Most Common Types of Financial Crimes in the U.S.

In a broad sense, a financial crime is defined as any type of crime that results in financial benefit to the criminal(s) involved. Financial crimes are carried out by organizations or individuals who seek economic advancement via illegal tactics. Regulatory bodies throughout the world are constantly developing new strategies to fight financial crimes, but the reality is that a significant portion of global GDP is actually income from these illegal activities. While financial crimes existed since the dawn of trade, criminals continually seek new methods of defrauding others. As such, government bodies, companies both large and small, and even individuals must be vigilant in understanding where risk may exist.

A bureau of the U.S. Department of Treasury, the Financial Crimes Enforcement Network (FinCEN) serves to “safeguard the financial system from illicit use, combat money laundering and its related crimes including terrorism, and promote national security through the strategic use of financial authorities and the collection, analysis, and dissemination of financial intelligence”. Established in 1990, FinCEN is just one of many ways that the U.S. attempts to fight financial crimes throughout the country.

A variety of people and organizations can commit financial crimes. Some offenders are unsurprising, like serial fraudsters or organized criminals like terrorist groups. Other offenders, however, are less predictable, like employees, corrupt heads of state, and senior executives. With such a wide range of prospective criminals, remaining on guard is imperative. There are a few main types of financial crimes that are seen lately:

  • Tax Evasion
  • Fraud
  • Terrorist Financing
  • Information Security
  • Embezzlement
  • Money Laundering
  • Corruption and Bribery
  • Electronic Crime
  • Insider Dealing and Market Abuse

The financial sector finds itself particularly vulnerable to fraud. There are a variety of reasons for this susceptibility, most notably being the complexity inherent in financial services. Technology is both a help and a hindrance when it comes to fighting financial crimes. On one hand, technology gives criminals an opportunity to seek new ways of committing crimes. On the other hand, however, developing technology has proven to be instrumental in regulatory measures being used to combat financial crimes.

Artificial intelligence (AI) and machine learning, for example, can process and utilize massive amounts of data in order to detect financial crimes such as money laundering. Employing technology such as this not only can help to detect and prevent costly issues, but it can quickly adapt to new methods and threats. In doing so, AI and machine learning can serve to be proactive in handling financial crimes efficiently and effectively.

From recognizing changes and patterns in behavior to reporting suspicious activity, implementing a system to combat financial crimes is critical nowadays. At Ellrich, Neal, Smith & Stohlman, P.A., our staff includes five Certified Fraud Examiners who are involved in fraud detection and prevention engagements. Such engagements include evaluation of an organization’s internal controls, identification and measurement of frauds, and implementation of procedures that will reduce the risk of falling victim to fraud schemes in the future.

Past fraud engagements have resulted in successful recoveries in both civil and criminal actions. Reach out to our Miami, Palm Beach Gardens, or Orlando offices to schedule a meeting with a fraud expert.