Up to $2 trillion is laundered every year according to the United Nations. Shockingly, they also estimate that banks help catch less than 1% of this crime. And, sadly, the UK ranks second in the money laundering hall of shame.  

On occasion, the finger of blame is pointed at Fintechs, with some being branded as an open door for dirty money. But, in reality, dirty money has much more to do with larger banks than it does with Fintechs.  

Clearly, lots more needs to be done to tackle this exacerbated myth, and banks should strive to work with Fintechs, taking advantage of their capabilities to do so.  

Shutting down the dirty money myth 

It’s important to consider how Fintechs have been able to supercharge their offerings. They are not isolated players, and the majority can only operate because they have access to established financial institutions’ infrastructure. This is not just to create more efficient payment opportunities; Fintechs proactively want to fight against financial crime. 

Unfortunately, there is a false narrative that Fintechs are the cause of financial crime. This must be debunked. If it remains, Fintechs risk a reputation that is both false and damaging to their business. It paints over all the good the industry has done in the world – enhanced financial health, wellbeing, and inclusion – and can harm both consumer and businesses’ trust in Fintechs. 

Findings have revealed 12% of Fintechs say the collective effort to tackle money laundering is not good enough, and 39% cite corporate and investment banks and traditional banks (27%) as the three sectors they consider most at risk. 

For years, Governments and Fintechs across Europe have been wrestling control from global banks to help reduce the risk of fraud and financial crime from citizens. The real culprits here are the incumbent banks who have naturally been threatened by the innovative and disruptive nature of Fintech.  

Now is the time to face financial crime head on.  

Banks and Fintechs need to work together 

Existing anti-money laundering (AML) processes are comprised of lots of manual, repetitive and data-intensive tasks. But these are no longer able to detect financial crime, given today’s digital complexities. Although banks are aware that this is the case, there is a lack of motivation to modernise their systems. This must change. 

Nearly half (46%) of Fintechs, a figure that reaches 60% for those with revenue above £500m, view new technologies such as AI and advanced analytics as one of the most efficient ways to improve the fight against money laundering. Banks need to up their game and follow their lead by taking advantage of these new technologies to tackle financial crime. 

The time is now for banks to take advantage of Fintechs’ capabilities. Traditional banks are complex, with multiple product lines, distribution channels, business units and systems. Whereas Fintechs, by their very nature, are not encumbered by legacy systems, meaning they can quickly implement cutting-edge solutions to combat growing fraud and money laundering. 

Every bank and Fintech must to be able to predict a problem before it becomes a threat. The solutions that many Fintechs provide can detect advanced fraud and manipulation earlier and faster than ever before. 

The great challenge of fighting financial crime remains around the world. And unfortunately, Fintechs are wrongly being blamed for it, instead of banks. In reality, they can work together and use each other’s areas of expertise to fight the financial crime battle and remain one step ahead of criminals.