This week, Finextra released new research exploring how financial institutions worldwide are addressing the rising challenge of trade-based financial crime (TBFC), which costs the global economy an estimated $1.6 trillion annually. Commissioned by Eastnets, the survey conducted in the summer of 2024 gathered insights from banks on their strategies to combat this issue.
The research highlighted significant obstacles, including internal fragmentation and complex regulatory environments. Notably, 42% of global institutions struggle with siloed data and disconnected workflows, with European banks facing the greatest challenges. This internal fragmentation hinders the effective fight against TBFC, as responsibilities for associated risks are typically divided among three to four departments within a single institution.
In response to these challenges, banks are increasingly turning to AI and automation. According to the findings, 87% of banks anticipate that AI will greatly enhance their TBFC detection capabilities, while 91% are prioritizing automation in the next year.
Gary Wright, research director at Finextra Research, remarked: “As trade-based financial crime evolves, traditional detection systems are becoming inadequate. This issue affects our 45,000 members across the world’s leading banks and fintechs. We are pleased to share their insights and priorities in this comprehensive report, in partnership with Eastnets.”
Wright also noted the increasing risks and heightened regulatory scrutiny faced by financial institutions. The research indicates a pressing need to overcome internal fragmentation by adopting advanced solutions that provide real-time insights and identify suspicious patterns in complex trade flows, highlighting AI and automation as essential pathways forward for banks.
Diya Innab, deputy CEO of Eastnets, emphasized the urgency of modernizing legacy systems: “Our research shows that financial institutions must urgently upgrade their outdated systems, which can no longer keep pace with modern financial crime.”
For more details on this research and to download the report titled Broken Inside, Broken Outside: The Global Fight Against Trade-Based Financial Crime, please follow this link.