Geopolitics, Financial Crime, and the AI Revolution: The New Battlefield for Financial Services
- Yair Samban
- Jul 17
- 7 min read
The intersection of geopolitics, large scale economic crime, and artificial intelligence (AI) is rapidly reshaping the global financial services landscape. As state-sponsored actors, organized crime syndicates, and hostile nation states increase their efforts to use financial channels to fund their activities and to cause disruption, financial institutions (FIs) are caught in a high-stakes race. The global race for AI dominance, highlighted by landmark US-Middle East AI investment deals in 2025[1], signals a new era of collaboration and competition. FI must invest in innovation while keeping their growth healthy to deliver ample returns to their stakeholders. The convergence of geopolitical shifts and technological innovation is not just a trend—it is redefining the very fabric of financial crime prevention and the future of finance itself.
The Geopolitical Context: A Fragmented and Competitive World
The onset of the Ukraine war in 2022 revealed a broader context of global realignment. Over the past few decades, the world has shifted from a bipolar order to one characterized by a multiplicity of actors, with constantly evolving alliances and rivalries. The Ukraine war, for instance, has prompted a consolidation of Western states against Russia, primarily through economic and diplomatic measures. However, it is evident that some countries within the Western bloc remain more open to dialogue and direct engagement with Russia, at times even acknowledging aspects of Russia’s perspective on Ukraine. Competition among states, multinational organizations (such as the UN and NATO), global corporations (including major technology firms like Amazon and Nvidia), and non-state actors—such as terrorist and resistance networks—has reached unprecedented levels. The series of conflicts in the Middle East, triggered by the Hamas attacks on October 7, 2023, has further strained international relations, compelling actors to continually reassess their positions and adapt to a rapidly changing global landscape.
Against this backdrop, FIs have faced unprecedented challenges. This race is not limited to states; it includes corporates, fintechs, and even non-financial actors, all vying for technological and financial supremacy.
Three major centers of influence are emerging: the US, Europe (bifurcated between the UK and EU), and the Russia-China bloc (which also don’t operate in complete alignment). Those centres of influence represent a critical mass of resources, miliary power, and inter-connected economies, that are translated to influence on the global scale and an agenda that is unique to each bloc. Each seeks to co-opt regional hubs like the Middle East, India, and Africa to fuel their technological growth, further fracturing the global financial system.
Hybrid Threat Finance: Organized crime cartels, terrorist organizations, and hostile states exploit regulatory gaps and technological advances, making financial crime more complex and harder to detect. The term Hybrid Threat Finance™ (HTF) refers to the fact that threat actors that operate at a certain scale – global criminal groups, international trafficking networks, organized cyber adversaries, or even hostile nation-states—exploit the financial infrastructure to achieve their objectives – steal money or move funds acquired elsewhere to support their illegal operations. The term ‘hybrid’ refers to these actors’ operations that span across domains: physical and digital, formal and informal, local and transnational.
For further information please refer to https://section2.com/.
The Expanding Definition of Money and Financial Crime
The very concept of money is evolving. Beyond traditional fiat, we now see:
Central Bank Digital Currencies (CBDCs)
Stablecoins
Tokenized deposits
Programmable assets
These new forms of money interact with legacy systems, creating both opportunities and new risks. Geopolitical forces encourage the adoption and design of these instruments, as people seek to escape state scrutiny and gain better returns on their investments, and states becoming interested in stablecoins as a way to leverage their strategic reserve currencies. The risk: increased fragmentation and new forms of systemic risk, especially if interoperability is not ensured.
AI: The Double-Edged Sword in Financial Crime Technology
The rapid increase in the amount of available data, which led to a decline in data quality, has led to the emergence of new solutions and concepts (AI being just one) that represent a dramatic shift in the role technology plays in the industry. This holds true whether your organization is in fintech, investment banking, or any other sector serving customers. The AI revolution has the potential to accelerate all transformations, and the first step to readiness is getting familiar with the new terminology that underpins
these new opportunities.
Generative AI is revolutionizing fraud detection, compliance, and customer personalization. It automates financial reporting, generates investment advice, and enhances efficiency.
Agentic AI goes further, autonomously acting on insights, orchestrating workflows, executing transactions, and adapting to evolving threats with minimal human intervention. It can monitor live financial data, restructure payment priorities, and dynamically adjust asset allocations in real time.
Business Orchestration and Automation Technology (BOAT) platforms provide the infrastructure for deploying and managing intelligent agents, ensuring seamless workflows and coordinated action across the financial ecosystem. This is crucial for integrating AI-driven functions like financial crime prevention, customer onboarding, and regulatory compliance.
While these technologies offer significant benefits, they also present new opportunities for threat actors. Criminals are increasingly leveraging generative AI to craft highly convincing phishing emails, deepfake audio and video, and synthetic identities that can bypass traditional security measures. Agentic AI can be used to automate money laundering, execute rapid fraudulent transactions, and adapt attack strategies in real time to evade detection. Furthermore, sophisticated automation platforms allow cybercriminals to coordinate large-scale attacks, exploit vulnerabilities in financial systems, and orchestrate complex fraud schemes with unprecedented speed and efficiency. As AI capabilities advance, the arms race between defenders and attackers in the financial sector is set to intensify, making robust, adaptive security measures more critical than ever.
