What is Financial Crime?
Financial crime is any illegal activity that involves money or the financial system, including money laundering, terrorist financing, fraud, and cyber-enabled schemes.
Financial crime threatens institutions, economies, and societies alike. It drains value from victims, funds organized crime and terrorism, and undermines trust in the financial system. Banks, fintechs, and payment providers sit at the center of the problem because criminals need their services to move, hide, and spend illicit funds.
Financial crime is rarely a single offense. A fraud scheme generates stolen money, criminals then launder it, and digital tools often make both steps faster and harder to trace.
What are the main types of financial crime?
Financial crime covers a wide range of offenses. The most common types include the following.
- Money laundering, which conceals the criminal origin of funds
- Terrorist financing, which moves money to fund terrorist operations
- Fraud, including identity theft, account takeover, payment fraud, and insider trading
- Cybercrime, which uses phishing, malware, or platform abuse to enable other offenses
- Sanctions violations, such as dealing with designated people or countries
- Corruption and bribery
- Proceeds of serious crimes like drug trafficking
What is the difference between financial crime and money laundering?
Money laundering is one type of financial crime, not a separate category. Financial crime is the umbrella term for every offense that abuses money or the financial system. Money laundering refers specifically to hiding where criminal proceeds came from.
The types of financial crime often feed into each other. A phishing attack can lead to an account takeover, which is fraud. The stolen funds then move through a network of money mules to be laundered, and may finally be cashed out through crypto. Each step is a different financial crime, and each calls for a different control.
How do businesses fight financial crime?
Businesses fight financial crime through financial crime compliance (FCC), the function that makes sure a firm and its customers follow AML and counter-terrorist financing laws. Financial crime compliance teams write internal policies, train staff, monitor transactions, and report suspicious activity to regulators.
The core controls work together across prevention, detection, and reporting. Know your customer (KYC) checks keep bad actors out at onboarding. Transaction monitoring detects suspicious activity once customers are active. Suspicious transaction reports then pass what was found to the national financial intelligence unit.
