Financial crime now poses a direct threat to national security and economic stability, according to Financial Conduct Authority chief executive Nikhil Rathi, who has called for a more coordinated and technology-driven response across the financial system.
Speaking at the FCA’s Working together to fight financial crime conference, Rathi said organised criminal groups are increasingly exploiting gaps between firms, regulators and institutions while using technology to scale fraud, money laundering and cyber-enabled crime at pace.
Rathi warned that financial crime networks are becoming more sophisticated and globally connected, with proceeds from fraud helping to fund wider criminal activity and destabilising activity linked to hostile state actors.
He said: “I’ve said before that separating financial services from national security is outdated and dangerous.
“This is a question of fundamental economic and national security.”
Rathi said investment fraud alone is leaving victims with average losses exceeding £25,000, while criminal networks operate across borders using increasingly advanced methods to exploit the financial system.
He said: “These groups are blending fraud, money laundering, sanctions evasion and cyber-enabled crime.
“Putting at risk trust in the whole financial system, even economic growth. Funds that could be productively invested, diverted instead into criminal coffers.”
The FCA chief executive argued that existing approaches based around individual institutional responsibilities are no longer sufficient to combat modern financial crime threats.
He said: “Historically, we’ve organised our responses around institutional boundaries. Each firm or authority focused on its own remit and responsibilities.
“But criminals today don’t see our org charts. They see seams.”
Rathi outlined three areas he believes require significant change across the system: greater information sharing, wider use of technology and deeper collaboration between regulators, firms, Government and law enforcement agencies.
He highlighted the FCA’s increasing use of advanced analytics, data tools and intelligence-sharing systems, including work with the National Crime Agency and Police National Database. The regulator has also processed more than 52 million intelligence records through its infrastructure.
However, Rathi warned regulators and firms will need to prioritise resources as financial crime volumes and complexity continue to grow, particularly with the rise of artificial intelligence.
He said: “The threat isn’t coming – it’s here.
“At these levels, it is simply not possible to chase every single lead.
“So we need to be candid that we won’t be able to defend everything equally.”
Rathi added that stronger financial crime defences are essential to maintaining trust in financial services and supporting long-term economic growth.
He said: “If the threat is adaptive, our defences have to be, too.
“And teamwork and a partnership that spans sectors and borders is our strongest weapon against financial crime.”
