As we enter 2024, the intersection of geopolitics and financial crime is more complex than ever. This era, characterized by rapid and significant shifts on the global stage, could have profound implications for the threat landscape of financial crime.
In this article we look at the major trends that you need to take into account as you put together your financial crime program over the coming year.
Geopolitical shifts and their economic implications
The influence of major global powers and the rise of geopolitical swing states are reshaping international dynamics. Emerging powers, with growing economies and influence, are increasingly able to impact global policies and economic trends.1 These shifts, and ensuing power struggles, could change sanctions regimes, as old alliances die out in favour of new ones.
An example of that can be seen in the international sanctions against Russia following the war in Ukraine. India, China, South Africa, Brazil, and NATO ally Turkey decided to not take part in the sanctions regimes, and remain open for business with Russian interests. The long-term impact of this remains to be seen, but in short to mid-term it generates a moving and complex target for sanctions teams to identify and hit.
2024 is also a year when the global political climate is set for transformation. A majority of the world’s population are being affected by pivotal elections, especially in the United States and European Union. These elections, reminiscent of significant past political events in their potential impact, could lead to shifts in economic and regulatory priorities.
The upcoming EU Parliamentary elections are expected to result in a “sharp turn right”, with populist radical right parties, together with Christian democrats and conservatives, gaining a majority for the first time since the body’s founding.2 This could lead to significant changes in the union’s foreign and internal policies, for example a potential deprioritization in the fight on environmental crime.
Such changes could create a fluid environment where criminals might find new opportunities amidst the economic turmoil and shifting government focuses.
War, polarization, and financial crime
Historical trends show that war and conflict often lead to an increase in profit-driven crimes such as human and arms trafficking. Ongoing conflicts, including the war in Ukraine, may continue this trend.
Additionally, armed conflicts and increased societal polarization fueled by economic downturn, increase the likelihood of heightened political extremism—potentially escalating into politically motivated terrorism. Simultaneously, increasing friction between different cultures and religions increases the risk of Jihadist terrorist recruitment and attacks.3
This means you should start paying more attention to new and emerging terrorist financing threats in order to identify, assess, prevent, and report suspected terrorist financing activities before it’s too late.
The geopolitics of AI and emerging technologies
The race for technological supremacy, particularly in AI, further complicates this landscape. Governments are rapidly developing regulatory frameworks to harness the benefits of AI while mitigating risks.4 This race, akin to the space race of the 20th century, is not just about technological advancement but also about geopolitical dominance. The rapid evolution of technology could outpace existing protective measures, potentially opening new avenues for sophisticated financial crime threats, especially fraud and cybercrime.
The ever-evolving nature of financial crime threats
As geopolitical landscapes shift, so too do the patterns of financial crime. Criminals are always quick to respond to new opportunities and to exploit weaknesses. This means they’ll likely be quick to exploit the changing geopolitical environment and advancements in technology in 2024.
To effectively manage and mitigate these risks, you’ll need to put in place a proactive and adaptive approach to managing financial crime risks.
Massive challenges, but also opportunities
The year 2024 is a critical juncture in the relationship between geopolitics and financial crime. And as the global landscape undergoes rapid transformation, the implications for financial crime are significant.
From the reshaping influence of major powers and swing states to the impact of technological advancements, these shifts necessitate vigilant and adaptive approaches to financial crime prevention and compliance.
This rapidly-changing world presents both challenges and opportunities. By staying informed and responsive you can navigate these complexities, ensuring stability and security in an increasingly interconnected global economy. Because one thing is clear: it’s no longer possible to rely solely on pointless word documents and coffee meetings to solve the complex challenge that is financial crime.
The world is spinning faster, and it’s your duty as a financial crime professional, government official, CEO, board executive, or company employee to make sure you keep up with it. Because criminals definitely will.
Sources:
1. 2024 Geostrategic Outlook by the EY Geostrategic Business Group
2. https://ecfr.eu/publication/a-sharp-right-turn-a-forecast-for-the-2024-european-parliament-elections
3. EU Terrorism Situation & Trend Report (Europol TE-SAT) 2023
4. https://joint-research-centre.ec.europa.eu/jrc-mission-statement-work-programme/facts4eufuture/artificial-intelligence-european-perspective/global-race-ai_en
