News & Blog

The Future of Financial Crime — Insights From Vic Hartman

Financial Crime
July 23, 2021

This article is part of Kyckr’s new Future of Financial Crime Series, which will feature interviews with leading industry professionals and thought leaders to learn more about the evolution of financial crime and the trends shaping the future.

The following is an interview we recently had with Vic Hartman, J.D., CPA/CFF, CFE, Former FBI Agent, Author of The Honest Truth About Fraud, Principal at The Hartman Firm, LLC.

The Future of Financial Crime — Insights From Vic Hartman

What is the state of financial crime today?

Businesses lose on average about 5% of their top line revenue to fraud. When this amount is multiplied by the gross world product of $88 trillion U.S. dollars, the amount of fraud is $4trillion dollars. These losses are attributable to insiders, or occupational fraudsters, and outsiders, or predatory fraudsters. The losses are also attributable to traditional financial crimes, e.g., investment frauds like Ponzi schemes, healthcare scams, insurance fraud, and banking crimes. Tax evasion and theft of intellectual property also account for an enormous amount of fraud. These financial crimes account for a significant amount of wealth transfer and retention among individuals, business sectors, and countries. Fraudsters are changing with the times and make creative use of technologies like computers, cell phones, and the internet to commit their crimes. Accordingly, the fraudsters may be in a different country and not even really know the organisations they are victimising.

How has financial crime evolved over the past 5 years?

The year 2020 saw the emergence of COVID-19 related frauds involving medical supplies, testing and vaccines. Predators understand weaknesses in medical supply chains and took advantage of organisations that lowered their due diligence procedures as they raced to obtain much needed supplies. There is also a continued evolution of the digital platform by fraudsters to commit crimes and then launder their ill-gotten gains. Ransomware attacks and business email compromise (BEC) are now mainstay financial crimes. The dark web provides all the tools and training for criminal enterprises that want to exploit these frauds. Despite the widespread knowledge of both ransomware and the BEC, the criminals behind these schemes are able to advance their tradecraft by staying one step ahead of their victims. These attackers are also being enabled by cryptocurrencies and the anonymity they provide.

What's the future of financial crime?

The future of financial crime will still consist of the traditional financial crimes, but digital crimes will continue to grow. There is no sign that ransomware and the BEC will stop anytime soon. The international community is at a pivotal time for the acceptance of cryptocurrencies. As China bans cryptocurrency use by financial institutions and the United States Department of Treasury’s designation of cryptocurrency as a capital asset for tax purposes, the decisions of these and other worldwide players in the financial markets will have an impact on the opportunities for cybercriminals in the future. Cryptocurrencies have made crimes like ransomware possible, and they are also enabling new money laundering schemes. For example, the transfer of assets from one type of cryptocurrency to another cryptocurrency in a jurisdiction that has lax AML laws creates tremendous challenges for regulatory and criminal enforcement authorities.

Financial Crime
July 23, 2021

This article is part of Kyckr’s new Future of Financial Crime Series, which will feature interviews with leading industry professionals and thought leaders to learn more about the evolution of financial crime and the trends shaping the future.

The following is an interview we recently had with Vic Hartman, J.D., CPA/CFF, CFE, Former FBI Agent, Author of The Honest Truth About Fraud, Principal at The Hartman Firm, LLC.

The Future of Financial Crime — Insights From Vic Hartman

What is the state of financial crime today?

Businesses lose on average about 5% of their top line revenue to fraud. When this amount is multiplied by the gross world product of $88 trillion U.S. dollars, the amount of fraud is $4trillion dollars. These losses are attributable to insiders, or occupational fraudsters, and outsiders, or predatory fraudsters. The losses are also attributable to traditional financial crimes, e.g., investment frauds like Ponzi schemes, healthcare scams, insurance fraud, and banking crimes. Tax evasion and theft of intellectual property also account for an enormous amount of fraud. These financial crimes account for a significant amount of wealth transfer and retention among individuals, business sectors, and countries. Fraudsters are changing with the times and make creative use of technologies like computers, cell phones, and the internet to commit their crimes. Accordingly, the fraudsters may be in a different country and not even really know the organisations they are victimising.

How has financial crime evolved over the past 5 years?

