Illicit Edge Insights: 10 Surprising Facts About Financial Crime You Might Not Know: Unveiling the Hidden World of White-Collar Criminals

May 2023

Financial crime is a multifaceted issue that affects individuals, businesses, and even entire nations. While most people are aware of high-profile cases involving fraud, money laundering, and corruption, there are many lesser-known facts that shed light on the true complexity and scale of financial crime.

Here are 10 surprising facts about financial crime that you might not know, providing a more in-depth understanding of this hidden world:

1. Financial crime is more common than you think: According to a PwC Global Economic Crime Survey, nearly half of all organizations surveyed reported experiencing some form of financial crime in the past two years. Financial crime is not just limited to large corporations; small businesses are equally susceptible.

2. The global cost of financial crime is staggering: The United Nations estimates that the annual cost of financial crime worldwide is between $1.6 trillion and $2.2 trillion, which is approximately 3.5% of the global GDP. This immense financial burden affects economies, undermines the integrity of financial systems, and hinders social development.

3. Money laundering is a global issue: Money laundering is the process of concealing the origin of illicit funds to make them appear legitimate. The United Nations Office on Drugs and Crime (UNODC) estimates that between 2% and 5% of global GDP, or around $800 billion to $2 trillion, is laundered every year.

4. Tax evasion costs governments billions of dollars: According to the International Monetary Fund (IMF), governments around the world lose approximately $600 billion in revenue each year due to tax evasion. This lost revenue could be used to fund essential services, such as education, healthcare, and infrastructure.

5. Corruption remains a persistent challenge: Transparency International’s Corruption Perceptions Index (CPI) reveals that more than two-thirds of countries score below 50 on a scale from 0 (highly corrupt) to 100 (very clean), indicating that corruption remains a widespread issue across the globe.

6. Cybercrime is on the rise: As the world becomes increasingly digital, cybercrime has emerged as a significant threat. A report by Cybersecurity Ventures estimates that the global cost of cybercrime will reach $10.5 trillion annually by 2025, making it one of the most lucrative forms of financial crime.

7. The role of cryptocurrencies in financial crime: Cryptocurrencies, such as Bitcoin, have become a popular tool for financial criminals due to their anonymous nature and the difficulty of tracing transactions. However, blockchain technology, which underpins cryptocurrencies, is also being used to develop innovative solutions to combat financial crime.

8. Human trafficking generates billions of dollars in profits: Human trafficking is a form of modern-day slavery, with victims forced into labor, sexual exploitation, or other forms of servitude. The International Labour Organization (ILO) estimates that human trafficking generates around $150 billion in illegal profits each year.

9. The art world is a hotbed for financial crime: The high value and often unregulated nature of the art market make it an attractive target for financial criminals. Money laundering, tax evasion, and the sale of stolen or forged artwork are common forms of financial crime within the art world.

10. Financial crime has far-reaching consequences: Financial crime is not just a matter of monetary loss. It can lead to increased income inequality, reduced trust in financial institutions, and even fuel violent conflicts. Addressing financial crime is vital for promoting economic growth, social development, and global stability.

Financial crime is a complex and ever-evolving issue that affects individuals, businesses, and governments worldwide. By understanding the surprising facts about financial crime and the various forms it takes, we can better appreciate the true scale and impact of this hidden world. It is essential for individuals, businesses, and governments to work together to combat financial crime and promote a more secure and transparent global financial system.

Raising awareness about the prevalence and consequences of financial crime is a crucial step in this collective effort. By staying informed and vigilant, we can help disrupt the activities of financial criminals, protect our personal and organizational assets, and contribute to a more stable and prosperous future for all.