Imagine Losing 20 Pounds In 14 Days!
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From trillions of dollars in losses to an incalculable human cost, financial crime a serious threat to the integrity of the global financial system. A newly released Nasdaq Verafin whitepaper has revealed how financial crime is also having deep impacts on the economy, further stressing the need for the financial industry to innovate and collaborate in the fight against money laundering and fraud.
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Slowing the U.S. Economy
“The societal and economic cost of financial crime is immense. It funds the darkest aspects of society and undermines confidence in the global financial system. It deprives individuals of both economic and emotional security. It holds our economy back from reaching its full potential.”
Insights from the whitepaper demonstrate that financial crime is significantly suppressing U.S. economic growth and productivity. Money laundering was estimated to represent 3.1% of GDP in 2023 — similar in size and scale to the accommodation and food services sector. Meanwhile, fraud losses, which can be thought of as removing money from the economic system, weighed heavily on the economy. If fraud losses were eliminated, the result would have been an estimated 0.4% increase in GDP.
Undermining American Households
The impacts of financial crime on the overall economy and within the financial services industry are significant. Yet nowhere is the pain felt more acutely than at home. Fraud scams are estimated to affect 15% of American homes, representing about 20 million in total. Given that losses to these scams often amount to $575, while 37% of all U.S. households cannot cover an emergency expense over $400 with cash or savings, a fraud loss can be devastating to the average American. According to the new whitepaper, it can lead to missed debt payments and damage to credit scores that, in extreme cases, may even prevent home ownership. The case of Lilah Jones, featured in the 2024 Global Financial Crime Report, is a stark reminder of these consequences, having nearly lost $120,000 and her dream home to a Business Email Compromise (BEC) scam.
The Need to Fight Financial Crime
Financial crime is a concealed epidemic – a global scourge that underpins many of society’s gravest crimes: elder financial exploitation, fraud scams, human trafficking, drug trafficking, and terrorist financing. As Nasdaq Chair and CEO Adena Friedman stated “to create a fair, trusted, and robust global financial system that supports growth and protects the most vulnerable, addressing financial crime is a global imperative.” This will require the financial industry to collaborate and embrace innovation to get ahead of criminal activity.
Action Through Innovation & Collaboration
“It is only by coming together that we can dismantle silos, craft urgent policy and technology responses, and cultivate a more secure, resilient, and productive economy for everyone.”
Financial crime is pervasive, threatening the integrity of the financial system with devastating human costs and lasting impacts on the communities we serve. Fighting back will require a new approach that embraces innovation and collaboration more than ever. This should include consortium approaches that allow for superior fraud prevention over commonly exploited channels such as wire payments and checks, and greater collaboration through information sharing under the safe harbor authorized by section 314(b) of the USA PATRIOT Act. Only through these concerted efforts can the financial industry temper the global financial crime epidemic and protect our financial system for all.
To learn more, read Nasdaq Chair and CEO Adena Friedman’s op-ed on the impact of financial crime on the U.S. economy and the supporting whitepaper.
Nasdaq Verafin provides cloud-based Financial Crime Management Technology solutions for Fraud Detection, AML/CFT Compliance, High-Risk Customer Management, Sanctions Screening and Management, and Information Sharing. More than 2,500 financial institutions globally, representing more than $8T in collective assets, use Nasdaq Verafin to prevent fraud and strengthen AML/CFT efforts. Leveraging our unique consortium data approach in targeted analytics with artificial intelligence and machine learning, Nasdaq Verafin significantly reduces false positive alerts and delivers context-rich insights to fight financial crime more efficiently and effectively. To learn how Nasdaq Verafin can help your institution fight fraud and money laundering, call 1-877-368-9986.
