Financial Crime in the Digital Era

SI link: https://link.springer.com/journal/42521/updates/27257266

Call for papers

The Digital Economy has brought about both opportunities and challenges regarding financial crime. Technological innovation (such as virtual currencies) and increased integration of financial flows in the domestic market, along with the global dimension of terrorist organizations, have determined fraudsters to become more and more innovative in finding new channels to get illicit money. Therefore, despite all the efforts to combat the economic and financial crime, it remains a long-standing problem.  Here's a breakdown of how digitization intersects with financial crime:

  1. Increased Connectivity: Digitalization has interconnected financial systems, allowing for faster and more efficient transactions globally. However, this increased connectivity also creates more opportunities for criminals to exploit vulnerabilities in the system for activities such as fraud, money laundering, and cyber theft.
  2. Cybercrime: The rise of digital financial services has led to an increase in cybercrime, including hacking, phishing, ransomware attacks, and identity theft. Criminals leverage technology to breach security systems, steal sensitive information, and siphon funds from individuals and organizations. The complex schemes of cybercrime (under malware attacks, ransomware, phishing, hacking) are used for stilling banking data, compromising savings accounts, fraud of some institutions and companies, or blocking access to information systems). All these have increased the pressure on society. These complex criminal schemes should be unveiled and known to identify the updated types of fraud conducted within the digital business.
  3. Money Laundering: Digital financial systems can facilitate money laundering by criminals seeking to conceal the origins of illicit funds. Cryptocurrencies, online payment platforms, and digital wallets allow money launderers to move and disguise money across borders with relative anonymity.
  4. Regulatory Challenges: Regulating digital financial transactions presents challenges for authorities due to the borderless nature of the internet and the rapid pace of technological advancement. Implementing effective regulations to combat financial crime while fostering innovation and economic growth requires collaboration between governments, financial institutions, and technology companies.
  5. Data Security: With the digitization of financial data, ensuring robust cybersecurity measures is crucial to safeguarding sensitive information from unauthorized access and data breaches. Financial institutions and fintech companies invest heavily in cybersecurity infrastructure to protect customer data and prevent financial crimes.
  6. Artificial Intelligence and Machine Learning: Financial institutions are increasingly employing AI and Machine Learning algorithms to detect and prevent financial crimes. These technologies analyze vast amounts of data to identify suspicious patterns and behavior, enabling early intervention and mitigation of risks.
  7. Compliance Challenges: Adapting to evolving regulatory requirements in the digital landscape poses compliance challenges for financial institutions. They must navigate complex regulatory frameworks across multiple jurisdictions while ensuring adherence to anti-money laundering (AML) and know-your-customer (KYC) regulations.

In summary, while digitalization offers numerous benefits for the financial industry, it also introduces new vulnerabilities that criminals can exploit. Effectively combating financial crime in the digital age requires a multi-faceted approach encompassing technological innovation, regulatory reform, and collaboration between public and private sectors.

Keywords: financial crime, digitalization, money laundering, artificial intelligence, machine learning, data security

Within this context, this special issue of Digital Finance seeks for original, high-quality papers that address the following, but not limited to, topics: