The importance of real-life stories for effective financial crime compliance strategies

The fight against financial crime is far more than a regulatory to-do list or an exercise in technical excellence. Fundamentally, it is a co-ordinated response to human problems and behaviors rooted in vulnerabilities and systemic loopholes. 

In a frank and insightful fireside chat from our CATALYST event series, criminologist and financial crime expert Dr Nicola Harding sat down with Jodie Gayet, a former fraudster turned advocate, to explore the importance of designing compliance systems with built-in awareness of the human behaviors that lead to criminal activity. 

This article highlights some of the key points from their conversation and explores how organizations can move beyond the idea of compliance as a box-checking exercise. By understanding the context and real-life scenarios that drive people toward illegal activity, firms can design more empathetic, robust, and ultimately successful strategies to detect and prevent financial crime.

The anatomy of fraud: Pressure, opportunity, and regulatory blind spots

Jodie’s story illustrates the combination of human factors and compliance weaknesses that often lie behind individual financial crimes. Her journey started with a large gambling win at age 18, which quickly spiraled into a decade of gambling addiction and financial crime involving insider fraud and consumer scams. 

Jodie was able to exploit three major compliance vulnerabilities:

• Overlooked factors in financial crime: Gambling addiction is a critical, often-overlooked red flag for non-organized fraud – even though in the UK, almost half of the population gambles regularly, with 4% at an elevated risk of gambling-related harm and financial crime. 
• Gaps in internal controls: Anti-money laundering (AML) and financial crime compliance programs can fail to adequately consider risks from those working inside financial institutions (FIs), such as accessing dormant accounts. Illicit transfers from these can then escape being flagged through a lack of oversight on internal transactions. 
• Scam vulnerabilities: Online marketplaces and social media websites can present opportunities for criminal exploitation, such as consumer scams, via a lack of basic authentication or know your customer (KYC) checks. 

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The importance of in-depth compliance programs

In cases like Jodie’s, a combination of siloed regulations and weak compliance protocols presented avoidable opportunities for criminal activity. 

For example, disconnects between safer gambling regulations and anti-money laundering and countering the financing of terrorism (AML/CFT) standards create loopholes that can be exploited. Minimal KYC processes when signing up for new financial services or gambling accounts can allow fraudsters to open accounts using other people’s identity details; surface-level transaction monitoring lets criminals find ways around measures like blocks on transactions by gambling on unregulated sites abroad or using third-party financial services not subject to these blocks. 

In many cases, simple measures such as card blocks or minimal KYC checks are not adequate deterrents for committed or experienced criminals. Solutions must take into account not only regulatory obligations, but design considerations that could enable or prevent criminal activity.

To ensure they go beyond the bare minimum of regulatory compliance, firms should work towards implementing a cross-organizational culture of compliance characterized by empathy and expertise. Compliance teams must be supported with appropriate financial resources and tools, while being given the freedom to challenge existing processes and rules. By making systems harder to break, compliance leaders can protect their organization, customers, and potential victims of financial crime.

The AI advantage: Adapting as fast as criminals

The continued evolution of powerful artificial intelligence (AI) tools has lowered the bar for entry into sophisticated criminal methods, with bad actors among the most innovative and prolific users of emerging technology. Deepfakes and AI-assisted social engineering are just two of the more common emerging criminal typologies for FIs to contend with. 

Compliance teams cannot afford to lose the AI arms race and must explore how to use all tools at their disposal, including advanced AI technologies like agentic and predictive AI, to enhance their systems for detecting and preventing financial crime. Successfully adopting these solutions requires firms to focus on breaking down tech and data silos in existing compliance programs, staying up to date on criminal trends and typologies with investments in financial crime expertise, and designing solutions around the real-world human behaviors driving financial crime. 

“A lesson that we can take from the criminal world is that we don’t want to be holding a knife at a gunfight. We need to be appropriately armed.”

Dr Nicola Harding, Criminologist and fraud expert. Hear more from Nicola by accessing our CATALYST event series on demand. 

By strategically adopting AI as part of a compliance program, organizations can expect to see improvements across: 

• Customer due diligence at onboarding: AI significantly enhances data collection and curation for fast and accurate results. Entity resolution to detect hidden links between individuals and companies, advanced search algorithms reduce false positives, and dynamic customer risk scoring aligns screening to your risk policies.
• Ongoing customer monitoring: Ensure customer risk profiles are updated as soon as changes occur with continuous screening. 
• Transaction monitoring: Advanced algorithms help analysts detect hidden patterns of suspicious behavior faster and at greater scale than manual reviews.
• Remediation and reporting: Agentic AI case remediation tools can instantly tackle low-risk alerts to clear backlogs and free up human analysts for more complex, higher-risk decision-making. 

Precision risk intelligence enhanced by AI on ComplyAdvantage Mesh

ComplyAdvantage Mesh is an AI-native platform that unifies customer and company screening, customer risk scoring, transaction monitoring, and real-time payments analysis into a single intelligent system. 

ComplyAdvantage’s industry-leading proprietary data is a cornerstone of Mesh, allowing organizations to screen their customers against up to 49 individual risk typologies, from money laundering to gambling regulatory breaches. Customer Screening and Ongoing Monitoring on Mesh gives firms: 

• The industry’s broadest proprietary data coverage: Our solution covers sanctions, watchlists, enforcement actions, PEPs and RCAs, and adverse media, with over 500 million customers monitored annually. 
• Up-to-the-minute risk data: Additions to global sanctions lists are available in minutes, rather than hours or days for competitors. 
• Fully flexible screening configurations: Users can set screening thresholds tailored to customer segments, locations, or business lines, and choose which risk sources to apply to different customer types or onboarding scenarios.