The Impact of Financial Crime: Effects on Policies & Industry

The nature of financial crimes may not have changed much in the last century, but the specifics could not be more radically different. Some modern financial crimes are rising in frequency at a rate that could not have been anticipated a century ago. A Javelin Strategy study found that in 2013 more than 13 million Americans were victims of identity fraud, a number that has grown from 11.2 million since 2005. In response, the industries and policies effected by these crimes have adapted and evolved as a result of the changing nature of financial crimes. Here’s a look at some of the ways that financial crimes have shaped the modern world.

Banking and Crimes

Banks have to worry about many illegal financial activities every day, but the rise of global banking has transformed the nature of the crimes the industry must fight. Globalization has increased the use of wire transfers to transfer illicit funds across the world, and the speed and ease of wire transfers make them an efficient way for criminals to launder money across international lines. The rise in wire fraud has caused the banking industry to apply new analytic algorithms to track the industries in which money laundering via wire is most common, and the results are surprising. The Journal of Strategic Security reports that common industries include car importers, flower shops, recycling, precious metals and real estate.



The growth of this criminal industry has birthed new anti-money laundering measures and policies such as fines for “scrubbing,” which refers to the act of removing identifying information from a wire transfer. Furthermore, more banks require human interaction in the wire transfer procedure to catch instances of multiple transfers being just slightly less than the mandatory regulatory $10,000 threshold for reporting, as many criminal transfers are broken up into smaller amounts to bypass automated monitoring systems.

Identity Theft

Financial CrimeThe criminal industry of identity theft has skyrocketed over the last century. Modern technology gives criminals unprecedented access to your personal information as well as the opportunities to use it for their own purposes. Cyber criminals are quick to adapt to new opportunities to steal consumer personal information, and often seek out targets in unexpected places. For example, the Medical Identity Fraud Alliance reports that 2.32 million Americans were victims of medical identity theft in 2014, a 22 percent jump from 2013. The medical industry has some of the most rigorous data security requirements of any industry in America, and yet even it is still prone to data breaches and other forms of cybercrime.

In response, the identity theft monitoring industry has risen to combat the ever growing threat. So prevalent is the threat of identity theft today that the monitoring industry is booming, and is now a highly sought after destination for many college graduates. Each individual industry answers to different regulations and rules regarding how they handle consumers’ personal information. This lack of standardized identity protection procedures makes the identity theft monitoring industry a viable and important form of consumer protection.