Day 7 - The Hard Truths Part 5: Why We’re Losing Ground Against Financial Crime

Lack of Focus on Victims and Impact Issue

In financial crime prevention, it’s easy to get lost in the technicalities—compliance requirements, regulations, and the high costs of non-compliance. Yet, every financial crime has real human victims, and every failure to prevent it leaves individuals, families, and entire communities vulnerable. Despite this reality, Anti-Financial Crime (AFC) programs have often drifted from their original mission of protection. The focus has shifted inward, prioritizing institutional protection from fines and penalties over the safety and well-being of the people who suffer the impacts of financial crime.

Today, I’m shining a light on one of the most significant shortcomings of our AFC strategies: the lack of focus on the human toll. When we treat AFC as a purely regulatory exercise, we risk forgetting the people whose lives are impacted—those who lose their life savings, fall prey to scams, or see their communities damaged by the effects of organized crime. If our AFC programs are to be truly effective, they must reconnect with this fundamental purpose. The cost of failing to protect victims is far too high, both morally and socially. I wrote about the need to move to Impact Awareness, previously, here.

How We Lost Sight of the Victims: From Mission to Mandate

When AFC programs first emerged, they were created with a clear purpose: to protect the public from the corrosive effects of financial crime. But over time, as regulations grew more complex and penalties for non-compliance became steeper, the focus shifted from protection to process. The core mission—to safeguard people and communities—began to feel secondary to the institutional priority of avoiding fines and satisfying auditors. In a world where regulatory fines can reach billions of dollars, institutions have come to view compliance as a necessary cost and exercise, often forgetting that their programs originally aimed to serve a greater societal good.

This drift from mission to mandate is pervasive. AFC programs are judged by whether they meet regulatory requirements, not by how many crimes they prevent or how well they protect individuals from harm. As a result, financial institutions devote resources to ensuring they “pass” compliance assessments rather than investing in proactive strategies that might better protect customers and communities. The human-centered mission of AFC has become buried under layers of paperwork, audit checks, and regulatory procedures.

The Real Cost of Ignoring the Human Impact

This inward focus on regulatory compliance over victim protection comes at a high price—both financially and ethically. Here’s a closer look at the true cost of sidelining the human impact in our AFC efforts:

1. Economic Losses That Ripple Through Communities

• When financial crime goes unchecked, its effects spread far beyond individual victims. Fraud, identity theft, and money laundering strip resources from communities, destabilize local economies, and siphon capital from businesses and citizens alike. According to the United Nations Office on Drugs and Crime, up to $2 trillion is laundered globally each year, with these funds often supporting organized crime, drug trafficking, and human exploitation.
• Communities bear the brunt of these economic losses. When crime erodes a local economy, legitimate businesses suffer, jobs are lost, and social services become strained. The harm spreads, affecting schools, healthcare, and public infrastructure. Our current AFC programs often overlook these broader economic impacts, missing the bigger picture of what financial crime truly costs society.

2. Lost Trust in Financial Institutions and the Financial System

• Every incident of financial crime that goes unaddressed erodes public trust in the financial system. Victims of fraud and identity theft often experience more than financial loss; they suffer from emotional trauma and a loss of confidence in their institutions. When financial institutions fail to prioritize the protection of their customers, it signals to the public that profit and regulatory compliance take precedence over their well-being.
• The erosion of trust is a severe consequence, particularly in an era where consumers have more choices than ever. Studies show that consumers are increasingly willing to switch institutions over trust and security concerns. If financial institutions continue to deprioritize victim protection, they risk losing both customer loyalty and their reputational standing.

3. The Human Toll of Financial Crime: Beyond the Numbers

• Financial crime affects real people—families who lose their savings, small business owners who are scammed, and individuals whose identities are stolen. These are not faceless incidents but personal catastrophes with lasting consequences. Victims may face months, even years, of financial hardship, stress, and vulnerability after falling prey to scams or fraud. Yet, these human costs are rarely the focal point in discussions about compliance.
• We need to remember that behind every transaction is a person. Behind every data point is a family, a community, a life. If we lose sight of these realities, we risk allowing AFC programs to become little more than a bureaucratic exercise. Financial crime is not just a regulatory issue; it’s a public welfare issue, and we must treat it as such.

