Shaping a Secure Financial Future with 2024 Fraud and AML Trends

In 2024, the financial industry faces new challenges and threats that demand our attention. With scams becoming increasingly sophisticated and regulatory measures tightening around fraud and AML (Anti-Money Laundering) protocols, staying informed about the proactive steps to protect your institution’s financial future is crucial.

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We surveyed over 350 financial professionals in fraud, AML, and FrAML across banks, credit unions, and fintechs to better understand the challenges the financial industry faces today and tomorrow. As we delve into the most pressing trends and challenges, this blog will help you effectively navigate a more secure financial future to fight against financial crime.

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The Rising Tide of Financial Scams Impacting our Financial Future and the Credibility of the Financial Ecosystem

As we reflect on the past year, it's clear that financial scams are becoming more sophisticated and frequent across the industry. And we've seen an unsettling rise in 2024, where scams have become one of the most prevalent and damaging forms of fraud across financial institutions, impacting banks, credit unions, fintech companies, but as importantly, the credibilility of the financial ecosystem. 

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From classic phishing attempts to new and aggressive schemes like romance scams and money mule schemes, these threats show no signs of slowing down. In fact, 14% of respondents noted scam growth above 50%. Credit unions have faced a particularly harsh impact, with 33% reporting a 50-100% rise in scam instances, especially romance scams (34%). 

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On the other hand, banks noted a 61% aggregate rise in scam activity as phishing (24%) remains a more accute (most likely reinforced with the sophisticated phishing leveraging AI to establish a highly realistic outreach from fraudsters) threat. 35% of fintech are also seeing a 10-50% increase, with money mule schemes hitting them hard (31%). 

For both institutions and individuals, the effects are profound. Financial criminals are advancing their tactics so quickly that even the most vigilant institutions are scrambling to keep pace. At Unit21, we understand that protecting our institutions and our customers is an unending commitment. That’s why we’re doubling down on creating better resources, faster detection models,  and advanced tools that help mitigate these risks.

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How Speed in Rule Deployment Helps With Institutions’ Financial Security. But Can Their Tools Keep Up?

When fraud hits, every second counts. As criminals adapt rapidly, financial institutions need equally agile fraud rule deployment processes. Yet, many institutions are struggling to keep up. Our findings indicate that only 40% of respondents can deploy new fraud prevention rules within five business days. More mind bending, 32% report it can take more than a month to deploy new rules, which gives bad actors ample time to exploit vulnerabilities. 

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For fintechs, the process is smoother, with many having the resources to deploy rules in-house (54%) and integrate third-party solutions (45%) quickly. However, nearly 50% of banks and 48% of credit unions face bottlenecks due to dependence on internal engineering teams, and external vendors pushing professional services, all of which are causing lengthy delays in rule implementation.

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Our report shows a clear path forward: financial institutions need to streamline rule deployment, using both in-house capabilities and efficient third-party solutions to ensure they stay ahead of fraudsters. As an added benefit, faster deployment reduces false positives (23% achieve false positive rates below 5%)—a key win for customer experience and efficient back office operations.

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Why FrAML is the Future of Fraud Prevention & Why Breaking the Functional Silos Will Create a More Cohesive Financial Crime Strategy

For many years, fraud and AML teams operated independently, often resulting in limited collaboration and slower response times. But with criminals now using sophisticated AI-driven techniques, fraud, and AML teams can no longer afford to work in silos.

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The growth in scams underscores a pressing need for efficiency, collaboration, and speed in fraud prevention and AML processes. We believe this unified approach is critical, especially as regulatory demands increase and become more complex. Financial institutions face mounting pressure from regulators to keep up with new guidelines while safeguarding customer trust.

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As a result, many institutions are now exploring the benefits of merging their fraud and AML functions into a unified FrAML (Fraud and AML) approach, which fosters better collaboration and a more agile response to emerging threats. Based on our survey, 100% of banks with fully integrated FrAML teams saw significant improvements in detection and prevention. Fintechs also reported that 33% of unified FrAML teams can deploy rules on the same day. 

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This is a massive shift for the industry, where collaboration often means the difference between rapid detection and a missed threat. A FrAML approach not only fosters stronger communication and data sharing but also enables faster response times to emerging threats, ultimately protecting your financial future.

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Investigator Burden and Alert Fatigue: How It Hinders Institutions’ Financial Future

In 2024, investigators face a tidal wave of alerts, Suspicious Activity Reports (SARs) filings, and consent orders. Our report shows that SAR filings have significantly increased for 16-28% of financial institutions. Even more, 47% of respondents are grappling with consent orders, which drain resources and add significant workloads. This flood of alerts leads to investigator burnout, longer resolution times, and, ultimately, slower responses to real threats.

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Real-Time Monitoring: A Critical Tool for Modern Fraud Prevention

RTM technology has transformed the way financial institutions detect and respond to fraud. Nearly 49% of institutions using RTM report improved fraud prevention and detection capabilities, with some experiencing false positive rates under 5%. And yet, the technology’s full potential remains underutilized, especially among smaller institutions and credit unions. Specifically, 91% of credit unions under $2 billion in assets have not implemented RTM due to budgetary constraints and limited access to the latest technology.

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Nevertheless, the data is compelling. Among the fintechs that have been using RTM for over a year, 95% reported a positive impact on their fraud prevention efforts, and 56% noted significant improvements. 85% of respondents also indicate that alert investigations take less than 30 minutes with RTM systems, leading to increased operational efficiency. 

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Clearly, as RTM technology continues to prove its value, expanding access to these tools could mark a transformative step in financial crime prevention across all sectors.

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Looking Ahead: A Call to Action for the Financial Ecosystem

As leaders, we’re optimistic about the future of fraud prevention. Yes, criminals are becoming more advanced, and yes, the industry is facing new challenges daily. But with every challenge, there’s an opportunity to innovate and strengthen our approach. 

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There’s no sugar-coating it; fraud and AML run rampant today in our banks, credit unions, and fintechs. The data in our report validates this, but we also discovered opportunities to reduce the burden, such as merging fraud and AML teams, leveraging AI to assist investigation handling time, investing in real-time monitoring solutions (and the real-time data to support), and the industry’s appetite for more agile rule deployment options.

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Download our 3rd Annual State of Fraud and AML report to dig into many more findings. We also have specific cuts of data released as three industry roundtable discussions digging deep into banks, credit unions, and fintechs featuring industry vets like Jason Mikula, Frank Mckenna, Hailey Windham, Donna Turner, and more—dynamic predictions, spicy reactions, and thoughtful advice you don’t want to miss.