A financial crime is a crime that is committed against property

A financial crime is a crime that is committed against property. It is associated with the illegal conversion of property ownership (belonging to one person) for personal use and benefit.

Financial crimes may involve:

  • fraud
  • bank fraud
  • insurance fraud
  • market manipulation
  • payment fraud
  • theft
  • tax avoidance
  • corrupt practices
  • identity theft
  • money laundering
  • forgery and counterfeiting

Research on financial crime aims to provide society with knowledge, tools, and ideas to understand, identify and address the threats posed by illicit financing. The range of financial crimes ranges from simple theft by an intruder to large-scale operations by organized criminal groups operating on all continents.

Analysis requires such global threats of illegal financing as:

  • Money Laundering
  • Terrorist Financing
  • Proliferation Financing
  • Abuse of New Technologies
  • Illicit Financial Flows

Financial crime is a multi-trillion-dollar business. The United Nations Office on Drugs and Crime reports that yearly up to $2 trillion of illicit funds are laundered through global financial networks. This amount ranges from 2% to 5% of global GDP and is increasing yearly. Yet, it is estimated that only 1% of illicit financial flows are intercepted. The difficulty in detecting financial crimes is that criminals are resourceful in developing methods to commit them. In addition, many criminals exploit the complex nature of financial services to protect themselves and make it more difficult to solve crimes. Moreover, organized crime groups that operate internationally successfully find and exploit the differences and loopholes in each country's criminal law.

Only in the US, according to the Federal Trade Commission, consumers lost $5.8 billion to fraud in 2021. It is up 70% from the previous year.

The most frequent type of fraud in 2021 was imposter scams. In second place is online shopping fraud. The top five categories of fraud complete prizes, raffles and lotteries; Internet services; and business and employment opportunities.

Financial offenders can be roughly divided into seven groups:

  • Organized criminals, including terrorist groups
  • Heads of State involved in corruption
  • Business people in top management
  • Employees of companies of various ranks
  • Buyers, suppliers, contractors, and others who may not be associated with the company at all
  • An employee colluding with a scammer
  • The successful individual criminal, serial or opportunistic fraudsters

The impact of financial crime on the economy, society, and the international community has made the fight against financial terrorism and money laundering a priority. To combat financial crime, governments and international companies are focusing on protecting the integrity and stability of the global financial system and creating barriers for those involved in criminal activities.

However, the complex nature of financial services makes it challenging to detect and prevent financial crime. Threats come on various scales, both local and international. The victims may be the companies and customers of these companies, the private sector, and the public sector. Thus, the effectiveness of the fight against financial crime depends directly on close cooperation between different regulatory bodies and institutions.