Day 3 - The Hard Truths: Why We’re Losing Ground Against Financial Crime

This is day 3 of my "Enough is enough" series that started here. Financial crime continues to grow unchecked, infiltrating every corner of our global economy, and it's past time we acknowledge how poorly the current system is serving us. Despite the billions spent annually on Anti-Financial Crime (AFC) programs, crime rates are rising, criminals are adapting faster than our systems, and our collective response has become mired in defensive, box-ticking compliance rather than proactive prevention.

Today, I want to take a hard look at why we’re losing ground—and why this has everything to do with how we’ve let AFC practices drift from their original mission of safeguarding people and protecting financial integrity. The goal of this series is to uncover the roots of our failures before we dive into the solutions, so in these early posts, we’ll confront the sobering reality of our current state. If this article sounds critical, that’s intentional—change begins by facing the uncomfortable truths head-on.

Box-Ticking Compliance: The Start of Our Drift from Purpose

When AFC practices were first introduced decades ago, they were intended to prevent money laundering, stop the flow of funds to organized crime, and protect vulnerable communities. Today, however, most AFC programs have devolved into a system that prioritizes compliance over actual prevention. Many AFC teams spend most of their time completing endless checklists to meet regulatory requirements rather than disrupting actual criminal networks.

Think of it this way: imagine if firefighters spent more time filling out forms about their equipment than actually fighting fires. This is what AFC has become. We’re so preoccupied with checking boxes that we’re missing the fires blazing around us. Compliance has become a game of passing inspections rather than preventing crime.

Why Compliance-First Thinking Took Over

The drift didn’t happen overnight. Originally, regulatory bodies established minimum AFC requirements to prevent abuse of financial systems and ensure that institutions would be held accountable for preventing criminal activity. But as crime evolved and regulations grew, compliance started to feel like an end goal in itself rather than a foundation for action.

As the complexity of compliance requirements increased, financial institutions found it easier to focus on satisfying regulatory requirements rather than investing in dynamic AFC strategies. Meeting the bare minimum became “good enough,” and the checklist mentality took hold. According to one recent report, global financial institutions now spend over $214 billion annually on financial crime compliance, yet criminals remain several steps ahead. We’re in an endless, expensive loop of “compliance theatre” that prioritizes form over function, documentation over disruption.

The True Costs of Box-Ticking Compliance

It’s easy to think of compliance as merely a necessary expense, but the reality is that it’s far costlier than we realize—both in direct financial terms and in missed opportunities to truly prevent crime. Here’s what it’s costing us:

1. Soaring Financial Costs with Minimal Returns Financial institutions across the globe are pouring massive sums into compliance, but much of it is spent on unproductive, paperwork-heavy processes. These expenditures are not translating into significant reductions in crime. In 2021 alone, financial institutions allocated nearly $50 billion to compliance in the U.S. alone. This is like trying to keep a sinking boat afloat by bailing water out with a teaspoon rather than repairing the hole.
2. Operational Inefficiency and Misallocated Resources The overwhelming focus on compliance has burdened institutions with bureaucracy and inefficiency. Compliance teams are forced to prioritize documentation over disruption, while investigators are bogged down in paperwork rather than focused on identifying and stopping actual criminal threats. High volumes of false positives compound this inefficiency, creating “noise” that drowns out real threats.
3. An Erosion of Trust and Public Confidence Compliance-focused AFC programs are inward-looking, aimed more at shielding institutions from regulatory penalties than at protecting the public. This approach damages the public’s trust in the financial system. Customers want security, and they expect financial institutions to care about their safety. When institutions focus more on “not getting fined” than on proactive crime prevention, they alienate the very people they are meant to serve.
4. Missed Opportunities to Protect Real People Every box ticked, every report filed, every penalty avoided—these actions don’t bring us closer to the real goal: preventing harm to actual people. Victims of financial crime suffer devastating losses, often with limited recourse for recovery. Financial crime funds human trafficking, drug trafficking, and countless other crimes that exploit vulnerable communities. By failing to actively prevent these crimes, we’re indirectly enabling harm.

