2025 Global AML Predictions: What Can we Expect & is it Positive Change?

Significant changes are coming in 2025 in anti-money laundering regulations and strategies: approaches to information sharing, and a change in focus on sanctions will be among the areas that will be prioritised by the industry in the new year. Aside from high-profile regulatory failings and fines in 2024, recent events which uncovered how criminals operate today around the globe will further our understanding of these threats, helping to find solutions to improve and safeguard compliance while ensuring that we actually make a difference in fighting financial crime in the year ahead.

Notable global developments made major impact in 2024. Noteworthy AML regulations were introduced, including recognising Registered Investment Advisors and Real Estate as obligated entities under US AML law. Australia rolled out its Tranche 2 regulatory package, expanding the scope to include Designated Non-Financial Businesses and Professions (DNFBPs). There was also a significant increase in focus on sanctions with continued increases in parties added to sanctions lists and focus on sanctions evasion and the use of secondary sanctions.

With all this in mind, we expect to see a continued focus on corporate transparency with pressure around the world on legislators to continue to uncover the veil of secrecy that often plagues attempts to identify ultimate beneficial owners. From a technology perspective, generative AI hit the headlines, with the regulated sector increasing adoption of the latest technological developments to improve the efficiency and effectiveness of their compliance programs.

Will any of this impact emerging trends for the coming year and what more can we expect?

Sanctions Still High on Agendas

Sanctions continue to be high on the agenda of many organisations and the focus on this by regulators and governments has not dissipated. There continue to be additions to watch-lists. In a shift of policy, many jurisdictions are starting to focus on secondary sanctions, examples of this include the recent sanctioning in the trade of gold and also sanctioning of Russian ‘shadow’ fleet of oil tankers. In addition, sanctions evasion is also gaining focus, with many recent additions to watch-lists being parties identified as facilitating the evasion of other sanctions parties.??

This year will be the year of change for many organisations as they face the challenge of preventing sanctions breaches, a year where modernisation of their screening systems is essential.?It will also be a year where many start to see sanctions as a compliance issue, requiring additional resources to perform sanctions due diligence checks during KYC and also enhancing transaction monitoring to increase coverage to detect potential sanctions evasion and breaches of secondary sanctions by customers or counter-parties. ??

The EU changes with the introduction of the instant payment regulation will also require a shift in policy and operations when it goes live, with greater emphasis on frequent list updates and customer screening over payment screening.?

There will be greater investment in people and technology to identify secondary sanctions breaches and sanctions evasion by customers. It will also be a year where governments will double their focus with increased regulatory enforcement.??

Growth in Global Information Sharing Adoption

Lauded as being transformative in how we fight financial crime, information-sharing initiatives and legislation changes are accelerating. Will 2025 be the year we see wide-scale adoption?

Lack of information sharing has been seen as the Achilles heel in tackling financial crime. 2024 saw the introduction of far-reaching legislation changes worldwide to allow information sharing between organisations to tackle financial crime. Canada, Mexico, the UK, and the EU have introduced new legislation, Singapore has strengthened its COSMIC platform, and other countries such as Hong Kong, UAE, and Australia are racing towards new information-sharing legislation.

Virtually all of this enacted legislation is voluntary, which has been the challenge with previous legislation regarding wide-scale adoption—but this time, it seems different. The regulated sector appears ready and willing to participate actively in information-sharing initiatives and with this new legislation, new gateways have opened to allow organisations to do this safely, reducing fear of falling foul of data protection legislation.

2025 will see more organisations signing up and participating in these initiatives, more information being shared, greater intelligence, and hopefully subsequent prosecutions of criminals and asset recovery. 2025 will also introduce new scalable technologies to share relevant information within data protection guardrails and integrate information into core compliance and investigation platforms. The change in legislation and the advancement of technology in this space make this potentially a revolutionary pivot in fighting financial crime.

Regulatory Focus on Non-Financial Businesses

There is growing focus in targeting Designated Non-Financial Businesses and Professions (DNFBPs). America, Australia, South Africa, and Europe have all introduced or enhanced regulation of DNFBPs. Real Estate, the art market, and precious metals are high-risk areas utilised extensively by organised crime to move and hide illicit wealth. Other DNFBP professions, such as accountants and lawyers, are well publicised for helping facilitate criminal activity and legitimising their business interests or wealth.??

Most of these businesses have more direct relationships with their customers than banks. These businesses place their customers' money into banks (often in the name of the DNFBP business) and, in some cases, have more intimate knowledge of the customer's history, behaviour, and source of wealth, especially for higher net worth individuals. They might have regular face-to-face meetings with customers and help them with day-to-day activities, such as dealing with assets, businesses, tax affairs, and legal matters. If anyone is going to understand whether an individual is legitimate, it will be these businesses.??

We cannot fight financial crime without effectively regulating DNFBPs or taking enforcement action? against DNFBPs which don't comply or which knowingly support criminals. In Recommendations 22 and 23, FATF clearly outlines the requirement to regulate DNFBPs, ensuring they conduct CDD and report suspicious activity. While several countries have introduced regulations, there is still a global disparity in regulation of this sector, which offers a clear opportunity for criminals to exploit. 2025 will see increasing pressure and enforcement for non-compliance of DNFBPs.??

