Within the Financial Crime Compliance (FCC) space there’s an increasing use of AI on both sides of the table with Financial Institutions leveraging the technology to combat financial crime; and bad actors manipulating it to commit financial crime. 

Why AI Matters in Financial Crime Compliance

The rise of artificial intelligence marks a significant shift in how financial crime is both committed and combated. Technological innovation has not only changed the nature of threats but also reshaped the tools available to counter them.

On the offensive side, bad actors are leveraging AI to scale and personalise fraud through deepfakes, automated phishing, synthetic identities, and intelligent malware. These techniques allow financial crimes to be executed faster, with greater sophistication, and on a broader scale than ever before. 

At the same time, financial institutions and regulators are embracing AI to detect and prevent these threats more effectively. Advanced machine learning models now play a central role in real-time fraud detection, anti-money laundering (AML) efforts, and customer identity verification. As both criminals and defenders race to outpace one another, AI has become a pivotal battleground in the evolving landscape of financial crime. 

How Criminals Use AI to Commit Financial Crime

1. Deepfakes, Identity Fraud & CEO Impersonation

AI enables criminals to create realistic synthetic identities using deepfake audio, video, and images. This is used in: 

• Synthetic ID fraud: Criminals use AI to create fake but realistic IDs (photos, videos, voices) to open bank accounts, apply for loans or bypass onboarding checks. 

• CEO fraud: Deepfake audio or video is used to impersonate C-level executives and trick employees into transferring money or revealing sensitive financial data. These attacks are particularly dangerous due to the trust placed in internal authority figures. 

2. AI-Driven Money Laundering Techniques  

Criminals use AI to mimic normal transaction patterns and avoid detection. Tactics include:  

• AI-driven mule networks: Bots can automate the recruitment of money mules through fake job postings and online ads and move illicit funds. 

• Transaction pattern mimicry: Criminals use AI to make laundering patterns look normal and avoid detection by bank monitoring systems.  

3. Market Manipulation via AI

Financial criminals use AI to exploit market systems through:  

• High-frequency trading abuse: AI algorithms can execute rapid-fire trades to manipulate prices through spoofing or layering— particularly within crypto or smaller-cap stock markets. 

• Fake news generation: Using generative AI, criminals can create fake financial news or social media posts to manipulate stock prices swaying investor behavior, often as part of pump-and-dump schemes. 

4. Document Forgery with Synthetic Data

AI tools are increasingly used to fabricate fake documents such as bank statements, pay stubs, or tax returns— all of which may be used to fraudulently access credit or pass Know Your Customer (KYC) checks. 

How Financial Institutions Use AI for AML Compliance

1. AI for Anti-Money Laundering (AML)

AI systems can analyze vast datasets to build complex relationship graphs that uncover hidden connections between entities. 
 
Entity resolution helps institutions to detect when bad actors are using slightly altered names, contact details or addresses. 
 
AI significantly reduces false positives, which are common in traditional rule-based AML systems. This allows compliance teams to focus on high-risk alerts that genuinely require investigation. 

2. Biometric & Document-Based Identity Verification

Biometric technologies: Facial recognition combined with liveness detection help prevent identity fraud during onboarding. 
 
Document analysis: AI-powered computer vision scans documents (passports, IDs, etc.) for signs of forgery, duplication or tampering. 
 
Natural language processing (NLP): This helps extract and analyse customer info from forms and public records. 

3. Real-Time Transaction Monitoring & Anomaly Detection 

What it does: AI models analyze millions of transactions in real time to detect suspicious patterns or behaviors that deviate from a user’s norm. 

Common detection examples include:  

• Unusual transfer sizes or velocity (e.g. multiple rapid transactions just under reporting thresholds) 

• Structured deposits and withdrawals 

• Smurfing – the deliberate breaking down of large sums into smaller ones to avoid triggering alerts  

4. Risk Scoring and Adaptive Customer Profiling

AI models assign real-time risk scores to customers or transactions based on a range of variables including transaction behaviour, geo-location, source of funds, and peer comparisons, helping banks decide what to block or escalate. 
 
Continuous learning helps refine these profiles over time based on new data.  

The Future of FCC: AI Arms Race Between Defenders and Criminals

The battle between AI-enabled criminals and compliance professionals will only intensify. The winners will be those who adopt adaptive, intelligent solutions that can evolve as fast as the threats themselves.  

Facctum’s Role in Modern AI-Powered Compliance

At Facctum we’re on the pulse of trends within financial crime compliance. We continuously develop and deploy advanced risk management solutions that incorporate AI, helping financial institutions strengthen their controls while adapting to constantly evolving threats.  Our technology improves decision accuracy, reduces operational overhead, and ensures compliance with regulatory expectations — without slowing down business. Whether you're seeking to improve sanctions screening, streamline KYC, or modernise transaction monitoring, we provide solutions built for today’s risks and tomorrow’s complexity.

• Watchlist and sanctions screening to improve detection accuracy and keep pace with global regulations 

• Customer screening and risk profiling for faster, more confident onboarding and monitoring 

• Payment and transaction screening that operates in real time with reduced false positives 

These tools improve accuracy, reduce manual workloads, and ensure regulatory alignment—without slowing business down.

👉 If you're interested in learning more, reach out to sales@facctum.com for more information