Last reviewed July 12, 2026 · 7 min read · Written for compliance and risk professionals · By the WhoWiki editorial team
Key takeaway: financial crime is the umbrella term for money laundering, fraud, bribery, and sanctions breaches, and regulated firms must detect it.
Financial crime is any illegal act that uses money or the financial system for gain. It covers money laundering, fraud, bribery and corruption, sanctions evasion, tax evasion, and market abuse. Regulated firms are legally required to detect and prevent it.
Key takeaways
- Financial crime is the umbrella term for crimes involving money and financial systems.
- Main types include money laundering, fraud, bribery, sanctions evasion, and tax evasion.
- Money laundering is one type of financial crime, not the whole thing.
- The UNODC estimates $800 billion to $2 trillion is laundered each year, a large part of the total.
- Firms manage the risk through financial crime compliance, screening, and monitoring.
- Failure brings fines, criminal liability, and lost banking access.
On this page
What it isMain typesVs money launderingWhat it costsCompliance (FCC)How firms reduce riskFAQsRead more
$800B to $2T
Laundered globally each year, one part of financial crime
Source: UNODC
~$300B
Laundered in the United States each year
Source: US Department of the Treasury
1989
Year the FATF was founded to counter financial crime
Source: FATF
What is financial crime?
Financial crime is any illegal act that uses money or the financial system to make or move illicit gains. It is a broad category that holds several distinct offenses under one heading.
Regulated firms have legal duties to prevent it, which is why banks run large compliance teams. Financial crime hurts more than its direct victims: it funds organized crime, drains public money, and weakens trust in the financial system.
Read more: the most common type is covered in money laundering explained.
The main types of financial crime
Financial crime splits into several types, and most firms face more than one. Each has its own controls, but they share tools like screening and monitoring.
- Money laundering. Disguising the criminal origin of funds. Learn more.
- Fraud. Deception to take money or assets. Learn more.
- Bribery and corruption. Paying for improper advantage or abusing power.
- Sanctions evasion. Dealing with restricted parties or countries. Learn more.
- Terrorist financing. Funding terrorist acts or groups. Learn more.
- Tax evasion. Illegally avoiding tax owed.
- Market abuse. Insider dealing and market manipulation.
Use the tool: look up a country’s risk profile with the Country Risk Checker before you take on exposure.
Check a country’s financial crime risk
Look up a country against FATF, EU, and corruption data to see its risk profile before you take on exposure.
Financial crime vs money laundering
Money laundering is one type of financial crime. Financial crime is the wider group that laundering belongs to.
Fraud, bribery, and tax evasion often produce dirty money in the first place. Laundering is the step that hides where that money came from. All of them count as financial crime.
What financial crime costs
Financial crime carries a heavy price, for economies and for firms. The scale is hard to measure, but the estimates are large.
The UNODC estimates $800 billion to $2 trillion is laundered each year, 2 to 5 percent of global GDP (UNODC). The US Department of the Treasury estimates roughly $300 billion is laundered inside the United States annually. On top of that sit the fines: TD Bank paid about $3 billion to US authorities in 2024 over Bank Secrecy Act failures (US Department of Justice, 2024).
Spot financial crime red flags early
Use our red flags checklist to review onboarding and transactions for the warning signs of laundering and fraud.
What is financial crime compliance?
Financial crime compliance, often shortened to FCC, is how a firm manages its financial crime risk. It brings AML, sanctions, anti-fraud, and anti-bribery controls under one function.
A typical FCC setup runs on four things:
- A risk assessment that rates where the firm’s exposure is highest.
- Screening of customers and payments against sanctions and PEP data.
- Transaction monitoring that flags unusual activity.
- Reporting of suspicion to the authorities.
The same controls that stop laundering also catch sanctions breaches and fraud, which is why firms combine them.
How firms reduce financial crime risk
Firms cut financial crime risk with a few core controls, applied in proportion to the threat. The goal is to catch problems early and keep evidence.
- Know the customer. Verify identity and rate the risk.
- Screen names. Check against sanctions and PEP data.
- Confirm ownership. For business customers, find the beneficial owner behind the company.
- Monitor and report. Watch transactions and report anything suspicious.
No single control catches everything, so firms layer them. A screening result is a first check, and a human review still decides the outcome.
Screen a name across watchlists, free
Run one search across sanctions, PEP, and adverse media data to check a person or company before you deal with them.
Frequently asked questions
What is financial crime?
Financial crime is any illegal act that uses money or the financial system for gain. It includes money laundering, fraud, bribery and corruption, sanctions evasion, tax evasion, and market abuse. Regulated firms such as banks are legally required to detect and prevent it, which is why they run dedicated compliance teams.
What are the types of financial crime?
The main types are money laundering, fraud, bribery and corruption, sanctions evasion, terrorist financing, tax evasion, and market abuse. Cyber-enabled theft and insider dealing also fall under the term. Most firms face several at once and manage them through a single financial crime compliance function.
What is the difference between financial crime and money laundering?
Money laundering is one type of financial crime. Financial crime is the wider category that also covers fraud, bribery, sanctions evasion, and tax evasion. Many of those crimes produce illegal money, and laundering is the separate step that hides where that money came from.
What are examples of financial crime?
Examples include laundering drug proceeds through shell companies, defrauding customers with fake investments, paying bribes to win contracts, trading with sanctioned parties, and hiding income to avoid tax. Each is illegal on its own, and several often appear together in the same criminal scheme.
Who investigates financial crime?
Police, financial intelligence units, and specialist agencies investigate financial crime. In the United States, FinCEN, the FBI, and the IRS play major roles. In the United Kingdom, the National Crime Agency and the Serious Fraud Office lead. Regulated firms support them by reporting suspicious activity.
What is financial crime compliance?
Financial crime compliance, or FCC, is how a firm manages its financial crime risk. It brings anti-money laundering, sanctions, anti-fraud, and anti-bribery controls under one function. A typical setup runs a risk assessment, screens customers and payments, monitors transactions, and reports suspicion to the authorities.
Is money laundering a financial crime?
Yes. Money laundering is one of the most common types of financial crime. It is the act of disguising the criminal origin of money so it can be used freely. Other financial crimes, such as fraud and bribery, often produce the dirty money that then gets laundered.
What is the most common financial crime?
Fraud is one of the most common financial crimes by volume, affecting individuals and firms worldwide. Money laundering is one of the largest by value, with the UNODC estimating $800 billion to $2 trillion moved each year. The two are linked, since fraud often produces the money that is later laundered.
What is market abuse?
Market abuse is illegal behavior in financial markets that distorts prices or misuses information. It includes insider dealing, where someone trades on non-public information, and market manipulation, where trading is used to move a price. Regulators such as the SEC and the FCA police it.
What is the difference between bribery and corruption?
Bribery is offering or taking something of value to influence a decision improperly. Corruption is the broader abuse of entrusted power for private gain, which includes bribery, embezzlement, and favoritism. Anti-bribery and corruption controls sit inside a firm’s wider financial crime compliance program.
How do firms prevent financial crime?
Firms prevent financial crime by knowing their customers, screening names against sanctions and PEP data, monitoring transactions, and reporting suspicion. They rate customer and country risk, confirm who owns business customers, and keep records. No single control catches everything, so firms layer them and review results.
What is a predicate offense?
A predicate offense is the underlying crime that produces illegal proceeds, such as fraud, drug trafficking, bribery, or tax evasion. Money laundering is the act of concealing the proceeds of that offense. A country’s list of predicate offenses decides which crimes can lead to a laundering charge.
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