The cost of fighting financial crime is staggering. Banks spend billions each year trying to stop it, yet criminals still move trillions through the system. The question isn’t whether financial crime is costly — it’s whether banks are spending their resources in the right way. Is the current prevention model delivering enough results to justify the expense, or is a smarter, more efficient approach needed?
Before answering, let’s take a look at some important data.
It’s all in the numbers
Nasdaq’s 2024 Global Financial Crime Report estimates that $3 trillion in illicit funds flowed through the financial system in 2023, with global fraud projected to account for $485 billion in losses. That’s equal to about 15% of the European Union’s GDP laundered each year. The report also found that 75% of financial institutions expanded their financial crime teams, driving indirect costs even higher.
BioCatch's 2025 Dark Economy Survey shows just how steep those indirect costs can be. More than half of those surveyed reported their institution spending more than $10 million a year on money laundering management, including operational expenses and sanctions for non-compliance. On top of that, 75% said they pay fines of at least $5 million annually; nearly half pay more than $10 million; and nearly a quarter pay more than $25 million.
And those numbers pale in comparison to the largest penalties: Danske Bank was fined $2 billion in the Nordics, Swedbank €347 million, and SEB €107 million. The biggest ever? BNP Paribas at $8.9 billion.
The good news: BioCatch's report found that firms that invested in financial crime prevention technologies were far less likely to face such massive penalties.
Where the costs really come from
The cost of managing financial crime goes well beyond fines.
- People: Large compliance teams, investigators, and managers can cost millions annually. Financial institutions often add consultants for regulatory projects and IT work, compounding expenses.
- Systems: Core anti-money laundering (AML) and fraud-detection platforms are just the start. Banks also need tools for risk assessments, investigations, and know your customer (KYC) checks. These must integrate with other business systems, creating a complex — and costly — ecosystem that demands IT staff, consultants, and constant updates.
- Inefficiencies: Indirect costs from outdated processes, and legacy systems drain productivity. Manual work that could be automated and platforms that can’t be updated leave firms stuck. One common problem is an AML system that can’t adjust transaction monitoring scenarios, leaving the firm at risk of non-compliance.
Becoming cost-conscious
As we’ve seen, a large share of the costs related to financial crime prevention are hidden or indirect. In my experience, many firms underestimate these costs, focusing mainly on the potential size of a fine. But long-term success comes from cost-consciousness and efficiency — spending smarter, not just more — and using compliance tools to create business value.
One example is using customer due dligence (CDD) requirements — the process banks use to verify customer identity, assess risk, and monitor activity — to analyze the customer base. Applying the 80/20 rule — the principle that 80% of outcomes often come from 20% of customers — can help firms focus on their most valuable relationships while cutting higher-risk, low-value segments, such as straight-rollers who take loans with no intent to repay, and proxies who lend their identities to shield criminals.
System dependency is another area to address. While fintechs often start with modern, integrated platforms, many traditional firms remain stuck with legacy systems. The fix is to revise system development plans so that financial crime prevention gets the priority it deserves. This may also mean updating product development plans or new product approval processes (NPAP). Too many times I’ve seen NPAP projects close only to discover compliance demands weren’t met, forcing compromises. Prevention should be built into new products and processes from the start, not patched in later at higher cost.
Financial crime is expensive. But prevention done right is far less costly than non-compliance, inefficiency, or regulatory failure. By focusing on people, systems, and smarter processes, and by becoming more cost-conscious, banks can reduce exposure, save money, and protect their licenses.
