Overview
Financial crime has become a major national security threat, driven by globalization, technological change, and increasingly sophisticated criminal networks. Illicit finance—estimated at more than $3.1 trillion globally—enables transnational criminal organizations, terrorist groups, and hostile states to evade sanctions, fund weapons programs, and undermine traditional tools of economic statecraft. As a result, illicit finance is increasingly viewed as a strategic instrument of power, sometimes rivaling the traditional economic component of the national security framework known as DIME (Diplomatic, Information, Military, Economic).
Relationship Between Financial Crime and National Security
Modern financial crime extends far beyond traditional money laundering. Criminal organizations and state-backed actors exploit cryptocurrencies, digital platforms, and professional intermediaries to move and conceal funds. Emerging technologies – especially artificial intelligence – are lowering barriers to criminal activity by enabling automated fraud, deepfake scams, ransomware attacks, synthetic identity fraud, and other complex schemes. At the same time, geopolitical tensions and declining cooperation among major powers are weakening international law enforcement collaboration, making it harder to investigate and prosecute transnational crimes.
Recent Trends in Digital Financial Crime
Digital assets have become an important channel for illicit finance. Illicit actors collectively hold tens of billions of dollars in cryptocurrency, including large holdings in Bitcoin, Ether, and stablecoins. Criminals are also adapting their laundering techniques by routing funds through multiple intermediary wallets, using addresses for shorter periods, and developing new infrastructures for converting digital assets into traditional currency. These tactics complicate detection and enforcement efforts.
Evolving Terrorist Financing Methodologies and Motivations
Terrorist organizations likewise rely on evolving financing strategies. According to the Financial Action Task Force (FATF), terrorist groups must continually raise, move, and use funds, often adapting quickly when authorities disrupt established channels. Their financing frequently overlaps with other criminal activities such as drug trafficking, human trafficking, kidnapping, extortion, and illegal resource extraction. Despite these risks, FATF assessments show that about 69% of jurisdictions have significant deficiencies in investigating and prosecuting terrorist financing cases.
International Cooperation and the Role of Technology and Innovation
Because financial crime is inherently transnational, international cooperation is essential. Organizations such as FATF, the Egmont Group, INTERPOL, and the UN Office on Drugs and Crime promote collaboration among financial intelligence units and law enforcement agencies.
Technology and innovation plays a role in combating illicit finance. Governments and regulators are encouraging financial institutions to adopt advanced tools such as digital identity verification, blockchain analytics, and AI-driven monitoring systems. Privacy-preserving compliance technologies and decentralized identity frameworks may allow institutions to perform customer due diligence while protecting sensitive data. Meanwhile, specialized analytics firms are helping authorities trace suspicious digital asset transactions in real time.
Bottom Line
Ultimately, a whole-of-government approach that integrates financial regulation with national security strategy is critical. Within financial institutions, the Three Lines of Defense (3LOD) framework – business operations, compliance and risk management, and internal audit – can serve as a critical mechanism for identifying and disrupting illicit financial activity. By combining stronger public-private partnerships, improved data integration, and advanced technological tools, governments and financial institutions can better protect the global financial system and address the growing national security risks posed by financial crime.
About the Author: Alma Angotti
Alma Angotti is a recognized expert in financial crime compliance and economic sanctions with more than 30 years of experience in both regulatory enforcement and global consulting. Alma has held senior enforcement roles at the U.S. Securities and Exchange Commission (SEC), the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) and the Financial Industry Regulatory Authority (FINRA). She brings deep subject matter expertise in regulatory compliance, including Bank Secrecy Act/Anti-money Laundering (BSA/AML), sanctions, and counter-terrorist financing (CFT).
At FTI Consulting, Alma advises clients on compliance risk assessments, remediation strategies, enforcement preparedness and regulatory investigations. Her clients include global and mid-sized financial institutions; global fintech firms; digital assets and payments institutions; stablecoins and cryptocurrency platforms; broker-dealers; hedge funds; casinos; and multinational corporations.
Alma serves on the advisory boards of the Global Digital Asset and Cryptocurrency Association and the Digital Dollar Project. At FinCEN and FINRA, she designed and led the AML enforcement programs and regularly trains regulators and government officials worldwide on AML and financial crime compliance matters. Additionally, she has been approved to be an independent compliance monitor by federal and state regulatory agencies, including the SEC, the Office of the Comptroller of the Currency (OCC) and the New York State Department of Financial Services (NYDFS).
About the Author: William Jannace
William Jannace is an Associate Professor at the Dwight D. Eisenhower School for National Security and Resource Strategy/National Defense University, where he teaches courses on economics and finance and national security. He has also served as an expert witness for The Bates Group on securities litigation matters. He is also an adjunct professor/lecturer at Fordham School of Law, Global Financial Markets Institute, and Metropolitan College, where he teaches courses covering Capital Markets/Digital Assets/Securities Regulation and Corporate Governance; State Capitalism, AML/Cybersecurity; Geopolitics/Geo-Economics, and U.S. Foreign Policy/International Relations, and Grand Strategy.
Mr. Jannace had previously worked at the American and New York Stock Exchanges, FINRA and several investment banking firms. He was also an account executive at Georgeson and D.F. King where he worked on proxy fights and tender offers. He has also served as a consultant for The World Bank and the Asian Corporate Governance Association. He has also lectured at the U.S. Army War College.
Mr. Jannace has also conducted overseas training programs for the: Russian Securities Commission/Stock Exchange; The Capital Markets Authorities in: Uganda, Burundi, Tanzania and Kenya; Saudi Arabian Capital Markets Authority; Securities and Exchange Board of India; Ukrainian Securities Commission/Stock Market; Romanian Securities Commission; Jordanian Securities Commission; Capital Markets Authority of Turkey; Albanian Financial Supervisory Authority; New York Institute of Finance- Beijing/China, the Taiwan Stock Exchange and for IOSCO in Spain.
He is a member of the faculty advisory group of Board Intelligence. He is also a CIArb Fellow, a member of the Association of Certified Anti Money Laundering Specialists, International Institute for Strategic Studies, New York International Arbitration Center, and Bretton Woods Committee. He is also a supporter of the National World War II Museum, American Battle Monuments Foundation, and National D-Day Memorial. Mr. Jannace received his JD from New York Law School, and his LL.M. in Corporate, Banking, and Finance Law from Fordham Law School.
The views expressed herein are those of the author(s) and not necessarily the views of the Dwight D. Eisenhower School for National Security and Resource Strategy/National Defense University, The Department of Defense, and FTI Consulting, Inc., its management, its subsidiaries, its affiliates, or its other professionals. FTI Consulting, Inc., including its subsidiaries and affiliates, is a consulting firm and is not a certified public accounting firm or a law firm. FTI Consulting is an independent global business advisory firm dedicated to helping organizations manage change, mitigate risk and resolve disputes: financial, legal, operational, political & regulatory, reputational and transactional. FTI Consulting professionals, located in all major business centers throughout the world, work closely with clients to anticipate, illuminate and overcome complex business challenges and opportunities. www.fticonsulting.com.
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