Additional countries will introduce regulations for DNFBPs in 2025, and the financial sector will heighten its diligence on some DNFBP customers. 2025 will also see more DNFBPs make greater investment? in compliance to ensure they do not fall foul of upcoming regulatory expectations and do not risk being debanked.??

Global Regulatory Disparity

The world has not been more fractured and polarised, with a clear East vs. West divide in recent memory. Russia was suspended from the FATF in February 2023, and the BRICS group of countries has expanded. On the other side are the NATO member countries, who have also strengthened their resolve. The fractured geopolitical environment could not be clearer when looking at world views on key global events and the sanctions landscape.?

Then, there was a rise in global right-wing politics in the West, most notably in the November 2024 US election in which Donald Trump's Republican party won the election and the popular vote. Even in Europe, there has also been a move to the right. In France, the National Rally party has gained significant support; in Hungary, Viktor Orbán's Fidesz party continues to dominate with a large majority, with the party taking an ambivalent approach towards Russia, creating tension with the EU. You then have Italy, Germany, Austria, and Sweden, where the right-wing parties are gaining popularity and momentum.??

Why is this political movement important? It is essential because right-wing policies tend to favour looser regulation, prioritising economic growth. The deterioration of geopolitical relations will also undermine progress in the fight against financial crime, as it gives criminals safe havens to hide and continue their criminal enterprises. Throw into the mix the rise in a number of failed states such as Myanmar,? resulting in a? boom in organised crime operating without fear of enforcement action.?

In 2025 we will likely see an overall stalling of global progress in implementing AML legislation and see the regulated sector pause investment in compliance, adopting a wait-and-see approach. The exception here could be in is Europe, which has recently introduced a new AML regulatory package and are moving forward with the AML Authority. Australia could also potentially be another exception with the introduction of Tranche 2.

The current global situation could make tackling financial crime much more difficult. This needs us now, more than ever, to be resolute in progressing standards and taking action to stop criminal gangs from taking advantage of any disconnect between jurisdictions and standards.?

Money Laundering as a Service??

We have all heard of Fraud as a service, where criminal gangs sell their scam services and expertise to other criminal gangs, diversifying their business operations and income. Organised crime also offers financial crime, or more specifically, money laundering as a service, outsourcing services to other criminal gangs, taking a cut, or charging a fee.??

These services are not new but appear to have seen increased investment by organised crime. Being utilised by other criminal gangs to establish themselves quickly, benefiting from the skills and experience of other criminals. Encryption, digital currencies and the dark web have all made these services much more accessible. Increased use and advancement of AI has accelerated the complexity, expertise and reach of these operations'. Criminals can now offer a global service with ease.??

Operation Destabilise, which identified a large, international Russian organised crime money laundering group; thrust this financial crime as a service operation into the spotlight. The gang offered services not only to street gangs and semi-organised criminal groups but also to transnational organised crime, high-net-worth individuals trying to evade currency controls, and sanctioned parties seeking to evade sanctions.??

This year we will learn, with greater awareness of how groups offering financial crime as a service operate, changing how we monitor, detect, and report suspicious activity. Operation Destabilise will serve as a foundation for learning. In this case, law enforcement acknowledged that they saw new laundering typologies they had not encountered previously, including the mixed-use of crypto and fiat currency for laundering.??

Greater use of Technology and Outsourcing

Financial crime compliance is costly, with some estimates stating that it cost the industry nearly 210 billion dollars in 2024. ?A significant portion of this cost is people, coupled with the fact that many programs have significant inefficiencies, including repetitive tasks, data gaps, siloed teams and systems, and extensive manual effort with tasks such as investigations, tuning, risk assessment, and gap analysis.

Talk of technology use is not new, but we have seen an acceleration of technology implementations and enquiries to modernise AML programs. We are in a technology revolution, and technologies such as generative AI, community analytics, and information-sharing technology are in their infancy with much more potential. 2025 will be the year of cost-sensitive buying, with many regulated sector organisations looking for technology solutions with a tangible return on investment.

One of the major drivers for modernisation will be to ensure regulatory compliance; there were some large and notable fines in 2024 around the world, for compliance failings. Many regulated firms will likely be in the midst of assessing their programs against recent regulatory findings on their peers to identify gaps, looking to technology to fill these gap.

The other driver we will see from organisations in 2025 is the continuing push to reduce headcount to cut costs. An enabler of this is the increased use of technology to reduce manual and repetitive tasks. However, there is still a balancing act, as cutting too much headcount risks exposing organisations who then cannot effectively cover their operational requirements, especially during peak periods.

There is a rapid increase in outsourcing services to address resource constraints, providing elasticity during peak periods or covering periods of audit or operational change. We will see an exponential increase in regulated sector organisations using outsourced services to cover gaps in their permanent teams or to use these services ad hoc to manage costs but provide a compliant solution during peak demand.

These issues will be the key drivers as we kick off 2025.