Fraud, Financial Crime, AML and Compliance

Every financial company is, by law, a part-time police force. Banks, payment firms, brokers, insurers, crypto exchanges and money transmitters must know who their customers are, watch what they do, report what looks suspicious and refuse to deal with sanctioned people and countries. When they fail, the penalties are among the largest in corporate life: BNP Paribas paid ~$8.9 billion for sanctions violations in 2014, Binance ~$4.3 billion in 2023, and TD Bank ~$3.1 billion in 2024 together with a guilty plea and a cap on the size of its US balance sheet. At the same time, financial firms are the main victims of fraud and the main channel through which fraud reaches consumers: Americans reported a record ~$15.9 billion of fraud losses to the FTC in 2025, and that is a fraction of the true figure. And some of the largest frauds in history were committed by financial firms themselves: Madoff's Ponzi scheme, Wirecard's invented cash, Wells Fargo's millions of unauthorised accounts. This section is centred on the US system. It explains the legal architecture of US anti-money-laundering (AML) and sanctions law (with brief comparisons abroad), how laundering and fraud actually work, what a compliance programme contains and costs, how enforcement is sized and what it does to a business, why fintechs and crypto firms keep getting caught, the 2025–26 shift in US enforcement, and how an experienced compliance leader thinks. A worked example computes the cost of an AML programme for a stylized US neobank, what happens when growth outruns compliance, what scam reimbursement would cost a US bank and the full cost of an enforcement action; a case-study file tells six cases in depth.