Money does not stop at the border (Part 2): United States and the European Union – Financial Crime Overview & Challenges

Both the United States and European Union (EU (play a critical role in global efforts to combat financial crime. Their comprehensive regulatory framework, complemented by an extensive network of government agencies are just two of the many indicators of their preeminent position. They are also both primary targets due to their importance.

More recently, the geopolitical events in both these jurisdictions and their spheres of influence have driven substantial changes in policy and regulation in areas such as sanctions and transparency, in what some experts argue is a “divergent path.”.

This article is the second of a two-part series, exploring how financial institutions (FIs) operating in the United States and the EU face shared challenges in their fight against financial crime, despite being subject to different laws and regulatory requirements as a result of geographical differences.

View part 1 of this series here.

United States

As of March 2024, the US had its Financial Action Task Force (FATF) Technical Compliance ratings revised, going from 5 (out of the 40 recommendations) rated as “non-compliant,” to just 3. These are mostly related to Designated Non-Financial Businesses and Professions (DNFBPs) and, particularly, the due diligence processes associated to adequately risk-rate these types of entities (law firms, real estate agents, accountants) that have been associated with a potential role of “enablers” of economic crime.

Also in 2024, the U.S. Department of the Treasury announced the National Illicit Finance Strategy. This strategy focuses on modernizing the anti-money laundering (AML) and countering the financing of terrorism (CFT) framework, strengthening enforcement mechanisms and leveraging technological innovation to mitigate risks. Its main recommendations include:

1. Closing legal and regulatory gaps in the U.S. AML/CFT framework that illicit actors exploit to anonymously access the U.S. financial system. This should be achieved by operationalizing the ultimate beneficial ownership (UBO) information registries for law enforcement, national security and intelligence use, finalizing rules related to the residential real estate and investment adviser sectors and risk-assessing other sectors that may be vulnerable to illicit finance.
2. Helping to create a more effective and risk-focused U.S. AML/CFT regulatory and supervisory framework for FIs to make them more efficient and effective in preventing illicit finance by providing better guidance, sharing information securely and ensuring adequate resourcing for supervisory and enforcement functions.
3. Enhancing the operational effectiveness of law enforcement agencies (LEA), other U.S. government bodies and international partnerships in combating illicit flows, in order to deny threat actors safe havens for their activities.
4. Promoting responsible technological innovation by developing new payments technology, supporting the use of new mechanisms for private sector compliance and utilizing automation and innovation to find more effective ways to combat illicit finance.

The Strategy, along with the relevant 2024 National Risk Assessments, aims to support both public and private sectors in optimizing the use of available resources, including technology, against the most significant illicit finance risks to the U.S. financial system.

Intelligence-driven approach

Within its role as the U.S. Financial Intelligence Unit (FIU), the Financial Crimes Enforcement Network (FinCEN) has issued advisories to FIs to help them detect illicit activities, such as oil smuggling, shadow banking and weapons procurement. This contributes to keep FIs aware of emerging risks and typologies, which they should translate into their relevant controls and detection capabilities.

FinCEN is effectively becoming more proactive in combating financial crime. During 2024 and 2025, FinCEN has focused on modernizing AML regulations, integrating artificial intelligence (AI) and machine learning (ML) capabilities to enhance financial intelligence. This approach reflects a broader effort across key markets to increase enforcement actions and strengthen collaboration with international regulators.

Transparency roll-back claims

In March 2025, the Department of the Treasury stated it would not enforce penalties under the Corporate Transparency Act (CTA), effectively rolling back some of its provisions. The U.S. administration celebrated this decision, calling the reporting requirements “outrageous and invasive” for small businesses. This has sparked significant criticism from lawmakers, financial crime experts and transparency advocates both at national and global levels. CTA roll-back detractors center their claims around the following aspects:

• Legal Uncertainty: Critics argue that suspending the CTA creates long-term compliance burdens for businesses, as individual U.S. states may enact their own beneficial ownership information rules, leading to a fragmented regulatory landscape and creating more complexity for FIs.
• National Security Concerns: exempting U.S. entities from BOI reporting undermines efforts to combat money laundering, tax evasion and financial crimes.
• Mixed Reactions from Businesses: While some business groups welcomed the rollback, others worry that foreign-owned U.S. shell entities could exploit transparency gaps, making it harder to track illicit financial flows.

