happens, financial activity often migrates towards alternative products, emerging fintech services, or less regulated channels.
For compliance teams, this means risk management must evolve continuously. A policy shift or new payments innovation can rapidly change how fraudsters operate, requiring institutions to monitor emerging transaction patterns and behavioral signals rather than relying solely on historical models.
In practice, AML and fraud teams must assume that whenever financial infrastructure changes, criminal activity will quickly adapt.
Fraud Is Expanding Beyond Individual Transactions to Entire Ecosystems
Another major shift discussed is the move from traditional payment fraud to broader ecosystem exploitation. As Hite explained, “The fraud landscape is shifting from credit card fraud to ecosystem exploitation.”
In earlier generations of financial crime detection, organizations often focused on specific transaction types, such as credit card fraud or suspicious transfers. Today, fintech platforms operate within interconnected ecosystems that include digital wallets, payment gateways, marketplaces, embedded finance services, and peer-to-peer payment networks.
Criminals increasingly exploit weaknesses across these entire environments instead of targeting just one payment channel.
As a result, fintech companies must think beyond transaction monitoring and evaluate how money laundering and fraud might propagate through the full lifecycle of their platform, including onboarding, payments, merchant activity, and third-party integrations.
AI Is Transforming Both Financial Crime and Financial Crime Detection
Artificial intelligence is rapidly becoming a defining factor in the future of financial crime.
On the defensive side, AI and advanced analytics can dramatically improve AML investigations by providing deeper contextual insights. Instead of simply flagging suspicious activity, modern systems can analyze behavioral patterns, identify anomalies, and help investigators prioritize the most relevant alerts.
AI can also help compliance teams refine detection models. Traditional AML programs often cast wide nets, generating large numbers of alerts that require manual investigation. AI-driven analysis can help narrow those alerts to the most significant risks, improving operational efficiency while reducing false positives.
Seth Sattler described the evolution of AML analytics this way: “When you build AML and detection models, you’re casting a net into the water. AI helps make sure the net only catches what’s big enough to worry about.”
However, the panel emphasized that criminals are adopting the same technologies. Generative AI tools now allow fraudsters to produce more convincing scams, realistic communications, and sophisticated phishing schemes. Errors that once signaled fraud, such as poor grammar or suspicious formatting, are becoming less reliable red flags.
This creates an ongoing technological arms race between financial institutions and bad actors.
Identity Fraud Is Becoming More Valuable Than Cash Theft
Another emerging trend is the growing value of identity data in financial crime. As Becki LaPorte explained, “Your identity is more infinite than cash.”
While traditional scams focused on stealing money once from an individual, criminals are increasingly targeting personal data that can be reused to repeatedly exploit the same individual. Stolen identities enable fraudsters to open accounts, apply for loans, commit tax fraud, and create synthetic identities that blend real and fabricated information.
Synthetic identity fraud in particular is becoming a significant concern. By combining elements of multiple individuals’ personal data, criminals can create entirely new identities that appear legitimate within financial systems. These synthetic identities may remain dormant for months before being used in fraud schemes, making them difficult to detect with traditional onboarding checks.
For fintech companies, this underscores the importance of strong identity verification and ongoing monitoring across the customer lifecycle.
“In order to be successful, you have to have an understanding of the underlying crime and criminal methodology so you can put the right controls and processes in place”
Understanding Criminal Methodology Is Critical
One recurring theme was the importance of understanding how financial crimes actually occur.
“In order to be successful, you have to have an understanding of the underlying crime and criminal methodology so you can put the right controls and processes in place,” said Steve Marshall.
Many compliance programs focus heavily on transaction thresholds or rule-based triggers. While these capabilities remain important, they are often insufficient to identify emerging threats.
Effective risk management requires deeper knowledge of criminal methodologies—how fraudsters recruit victims, how scams evolve, and how illicit networks move money. By understanding these patterns, compliance teams can design controls that target the underlying behavior rather than simply monitoring transaction amounts.
Prevention Alone Is Not Enough
Another key takeaway is that financial institutions cannot rely solely on preventing fraud before it occurs.
Despite the best controls, some fraud will inevitably succeed. What happens after an incident—how quickly institutions detect it, investigate it, and respond to it—can be just as important as prevention.
As Jacqueline Hite noted, “The question is not whether we can prevent all fraud, because that’s not possible.”
Organizations must therefore build capabilities for:
Rapid detection and investigation
Effective recovery processes
Collaboration with banks and law enforcement
Ongoing monitoring of compromised identities or accounts
A strong response strategy can significantly limit the long-term impact of financial crime events.
Innovation and Regulation Must Move Together
“When it comes to innovation and regulation, there’s a balancing act in fintech,” said Steve Marshall.
When financial technology evolves faster than regulatory oversight, risks can grow quickly. Conversely, overly restrictive regulation can slow innovation and push financial activity into less regulated spaces.
The most sustainable path forward is alignment between innovation and risk management. Fintech companies must incorporate compliance considerations early in product design and strategy rather than addressing them after risks emerge.
As financial technologies become embedded in everyday life—from digital wallets to AI-driven services—the stakes for effective AML and fraud prevention will only continue to grow.
What This Means for FinTech Compliance
The financial crime landscape is entering a new era defined by rapid technological change, evolving payment ecosystems, and increasingly sophisticated criminals.
To succeed in this environment, fintech organizations must move beyond static compliance programs and adopt more adaptive, intelligence-driven approaches to financial crime prevention.
Understanding criminal behavior, leveraging advanced technologies, and embedding risk management into innovation will be essential to navigating the turbulent years ahead.
Missed the live session?
Watch the replay to explore how fintech compliance teams can respond to evolving fraud tactics, AI-powered scams, and new AML risks.