The Drift from Mission to Minimum

How did we reach a point where compliance became the mission itself, rather than a tool to support it? This drift is rooted in an ever-expanding set of regulations that often fail to adapt to the realities of modern financial crime. AFC rules were initially introduced to keep criminals out of financial systems, but as these rules multiplied, they became increasingly detached from the dynamic methods used by criminals.

Compliance became a defensive strategy, where institutions focused more on avoiding penalties than on actually preventing crime. The intent behind AFC programs was to build a firewall against crime, but instead, we’ve built a wall around ourselves. It’s a wall of paperwork, processes, and procedures that have distanced us from the real purpose of AFC: protection and prevention.

This drift has come at a steep cost. Financial institutions are now more focused on satisfying examiners than on stopping criminals. The “good enough” mentality dominates, creating an AFC system that celebrates meeting minimums rather than setting ambitious goals for public protection. In this sense, AFC has lost its way, becoming less about mission and more about minimizing regulatory risk.

Where We Go from Here: Reclaiming Purpose in AFC

To combat financial crime effectively, we must dismantle this box-ticking mentality and rebuild a mission-driven approach. This will require fundamental changes in how we think, act, and align as an AFC community. Here’s what we must do:

1. Reframe Compliance as a Support Function, Not the Goal Compliance should be the foundation, not the ceiling, of AFC practices. This means treating regulatory requirements as a baseline, but not as the ultimate target. Financial institutions need to invest beyond the minimums, viewing AFC as a strategic priority and not merely a cost center. Compliance should support our mission to protect—not replace it.
2. Invest in Cutting-Edge Technology and Real Intelligence Today’s criminals are tech-savvy and well-resourced; we must be the same. Advanced technologies like AI and machine learning can help us go beyond checklists, allowing for real-time, intelligent detection of suspicious patterns that manual compliance checks would never uncover. Privacy-preserving computing techniques can help us share insights across institutions and borders without compromising personal data, breaking down the silos that criminals exploit.
3. Institute a Culture of Accountability Across All Stakeholders AFC is not solely the responsibility of banks or regulators; it’s a collective mission. Lawmakers, policy setters, financial institutions, and law enforcement all have a role in creating an environment that prioritizes true prevention over performative compliance. This means that everyone—at every level—should be held accountable not just for regulatory compliance, but for actively contributing to the fight against financial crime.
4. Build Bridges Beyond Borders Financial crime is global, yet AFC practices are limited by borders. We need an international framework for data sharing that allows institutions, regulators, and law enforcement to work collaboratively. Criminals rely on fragmented efforts to evade detection; we need a united front that breaks down these barriers.
5. Create a Victim-Centric Model The ultimate purpose of AFC is to protect people, not just institutions. Let’s redefine AFC programs with the goal of protecting those who suffer most from financial crime. By prioritizing public safety and public trust, we reframe AFC as a public service, not a regulatory hassle.

Moving Forward: Let’s Face the Hard Truths to Make Real Change

As we continue this series, we’ll keep peeling back the layers, examining each obstacle standing in the way of effective financial crime prevention. This isn’t just a criticism; it’s a call to reimagine what AFC can be. We have the potential to move from box-ticking to truly mission-driven action, but only if we’re willing to challenge the status quo.

In the days ahead, I’ll explore other root issues that are holding us back, from the fragmented approach to global crime prevention to the heavy toll of false positives. We’ll confront the facts, share new insights, and look at specific steps each stakeholder can take to make AFC more effective, less wasteful, and genuinely protective.

If you’re in the AFC community, I encourage you to engage with this series. Share your experiences, challenge assumptions, and advocate for the change you believe is necessary. Each small change, each act of accountability, brings us closer to building a system that doesn’t just check boxes, but actively protects the people it serves.

This isn’t a fight we’re destined to lose—but it will require all of us to think bigger, to dig deeper, and to refuse to accept “good enough” as an answer. Let’s confront the hard truths, reclaim our mission, and work together to turn AFC into a true force for good.