How the Drift Was Allowed: The Compliance-First Mindset

Part of the reason why AFC has become so inward-focused is the emphasis on compliance as a “pass or fail” function. Regulators examine whether institutions are following the rules but often stop short of assessing the real-world effectiveness of these programs. This approach has driven financial institutions to focus on checking boxes rather than measuring their impact on crime prevention.

Moreover, the regulatory emphasis on fines has exacerbated this drift. With billions of dollars at stake, financial institutions are incentivized to avoid penalties rather than prioritize public protection. A single compliance failure can lead to immense fines, so institutions naturally prioritize what regulators inspect, which rarely includes metrics on victim impact.

What We Must Do Now: Putting People Back at the Center of AFC

If we want to build AFC programs that actually work, we need to refocus on the people these programs were meant to protect. This means reframing AFC as a public mission rather than an internal mandate. Here’s how we can begin that shift:

1. Establish Metrics That Measure Real-World Impact

• AFC programs should be evaluated not just on regulatory compliance but on their actual effectiveness in preventing harm. This means establishing metrics that measure victim protection, customer trust, and community safety. Financial institutions can track the reduction in financial crime incidents, the speed of fraud resolution for victims, and customer satisfaction regarding their security.
• By shifting the emphasis from regulatory pass/fail metrics to victim-focused outcomes, institutions can build programs that deliver tangible benefits to the communities they serve. When we measure what truly matters, we incentivize actions that prioritize the well-being of individuals.

2. Adopt a Victim-Centric Approach to AFC

• AFC programs need to be designed with the victim in mind. This could involve creating dedicated victim support services within financial institutions, speeding up fraud investigations, and offering better protections against identity theft and scams. Rather than treating victims as collateral damage, institutions should be equipped to provide support, guidance, and resources to those impacted by financial crime.
• Imagine a world where AFC teams don’t just catch crime but also prevent it and support those affected. Victim-centric AFC programs can help rebuild trust in the financial system, demonstrating that institutions see protection as their primary duty, not merely an afterthought. Listen to Hailey Windham, CFCS and Jen L., BSACS, CFE discussing exactly this need, here.

3. Engage in Community Awareness and Education

• Protecting victims isn’t solely about catching criminals; it’s also about empowering individuals to recognize and avoid scams. Financial institutions can play an active role in educating customers about common fraud tactics, offering resources on how to safeguard personal information, and providing alerts for high-risk activities.
• Community awareness and education programs can make a significant difference. When people understand the risks and how to protect themselves, they become less vulnerable to exploitation. AFC programs that prioritize education don’t just react to crime—they proactively reduce its likelihood.

4. Hold AFC Programs to a Higher Ethical Standard

• At the heart of every effective AFC program is a commitment to ethics. Financial institutions must hold themselves to a standard that goes beyond regulatory minimums. When the priority is to serve and protect people, compliance becomes a natural byproduct, not the goal. AFC teams should be encouraged to act not only as compliance officers but as protectors, driven by a sense of duty to their communities.
• Ethical accountability is not just an aspirational value; it’s a functional advantage. Institutions that prioritize ethical practices over legal minimums can differentiate themselves, winning trust and loyalty from customers who recognize the genuine commitment to protection.

Moving Forward: Reclaiming AFC’s Core Mission

The lack of focus on victims and impact is more than a failing in our AFC programs; it’s a fundamental drift from the very reason these programs exist. Financial crime is not just a financial issue—it’s a societal one, affecting real people in meaningful ways. When we focus only on compliance, we miss the larger mission of AFC: protecting communities and preserving trust.

This series continues to peel back the layers of our AFC shortcomings, examining why and how we’ve drifted from mission to mandate. But it’s also a call to action, a reminder that real change is possible. By reframing AFC as a mission-driven endeavor that prioritizes people over process, we can build a system that doesn’t just report on crime but actively protects against it.

In the days to come, I’ll delve further into practical solutions, exploring how we can move beyond these limitations to create AFC strategies that are truly effective. Together, let’s shift the focus back to the people who matter most, protecting not only our institutions but the communities we serve.

Tomorrow: Day 8 - Misalignment in Viewing AFC as a Cost Center