• Fraud now accounts for over 40% of reported crime in the UK
• 57% of banks lost more than $500,000 to fraud in 2023
• Digital payment fraud hit $485.6bn globally last year
• Synthetic identity fraud alone could cost $23bn in the US by 2030
• AI-driven fraud schemes now make up 34% of fraud cases
• Financial institutions spend £38.3bn annually on compliance
• Compliance costs have risen 33% since 2021
• AI and ML are central to future fraud and AML detection
• Two-thirds of banks are unprepared for emerging fraud risks
• Fraudsters now use cybercrime-as-a-service to scale attacks

Fraud has emerged as one of the most urgent threats facing the financial services sector, with criminals exploiting rapid technological change to outpace banks' defences and inflict record-breaking losses.

A flood of AI-enhanced attacks, synthetic identity schemes, and cybercrime-as-a-service models are transforming the nature of fraud and stretching compliance teams to the limit.

In 2023 alone, global fraud losses through digital payments reached $485.6 billion, according to Nasdaq Verafin.

In the UK, fraud made up over 40 percent of reported crime, while the global cost of financial fraud is forecast to exceed £500 billion a year. And yet, many financial institutions are still underprepared.

A joint whitepaper from Themis and Bottomline revealed that two-thirds of commercial banks are not equipped to handle emerging fraud risks.

The scale of the threat is staggering. A 2024 report from Alloy found that 57 percent of banks, credit unions, and FinTechs experienced direct fraud losses over $500,000 in 2023.

More than a quarter reported losses over $1 million. These figures only scratch the surface, excluding the indirect costs of investigation, customer attrition, and reputational damage.

Fraud tactics are evolving fast. Synthetic identity fraud – where criminals combine stolen and fake data to open accounts – is projected to cause $23 billion in US losses by 2030.

Deepfakes and AI-powered impersonation scams are proliferating. NatWest reports that AI-driven fraud now accounts for more than a third of fraud crimes in the UK.

Criminal networks are also adopting industrial-scale methods. Cyber crime-as-a-service, where malicious tools are rented or sold to other fraudsters, is now a $1.6 billion annual industry, according to Field Effect.

These services allow low-skill actors to launch sophisticated attacks, increasing both the scale and complexity of the threat.

Banks are responding with heavy investment in artificial intelligence and machine learning to detect suspicious patterns and reduce false positives.

AI is being used to scan transactions in real time, automate reporting, and provide dynamic risk scoring. Boston Consulting Group estimates that AI can cut fraud-related losses by up to 30 percent per year.

Anti-money laundering efforts are also being reshaped by automation. While traditional AML methods rely on static thresholds and manual review, AI-powered systems can analyze vast volumes of transaction data and detect anomalies previously missed.

According to LexisNexis, 40 percent of firms have already adopted machine learning in due diligence processes, and 58 percent plan to do so within three years.

But these advances come at a cost. In the UK alone, financial firms are now spending £38.3 billion annually on compliance—a 33 percent increase since 2021. Onboarding and screening processes cost firms an average of £21,000 per hour, a burden that continues to rise as regulations tighten and fraud threats multiply.

Despite these efforts, fraudsters continue to find gaps—particularly in the cracks between institutions, systems, and geographies.

As firms adopt new technologies to remain competitive, their risk management frameworks are struggling to keep up. Many lack the internal controls, technical expertise, or integrated systems needed to fully deploy AI-based defenses.

The white paper sent a clear message: staying ahead of financial crime means combining cutting-edge technology with strong governance and rapid adaptability. Without that, the cost – both financial and reputational – will only continue to climb.