Francisco Mainez from NICE Actimize, shares insights into the financial crime landscape and key challenges in Australia, South Africa, and Sweden.
One of the most common quotes among compliance professionals is ‘money does not stop at the border’. The sentence is attributed to award-winning writer and journalist Oliver Bullough‘s brilliant work ‘Moneyland’.
The quote perfectly reflects reality, especially when considering the transnational nature of financial crime. The global economy’s steady move towards globalisation and the interconnectedness of financial systems have created an almost perfect framework for white-collar crimes. While capital flows are almost unrestricted through markets, the critical elements to monitor and detect suspicious activity hidden in these flows, like data, regulation, or intelligence, typically struggle to cross nation-state boundaries.
The result is the rise of resilient, elusive global financial crime networks, capable of laundering the proceeds of crimes—such as drug trafficking, human trafficking, and fraud—that impact large segments of the populations in which these networks operate. This article is the first of a two-part series, exploring how financial institutions (FI) operating in Australia, South Africa, and Sweden face common challenges in their fight against financial crime, despite being subject to different laws and regulatory requirements as a result of geographical differences. In the second part, we will explore other areas like the EU and the US.
From an international standards perspective, the Financial Action Task Force (FATF) lists Australia on an ‘enhanced follow-up’ roadmap since 2018. As of March 2024, the country is compliant with eighteen of the original 40 FATF Recommendations, largely compliant with another 12 Recommendations, partially compliant with 6 Recommendations and non-compliant with 4, namely:
Three recommendations related to regulation, customer due diligence (CDD) and other measures on Designated Non-Financial Businesses and Professions (DNFBP) (also referred as ‘Tranche 2’ entities).
Transparency and beneficial ownership of legal arrangements.
Australia has seen one of the most globally prominent Regulatory Enforcement Surges over the last 5 years. This has been driven by a perceived increase of illicit flows driven by highly active OCG (Organised Crime Groups). Main gaps were identified in the ‘Tranche 2’ entities, which led to a series of specific reforms centred around these entities:
From July 1, 2026, Anti Money Laundering/Counter Terrorist Financing (AML/CTF) obligations will apply to real estate professionals, lawyers, accountants, trust, and company service providers, and dealers in precious metals and stones.
Businesses in these sectors, totalling approximately 90,000 new reporting entities, must enrol with AUSTRAC, conduct CDD, report suspicious transactions, and maintain adequate, risk-based AML/CTF programs.
While some indicators pointed at a possible FATF ‘grey-listing’ following the trend of other major developed markets like UAE, in May 2024 the Australian government announced an investment in reforms of AUD 166.4 mln (USD 107 mln) to strengthen its AML/CTF framework. This move, combined with Australian regulator (AUSTRAC) high regulatory activity, suggests a concerted effort to lead the efforts to fight financial crime in the region, especially in the light of the uncertainty posed by recent geopolitical events.
AUSTRAC is taking a similar approach to other authorities across the world. Like the UK’s National Crime Agency, they are turning to a more proactive approach while also stressing the importance of education, to ensure the relevant people and businesses fully understand their obligations.
Money Laundering: prevalent money laundering typologies in Australia include:
Real estate laundering: criminals invest in high-value properties to clean illicit funds, often using shell companies or third-party buyers.
Trade-based money laundering (TBML): it involves manipulating invoice values in international trade to move money across borders.
Sanctions evasion: deliberate actions taken by individuals, businesses, or governments to circumvent international sanctions.
Casino & gambling laundering: using casinos, betting accounts, and gaming chips to integrate illicit funds into the financial system.
Professional services abuse: lawyers, accountants, and trust service providers facilitating complex financial structures to hide ownership.
Fraud: During 2023 Australians lost AUD 2.74 bln (USD 1.75 mln) to fraud and scams, marking a 13.1% decline from the previous year. Main typologies included identity fraud, account takeover (ATO), card fraud (mostly CNP – card not present, where stolen card data is used online), and social benefits fraud.
Australia continues to be highly exposed to a variety of financial crime typologies. Criminals continue to exploit cash, banks, luxury goods, real estate, and casinos to launder illicit funds. The domestic drug market alone generates AUD 12.4 bln (USD 7.9 bln) annually, which needs to be laundered through the economy. In terms of emerging threats, the exploitation of digital currencies is increasing, allowing criminals to move funds quickly, cheaply, and semi-anonymously. These predicate and financial crimes are being mitigated by combined regulatory and law enforcement efforts, which have lately placed Australia at the forefront of the fight against financial crime in the APAC region.
South Africa's most recent Financial Action Task Force (FATF) review was its Mutual Evaluation Report in 2021. The assessment found that while South Africa has a solid legal framework for combating money laundering and terrorist financing, there were significant shortcomings. The country was placed on the FAFT ‘grey list’ due to deficiencies in its anti-money laundering system.
Since then, South Africa has made positive progress in addressing these deficiencies, with several technical compliance ratings being upgraded. If the country successfully addresses its remaining deficiencies, it could exit the grey list by October 2025. Two key areas (investigations and prosecutions) are still assessed as needing sustained improvement.
Regulatory challenges for 2025 include crypto asset regulations, updates to the Financial Intelligence Centre Act and reforms in financial services compliance:
Crypto asset service providers (CASPs): are required to be licensed as financial services providers and comply with the requirements under the Financial Advisory and Intermediary Services Act.
