With a footprint in markets worldwide as well as anti-fraud and anti-money laundering (AML) efforts in finance, global marketplace and technology provider Nasdaq has a front-row seat to evolving trends that invite in bad actors.

The company has been working to root out abuses like stock manipulation and insider trading for years, more recently expanding to address financial crimes at banks and financial institutions. Those efforts were accelerated by Nasdaq‘s $2.75 billion February acquisition of Canada-based anti-financial crime management company Verafin.

“We said, ‘Okay, we’re in the fight against market abuse, and we’re going to help fight financial crime across the whole sector, and that now includes money laundering and fraud,'” Valerie Bannert-Thurner, Nasdaq’s global head of anti-financial crime technology, told Bank Automation News.

Bannert-Thurner pointed to six evolving trends in financial crime:

1. Money laundering is becoming more elaborate

Criminals are investing in technology and becoming more sophisticated, Bannert-Thurner said, and this partly explains why only about 1% or less of money laundered through the global financial system is detected.

Money launderers are “going to great lengths” with schemes using mules — which the FBI defines as those who transfer or move illegally acquired money on behalf of someone else — and others to move and conceal funds across multiple borders and different companies, she noted, making that money difficult to track.

2. Cloud-based technology is widening the net

Part of the reason AML efforts aren’t always effective is due to siloed monitoring within an organization, Bannert-Thurner told BAN.

In some cases, “every team looks just at their particular alerts, and often they don’t even look across the whole company — like a big firm wouldn’t necessarily look across all different potential accounts of the customer,” she noted.

Viewing a company’s data in its entirety, or even across multiple companies, can deliver better results. Bannert-Thurner pointed to Verafin’s cloud-based approach, which pools a customer’s data and allows a more robust view. “The wider you cast the net, the higher effectiveness you can attain,” she said.

3. Artificial intelligence (AI) and machine learning (ML) are helping

AI and ML are being employed in AML systems more frequently to improve financial crime detection and to reduce and help address false positives, Bannert-Thurner noted. Banks and financial institutions traditionally have had to sift through alerts — which can be numerous — manually.

“We do quite a bit of research in that, across trade surveillance, money laundering and other areas, and really try to bring that knowledge into our systems and make them more efficient,” she told BAN.

4. Retail investment and participation are up

Over the last 10 years, retail and consumer investments have roughly doubled, and the COVID-19 pandemic accelerated those investments, Bannert-Thurner said.

The change has altered the dynamics of markets, including by introducing new payment rails, she added. “From a surveillance perspective, you have to think about what that means and how do you detect if there is fraudulent behavior within it, and also how do you better protect the others,” Bannert-Thurner said.

5. Data volumes are fast increasing

Nasdaq has seen data volumes essentially double over the last year, so what was once a challenge in monitoring and managing information is growing rapidly, or even exponentially, volume-wise.

“We really have a lot” of data, Bannert-Thurner said, and it’s “a big challenge for engineers.”

6. ‘The big one’: Crypto and blockchain are growing fast

“The big one” among these trends is that cryptocurrency trading and the use of blockchain/ decentralized finance (DeFi) technology are also changing the dynamics of money laundering and fraudulent schemes, Bannert-Thurner said.

Trading, investments and digital transactions are gateways for fraudulent players, she added. “It touches everything we do in many areas, so it’s key for us to understand where the industry is going, which is difficult to estimate at this point,” Bannert-Thurner told BAN. “What’s clear is, it’s here to stay.”