The dynamic nature of financial crime remains a major issue for financial institutions (FIs) in the Asia Pacific region (APAC). Bad actors are employing more innovative methods and advanced technologies to perpetrate crime, and the regulators’ demands are continually increasing in the region. In areas where FIs have failed in their anti-money laundering (AML), sanctions, fraud, or compliance obligations, regulators have not been averse to imposing significant enforcement actions. FIs need to ensure the effectiveness of their anti-financial crime (AFC) programs, all while striking the delicate balance between customer experience, effectiveness, and efficiency. 

Four emerging trends in financial crime compliance to watch out for

New methods of financial crime are emerging in 2025, highlighting the need for APAC FIs to not only refresh and enhance their risk management programs and the underlying changes in their risk profile, but also demonstrate agility in their response to the dynamic threat environment.

Forging new identities via synthetic identity laundering

Criminals are increasingly amalgamating genuine and fabricated credentials to forge new identities. While detecting synthetic identity fraud is challenging, FIs can take steps to implement effective controls. These include monitoring unusual credit patterns, such as sparse public records, rapid credit build, and the utilization of common addresses. Additionally, advanced fraud detection capabilities that employ deep behavioral analytics can help uncover inconsistencies. FIs need to stay abreast of these technological developments, invest in advanced detection tools, enhance training programs, and maintain secure communication channels to protect themselves and their customers from the significant threats posed by deepfakes.

A look at currencies and assets in online gaming platforms

Criminals are increasingly exploiting online gaming platforms, mainly because of the existence of virtual currencies and tradable in-game assets. Players can easily convert in-game currencies into real money, enabling the transfer of illicit funds through “money muling.” Criminals often exploit these platforms to launder their money through microtransactions, which are masked as legitimate purchases of game items or in-game tokens. To address these issues, the FIs engaged in processing payments for these platforms as clients or for their individual and entity clients that transact with these platforms, need to reassess how they address these risks.

Impact of regulatory gaps on digital assets and arbitrage risk

Digital assets and cryptocurrencies have become a significant focus for financial crime regulations. Though there is limited global alignment on best practices, global regulators will continue to work on comprehensive frameworks for managing the growing digital asset sector and to prevent any potential arbitrage by criminals seeking to circumvent the AFC controls implemented within traditional financial systems. While FIs increasingly are seeing compelling commercial opportunities in digital assets, any moves into this space will need to be combined with a clear understanding of the regulatory perimeter, a clearly articulated risk appetite, and potentially the adoption of specialist tools for blockchain analytics to ensure AML checks, such as the source of wealth, can be performed.

Managing compliance risks in a volatile geopolitical landscape

While not a new risk, geopolitical tensions, such as those surrounding Russia, China, and the Middle East, will continue to affect AFC compliance. International sanctions regimes will continue to be complex, and widespread as a result. As FIs in APAC strive to maintain compliance in a dynamic and volatile environment, they must reassess how they monitor and respond to risks and prevent breaches. This means having effective mechanisms in place to understand changes quickly in sanctions regimes, and the effects on AFC risk management and controls.

Embracing AI is critical in anti-financial crime compliance risk management

Artificial intelligence (AI) and broader technology will be critical to enabling FIs to manage AFC risks. The use of AI in multiple areas will not only facilitate automating human tasks and streamlining operations across know your customer (KYC) initiatives, alert management and dispositioning, and reporting, but also be critical in uplifting predictive and detective capabilities.

However, AI should not be expected to replace the expertise of AFC professionals with extensive risk management knowledge. Compliance leaders must understand the inherent strengths and shortcomings of the different forms of AI to find the balance between automation and human involvement and interaction. To achieve success and limit risk, FIs will need to do the following:

• Articulate an AI strategy for the AFC program with strong leadership support
• Secure buy-in from senior leadership and educate the organization on the function of AI
• Communicate early and often with regulators and model risk management
• Run a series of pilots and proofs-of-concept to build conviction for AI-based solutions
• Establish robust governance for AI, including policy frameworks, governance bodies, and performance monitoring

It is imperative that AFC executives prioritize the strengthening of their technology, processes, workforce, and operating model to enhance compliance and risk management. By embracing collaboration through public-private partnerships and leveraging technological innovations, institutions can enhance the effectiveness and efficiency in managing AFC risks and meet the challenges that lie ahead in 2025 and beyond, while ensuring cost and customer experience remain front of mind.