The Financial Conduct Authority has warned that artificial intelligence is accelerating the scale and sophistication of financial crime as regulators and firms struggle to keep pace with rapidly evolving threats.
Speaking at the FCA’s financial crime conference in London today (14 May), FCA chief executive officer Nikhil Rathi said financial crime had become “more organised than ever before” and increasingly intertwined with national security risks.
Rathi said AI and other emerging technologies were enabling criminals to operate faster, at greater scale and across multiple jurisdictions simultaneously.
“The threat isn’t coming – it’s here,” he said.
He warned that AI could expose cyber security vulnerabilities “at a speed and scale the likes of which we’ve never seen”.
Rathi said financial crime groups were increasingly blending fraud, money laundering, sanctions evasion and cyber-enabled crime while exploiting weaknesses between firms, regulators and systems.
“Criminals don’t see our org charts. They see seams,” he said.
The FCA chief argued that traditional approaches to tackling financial crime were no longer sufficient in an environment where threats evolve rapidly and move across institutional boundaries.
“How many of us have felt, at times, that fighting financial crime is like whack-a-mole?” he said.
“One threat disappears. Another pops up somewhere else.”
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Rathi said the scale and speed of modern financial crime meant regulators and firms could no longer respond effectively in isolation.
“Against this kind of networked threat, we will always be outgunned if we act alone,” he said.
The FCA is increasing investment in data, surveillance and financial crime detection tools, including advanced network analytics and AI-driven monitoring systems.
Rathi said testing within the payments sector showed new analytics tools were able to identify firms with potential money laundering risks earlier than traditional rule-based systems.
He also confirmed the FCA would begin wider sharing of intelligence with law enforcement agencies from June, including more than 5,000 intelligence records through the Police National Database.
Rathi said stronger collaboration between regulators, firms, law enforcement agencies and technology providers would be essential to tackling future threats.
“Done well, private-to-private sharing is one of our most powerful tools,” he said.
The FCA chief also issued a warning to major technology platforms over the growth of online investment scams and financial promotions spread through social media.
“And sending a clear message to big tech: you cannot sit on the sidelines as online investment fraud continues to rise,” he said.
Rathi described financial crime as a broader economic and national security issue rather than simply a regulatory challenge.
“I’ve said before that separating financial services from national security is outdated and dangerous,” he said.
“This is a question of fundamental economic and national security.”
The FCA said its internal intelligence infrastructure has now processed more than 52 million intelligence records linked to financial crime activity.
Rathi acknowledged that regulators and firms would increasingly need to prioritise which threats they focus on due to the growing volume and complexity of risks.
“At these levels, it is simply not possible to chase every single lead,” he said. “We have to prioritise.”