The year 2020 saw the emergence of COVID-19 related frauds involving medical supplies, testing and vaccines. Predators understand weaknesses in medical supply chains and took advantage of organisations that lowered their due diligence procedures as they raced to obtain much needed supplies. There is also a continued evolution of the digital platform by fraudsters to commit crimes and then launder their ill-gotten gains. Ransomware attacks and business email compromise (BEC) are now mainstay financial crimes. The dark web provides all the tools and training for criminal enterprises that want to exploit these frauds. Despite the widespread knowledge of both ransomware and the BEC, the criminals behind these schemes are able to advance their tradecraft by staying one step ahead of their victims. These attackers are also being enabled by cryptocurrencies and the anonymity they provide.

What's the future of financial crime?

The future of financial crime will still consist of the traditional financial crimes, but digital crimes will continue to grow. There is no sign that ransomware and the BEC will stop anytime soon. The international community is at a pivotal time for the acceptance of cryptocurrencies. As China bans cryptocurrency use by financial institutions and the United States Department of Treasury’s designation of cryptocurrency as a capital asset for tax purposes, the decisions of these and other worldwide players in the financial markets will have an impact on the opportunities for cybercriminals in the future. Cryptocurrencies have made crimes like ransomware possible, and they are also enabling new money laundering schemes. For example, the transfer of assets from one type of cryptocurrency to another cryptocurrency in a jurisdiction that has lax AML laws creates tremendous challenges for regulatory and criminal enforcement authorities.

Build your Customer Due Diligence and KYC processes on a robust foundation with Kyckr.

Make data work smarter, not harder.

Request a Demo
Newsletter Sign Up
Book a Demo
Talk to us
LinkedIninfo@kyckr.com
Close
23Q4_ALL_WEB_DigitalTransformation_WebinarReplay_Request
23Q4_ALL_CONF_06.06_Money2020_EU_MeetingForm
23Q4_ALL_WEB_18.05_AML_Digital_Transformation
23Q4_GatedCON_AMLFines2022_RoundupReport_FORM
23Q3_ALL_WEB_20.04_AMLSolutions_WebinarReplay
23Q3_ALL_WEB_20.04_AMLSolutions_Signup_FORM
23Q3_ALL_CONF_21.03_AML_ABC_Forum
23Q3_ALL_WEB_23.02_Signup_FORM
23Q2_ALL_WEB_14.12_KYC_VS_KYB_Webinar_Replay_FORM
23Q2_ALL_CONF_07.12_AFCSummit_BookAMeeting
23Q2_ALL_WEB_14.12_KYC_VS_KYB_SIGNUP_FORM
Webinar: Spotlight on KYC vs KYB - Why The Difference Is Increasingly Important For Verification
23Q2_ALL_WEB_17.11_Corporate_KYC_Landscape_ReplayRequest
23Q2_ALL_WEB_27.10_Corporate_KYC_Landscape_FINAL_FORM
Whitepaper: AML Bank Fines 2022 Mid-Year Report
Research Paper: The State of Customer Onboarding in Corporate Banking in Australia 2022
Registry Portal Pro
Registry Portal Basic
Registry Portal Essentials
Request API Key
Newsletter Signup
Whitepaper: AML Fines Report 2021
Ebook: The Future Of Financial Crime
Research Paper: Voice of the KYC Compliance Professional
Whitepaper: Corporate Onboarding: will it become a competitive differentiator for banks in a real-time world?
Research Paper: The State of Customer Onboarding in Corporate Banking
Whitepaper: Overcoming the Limitations of Company Registries to Enhance KYC Efficiency
Whitepaper: AML Bank Fines 2020 Report
Whitepaper: Impact of the European Union’s 5th AML Directive
Leverage cutting edge technology to automate customer onboarding
Moving from Periodic to Perpetual KYC
Unleash the power of primary source data & automate customer onboarding
Primary source data, the true foundation of regulatory compliance for Legal Firms
Primary-source data, the backbone of streamlined, “zero-touch” onboarding for Payment Providers
Spotlight on company registries in the wake of the FinCen Papers
Spotlight on US Company Registries
Spotlight on Ultimate Beneficial Ownership
Spotlight on APAC Company Registries
Spotlight on Company Registries in Offshore Jurisdictions
How can automation enhance your KYC and Onboarding Process?
Perpetual KYC – a myth or a must?
Spotlight on 2021 AML Fines
How to Future-Proof your AML/KYC processes with the help of RegTechs?
Webinar Replay: How to overcome the challenges associated with UBOs?
Spotlight On Entry Verification
Registry Portal Enterprise
AMLFines_ReplayRequest_FORM
Replay
Webinar Replay
Book A Demo