AI Now 'Essential' for Financial Crime, Survey Finds
A new INFORM survey of banks and financial institutions finds that 97% now view AI as essential for fighting financial crime. Respondents cited improved speed and accuracy, but critically, also highlighted AI's ability to reduce false positives as a key benefit, improving the experience for legitimate customers.
The fight against financial crime is a costly one, with an estimated $3 trillion in illicit funds flowing through the financial system in 2023. Financial institutions have been increasing their spending on compliance, with some large banks spending over $200 million annually. In the UK, banks and fintechs are reported to spend a combined £38.3 billion annually on financial crime compliance. The increasing sophistication of financial crime, fueled by the rise of digital banking and faster payment methods, has led to a significant uptick in fraudulent activities. In 2023, 43% of financial institutions in the U.S. reported an increase in fraud compared to the previous year, with average losses for larger institutions climbing by 65% to $3.8 million. This has driven 89% of banks to actively encourage the adoption of AI to combat these threats. A major operational challenge for financial institutions is the high rate of false positives from traditional rule-based monitoring systems, with some studies indicating that up to 90% of alerts are for legitimate transactions. These false alarms result in significant manual review costs and can negatively impact the customer experience. AI is seen as a key tool to reduce these inefficiencies, with some machine learning models identifying more illicit schemes while cutting false positives by up to 80%. The evolution of real-time payment networks like The Clearing House's RTP® and the Federal Reserve's FedNow is also changing the landscape. The RTP network now processes over 2 million payments on peak days, with a single-day value record of $8.36 billion. While FedNow is newer, it has seen a 1,200% year-over-year increase in transaction volume, with over 1,400 financial institutions participating. To further secure the digital ecosystem, there is a growing emphasis on robust digital identity verification. Technologies like biometric authentication and behavioral analysis are being integrated to prevent account takeovers and new account fraud, which saw a 32% jump in reported cases in 2022. These systems aim to create a more secure and seamless onboarding and transaction experience for legitimate customers. In the realm of digital assets, regulatory frameworks are solidifying globally. The European Union has implemented its comprehensive Markets in Crypto-Assets (MiCA) regulation, and the U.S. passed the GENIUS Act in July 2025 to ensure stablecoins are fully reserve-backed. This increasing regulatory clarity is fostering greater institutional adoption of stablecoins for cross-border payments, which can offer faster settlement times and reduced transaction costs. On-chain stablecoin transaction volume surpassed $8.9 trillion in the first half of 2025.