Geopolitics and the Escalation of Financial Crime
Geopolitical tensions and economic fragmentation have made financial crime more sophisticated and globalized. Governments around the world have started to take notice. The United Kingdom’s newly released National Security Strategy 2025 (NSS) marks a pivotal shift in the government’s approach to safeguarding its people and interests in an era of unprecedented geopolitical volatility. Traditionally focused on defence and counterterrorism, the NSS now places financial crime—such as money laundering, kleptocracy, and sanctions evasion— in a central place as part of national security policy, recognizing the profound threat illicit finance poses to the UK’s economic and political stability. This is no small challenge: it is estimated that up to £100 billion is laundered through the UK or UK corporate structures every year, while the total cost of fraud against individuals exceeds £6.8 billion annually.
Recent statistics underscore the immense and growing risks posed by both money laundering and cybercrime worldwide. Money laundering is estimated to account for up to 3.6% of global GDP each year, reflecting the vast scale of illicit financial flows and the challenge they present to regulators and financial institutions6. Practically speaking, money laundering fuels a wide range of dangerous activity. It is the source of funding to human trafficking, fraud (perpetrated by professional organizations who need to be paid), terrorism, and all other violent crimes we may think about that need to be financed and the way to finance them is, by definition, through money laundering.
Increasingly, experts are pointing to the growing connection between cybercrime and money laundering. There is even a term for this: cyber laundering. The cost of cybercrime is projected to reach $10.5 trillion globally by 2025, as criminals increasingly exploit digital platforms and financial services to conceal the origins of illicit funds. Cybercrime is considered a predicate offense to money laundering (there are 22 of those under The European Union’s 6th Anti-Money Laundering Directive) because it generates illegal proceeds that need to be disguised by laundering before they can be entered into the legitimate financial system.
The main risk vectors can be summarized as follows:
Sanctions Evasion: As sanctions regimes proliferate, sanctioned entities adapt quickly, exploiting new technologies and regulatory arbitrage across jurisdictions.
Terrorist Financing: Ongoing conflicts and the rise of extremist groups keep terrorism financing risks in flux, requiring FIs to maintain global awareness and adapt monitoring strategies.
Cybercrime and Hybrid Threats: State and non-state actors use AI and advanced technologies to obfuscate fund origins, evade detection, and build complex cross-border networks.
The Regulatory and Compliance Response
Regulators are responding with new frameworks for digital assets, RegTech solutions, and a heightened focus on consumer protection and data security. However, the pace of innovation often outstrips regulatory adaptation, creating vulnerabilities that sophisticated actors can exploit.
The Path Forward: Building Resilience and Agility
The Takeway: Geopolitical developments (e.g. wars, sanctions, operations by hostile nation states) have become the main driver to the need to invest in Economic Crime controls in the financial industry.
Looking ahead – what can financial firms expect? 🔮
1. The convergence of geopolitical instability, technological innovation, and increasingly sophisticated criminal tactics means that financial services firms in the UK will face an even more challenging environment in the near future.
2. As the government implements the ambitious measures outlined in the NSS 2025, firms can expect heightened regulatory scrutiny, more frequent and complex sanctions updates, and a growing expectation to detect and disrupt illicit financial flows at speed and scale.
3. The rise of cyber laundering, the use of AI by both criminals and compliance teams, and the proliferation of state-sponsored financial crime will demand continuous investment in technology, talent, and sharing of actionable intelligence.
4. Those financial institutions that proactively adapt—by strengthening their risk frameworks, embracing advanced analytics, and fostering a culture of constant innovation —will not only meet regulatory expectations but also strengthen their brand by playing a critical role in safeguarding their customers.
To thrive in this environment, financial institutions must:
Invest in AI-driven innovation and data quality to stay ahead of both criminal and competitive threats.
Adopt flexible orchestration technology to integrate legacy and next-generation systems.
Foster international partnerships to harmonize standards and share intelligence.
Balance automation with human expertise, as AI alone cannot address the full spectrum of emerging threats.
Conclusion
The convergence of AI, geopolitics, and financial crime is creating a new, complex battlefield for financial services. The institutions that succeed will be those that anticipate divergent futures, invest in robust technology and governance, and build resilience against both technological and geopolitical shocks. Those FI will demonstrate, that in this new era, the fight against financial crime is not just about compliance—it is about securing rapid, sustainable growth and market leadership in a rapidly changing world.
Yair Samban
is a senior leader with years of practical experience in Artificial Intelligence, Financial Crime & Compliance (FCC) and counter-terrorism. His background includes leadership roles at global technology firms (NICE-Actimize, Pega, Matrix) and advising to financial institutions across the globe.
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