There are also arguments in favor of the roll back, noting it will reduce compliance costs:

• Total cost on compliance is the U.S. is estimated around 61bn USD.
• An average, U.S. firm spends between 1.3% and 3.3% of its total wage bill on regulatory compliance. This burden is particularly high for firms with around 500 employees.

Other arguments against the CTA include privacy concerns, where critics argued that requiring companies to disclose ownership details violated business privacy rights.

Typologies

In relation to the main financial crime typologies affecting the U.S., the default answer would easily be “all of them,” given the size and importance of the market. We will limit these to the most prominent in both money laundering and fraud.

Money laundering in the U.S. takes many forms, with criminals using sophisticated methods to disguise illicit funds. Here are some common money laundering typologies:

• Structuring (Smurfing): Breaking large transactions into smaller amounts to avoid detection by FIs.
• Bulk Cash Smuggling: Criminal organizations physically transport substantial amounts of cash across borders to evade detection.
• Trade-Based Money Laundering (TBML): Manipulating invoices, over- or under-invoicing goods or misrepresenting trade transactions to move illicit funds.
• Shell Companies & Front Businesses: Establishing fake or inactive businesses to obscure the origins of illicit money.
• Real Estate Laundering: Purchasing properties with illicit funds to integrate them into the legitimate economy.
• Casino Laundering: Exploiting gambling establishments to convert illegal money into chips and cashing them out as “winnings.”

Fraud losses in the U.S. have been rising sharply, with 12.5bn USD lost during 2024, marking a 25% increase from the previous year. The Federal Trade Commission (FTC) reported that investment scams accounted for 5.7bn USD in losses, making them the most damaging type of fraud, while scams, resulted in losses amounting to 2.95bn USD.

Additionally, FIs in North America face high costs, with every $1 lost to fraud costing them $4.41 due to associated expenses. The U.S. government also experiences significant fraud losses, estimated between $233 billion and $521 billion annually across various federal programs.

• Imposter Scams: Fraudsters pretend to be trusted figures—such as government officials or company representatives—to steal money or personal information.
• Online Shopping Scams: These involve undisclosed costs, failure to deliver goods or businesses preventing honest reviews.
• Investment Fraud: Scammers lure victims into fake investment opportunities, often promising unrealistic returns.
• Identity Theft: Criminals steal personal information, such as Social Security numbers, to commit financial fraud.
• Credit Card Fraud: Unauthorized use of credit or debit cards to make purchases or withdrawals.
• Job Opportunity Scams: Fraudulent franchise opportunities, multi-level marketing schemes and fake job offers.

Due to the multiple reasons outlined above, the United States is critically exposed to a variety of financial crime typologies. Criminals continue to exploit the wide range of institutions, products and services, as well as the high volume of population with access to digital channels as almost endless opportunities in money laundering and fraud.

According to the Organized Crime Index, the U.S. has a criminality score of 5.67, ranking 67th globally. The illicit flows generated from activities like drug trafficking, cybercrime, financial fraud and human trafficking, will present a continuous (and potentially growing) challenge to public and private sectors alike. These predicate and financial crimes are being mitigated by a combination of regulatory, law enforcement and technology efforts, which will continue to see the United States at the forefront of the global fight against financial crime. 

European Union

Analyzing the impact and challenges of economic crime in the EU is a seemingly complex task, as it is formed by 27 member countries. However, its structure as an apolitical and economic bloc, combined with a tightly bound regulatory framework enables an overview that would be applicable to all the integrating parts.

Most EU countries are compliant, or largely compliant, with FATF standards, but some face challenges or have even been “grey listed” (officially called “jurisdictions under increased monitoring”) like Bulgaria, placed for strategic deficiencies in their AML/CFT frameworks. As of June 2025, Croatia had been removed from the grey list, indicating improvements in its compliance efforts.