Advanced technologies: Although AI is largely unregulated in South Africa, it is anticipated that once concerns surrounding AI are addressed, AI will play a significant role in the functioning of most industries, including the financial sector. Some of the current concerns include security risks posed by AI, the large amounts of data that are required, the additional energy required to cater to the additional computing capacity, and the production of biased outputs.
Sasfin Bank was fined R 210 mln (USD 11.7 mln) for historic non-compliance in its foreign exchange business.
Capitec Bank received an R 56.25 mln (USD 3.1 mln) fine for failing to meet Financial Intelligence Centre Act (FICA) requirements.
Absa Bank was fined R 10 mln (USD 559.7 k) for customer due diligence failures related to politically exposed persons and transaction monitoring.
South Africa's financial crime threats emerge from fraud, corruption, drug trafficking, tax crimes, and money laundering.
Money laundering: specific typologies identified by the South Africa Financial Intelligence Centre (FIC):
Cash-based laundering: due to the high reliance on cash transactions in South Africa, criminals use physical currency to hide illicit funds, making detection difficult.
Illegal gold smuggling: criminals exploit South Africa’s gold industry to launder money, often moving illicit gold across borders.
Environmental crimes: illegal wildlife trade and illicit mining operations provide opportunities for criminals to conceal their unlawful proceeds.
Fraud: the South African Banking Risk Information Centre (SABRIC) reported R 3.3 bln (USD 184 mln) in financial crime losses, with digital banking fraud increasing by 45% and card fraud making up 68% of total fraud losses.
After the 2020 FATF report, Sweden remains partially compliant with three recommendations: Sanctions related to Terrorism Financing, Proliferation Finance, and Cash Couriers.
In terms of regulation, Sweden is working heavily on adapting and implementing the EU AI Act. Another area of focus is beneficiary ownership and due diligence, following banking failures in these areas:
Klarna Bank was fined 500 million SEK (USD 46 mln) for breaching anti-money laundering (AML) regulations. The Swedish Financial Supervisory Authority (Finansinspektionen) found deficiencies in Klarna’s risk assessment process.
The regulator fined Kindred’s Spooniker subsidiary SEK 10 million (USD 1.04 mln) for insufficient customer due diligence. The company failed to verify the source of funds, leading to potential money laundering risks.
Sweden is generally perceived as a country with low crime volume. Nevertheless, it faces money laundering risks due to its role as a regional financial centre and from the impact of domestic crimes - particularly tax-related offenses. It has also recently experienced a worrying increase in organised crime, which has prompted some FIs to explore more efficient ways to manage the resulting spikes in transaction monitoring and fraud activity. These include advanced technology solutions and the creation of dedicated, specialised investigations teams.
Money laundering: main typologies include TBML, real estate, and misuse of legal entities. Sweden’s gambling market is considered particularly high-risk due to its broad accessibility.
Terrorist financing: Sweden also faces terrorist financing risks associated with Islamic State (ISIL) and foreign terrorist fighters. Swedish authorities prioritise combating terrorist financing and integrate this with other counter-terrorism work. However, there are legal and practical weaknesses in Sweden’s implementation of targeted financial sanctions to freeze terrorist assets, an issue that should be addressed urgently.
Organised crime: Sweden has experienced a significant increase in organised crime group (OCG) activity in recent years. The surge is attributed to several factors, including lax government policies, social segregation, and the evolving nature of gang activities. This has led some FIs to set up their own internal financial intelligence units to analyse, monitor, and advise on the potential impact and effect of this surge on their institutions.
Fraud: typologies have seen a rise parallel to that of organised crime activities (see above), and include ecommerce scams, payment card fraud (stolen card details), romance scams, business email compromise (BEC), and benefits fraud.
While these jurisdictions are in completely opposite locations in the World, they share common elements, both in terms of regulatory and financial crime challenges. These include:
Adapting to a fast-paced, changing technological landscape, where ensuring compliance is part of a bigger challenge. Ensuring data is accessible, high-quality, and usable for AI-driven analysis is no longer optional—criminals are already leveraging these technologies for their own purposes.
Growing volumes of transactions to monitor, screen, and investigate, with the subsequent knock-on effects on operational costs for public and private institutions alike.
Rising, adaptability and resilience of criminal practices, often exploiting legal gaps or the evolution of consumer habits e.g., online transactions, and shopping.
Lack of data sharing: money moves freely across borders, but the data needed to track it often does not—hindering efforts to combat the harmful effects of financial crime in our societies.
About Francisco Mainez
Francisco Mainez, former Global Head of Data & Analytics for Financial Crime Risk at HSBC, now serves on the Professional Services team at NICE Actimize. With deep expertise in financial crime, intelligence, and analytics, he helps design solutions for better prevention and detection. His background spans roles in HSBC’s Financial Intelligence Unit, Standard Chartered in London and Singapore, and earlier, Military Intelligence missions with NATO and the EU.
About NICE Actimize
NICE Actimize is the largest and broadest provider of financial crime, risk, and compliance solutions for regional and global financial institutions, as well as government regulators. Consistently ranked as number one in the space, NICE Actimize experts apply innovative technology to protect institutions and safeguard consumers' and investors’ assets by identifying financial crime, preventing fraud, and providing regulatory compliance. The company provides real-time, cross-channel fraud prevention, anti-money laundering detection, and trading surveillance solutions that address such concerns as payment fraud, cybercrime, sanctions monitoring, market abuse, customer due diligence, and insider trading. Find us at www.niceactimize.com, @NICE_Actimize, or Nasdaq: NICE.
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