The EU has a comprehensive strategy against financial crime, driven by the following elements:

• AML Regulations: these are enshrined by the AML directives. With the latest one (AMLD6) released in 2024 and notably introducing AMLA (EU AML Authority). AMLDs are compulsory for all EU member states. Each directive must be transposed into national law, meaning individual countries must implement the regulations within their own legal frameworks. AMLD6 includes the following key features:
• Expanded Criminal Liability: AMLD6 holds corporate entities accountable for money laundering offenses, ensuring businesses face legal consequences.
• Harmonized Definitions: The directive standardizes money laundering offenses across EU member states, reducing loopholes in national legislation.
• Stricter Penalties: Minimum prison sentences for money laundering offenses have been increased to four years.
• Predicate Offenses: AMLD6 defines 22 predicate offenses, including tax crimes, cybercrime, environmental crime and human trafficking.
• Aiding & Abetting: The directive criminalizes aiding, abetting and attempting money laundering, expanding enforcement capabilities.
• Focus on High-Risk Country Monitoring: The European Commission (EU’s executive branch) updates and monitors its own list of high-risk jurisdictions.
• Technological Advancements: The EU is integrating AI and blockchain into financial crime prevention. This has been accelerated with the roll out of the EU AI act in 2024. Among other initiatives, the Act promotes AI sandboxes to encourage responsible AI development. FIs can use sandboxes to develop and refine AI models for detecting money laundering, fraud and illicit transactions. The EU AI Act mandates that each member state establish at least one AI regulatory sandbox by August 2026.
• Multilateral Cooperation: This has been recently boosted with the creation of EU AML Authority (AMLA): A newly established EU body that coordinates national supervisors to ensure consistent application of AML/CFT rules.AMLA’s mission includes:
• Direct Supervision: AMLA oversees high-risk FIs to ensure compliance with EU AML/CFT rules.
• Coordination Role: It will work with national regulators to ensure consistent enforcement across EU member states.
• Cross-Border Investigations: The agency has a responsibility to facilitate international cooperation to combat money laundering and terrorist financing.

Typologies

The EU has close similarities to the U.S. in terms of financial crime typologies. Criminals are constantly evolving in their ways to laundering proceeds of criminal activity and using increasingly more sophisticated methods to commit fraud.

Most common money laundering typologies across the EU include TBML, use of shell companies, crypto currency misuse and real estate laundering (again, showing a close equivalence to U.S. landscape). In addition to these, in some jurisdictions e.g. Sweden, as outlined in Part 1 of this series, a rising emergence of Professional Money Laundering Networks has been reported. These consist in specialized money launderers offer services to criminal organizations, using complex layering techniques.

This form of “crime as a service” (CaaS), highly organized in teams that are relatively easy to set up and equip, presents a challenge to FIs trying to identify and track them, since these networks operate across different jurisdictions and multiple FIs and products. The lack of cross-border data sharing protocols only exacerbates this problem.

Fraud losses in the EU remain a significant concern. According to the European Banking Authority (EBA) and the European Central Bank (ECB), fraud losses in the EU amounted to 4.3bn EUR in 2022 and 2bn EUR during the first half of 2023. Main fraud trends are:

• Card Payment Fraud: Remote transactions, such as online purchases, account for 82% of card payment fraud.
• E-Money Fraud: Digital wallets and prepaid cards are increasingly targeted, especially in cross-border transactions.
• Credit Transfer Fraud: Authorized push payment (APP) fraud remains a challenge, with fraudsters tricking victims into sending money to fraudulent accounts.

The EU’s strong customer authentication (SCA) requirements have helped reduce fraud rates, particularly for card payments. However, fraudsters continue to adapt, combining cybercrime and AI into their fraud schemes.

Conclusions

Without a doubt, the U.S. and EU are systemic actors in the compliance and financial crime landscape. They share familiar challenges, possibly aggravated by a divergence in strategic direction, which is driven by geopolitical events. They also have key distinctive features:

• Current foreign policy changes towards their stance to Russia could drive different approaches and sanctions regimes. This would bring added difficulties for FIUs in terms of tracking and adapting their systems and processes to sanctions screening and investigations.
• The EU relies on directives e.g., AMLD6, requiring member states to transpose them into national law, while the U.S. enforces federal regulations directly.
• The EU mandates centralized beneficial ownership registers, while the U.S. Corporate Transparency Act requires companies to report ownership information to FinCEN, with the roll back outlined above also affecting its applicability.
• Both jurisdictions face growing volumes of transactions to monitor, screen and investigate, with the subsequent rises on operational and compliance costs.
• Lack of data sharing allows for illicit flows to move freely across borders, while the data needed to track it often does not, highlighting the growing challenge of fighting a global criminal activity, while restrained by local or “EU-bloc” type regulations.