Nasdaq's 2024 Global Financial Crime Report, recently released, revealed a staggering $3.1 trillion in illicit funds that flooded the global financial system last year. The report, which surveyed over 200 anti-financial crime professionals from financial institutions in North America, throws light on the disturbing prevalence of various criminal activities contributing to this massive sum.

The report identifies three major contributors to the $3.1 trillion in illicit flows:

• Drug Trafficking Activity: A staggering $782.9 billion was funneled through the global financial system due to drug trafficking activities.
• Human Trafficking: The insidious crime of human trafficking accounted for $346.7 billion in illicit funds.
• Terrorist Financing: The report revealed $11.5 billion associated with terrorist financing.

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Financial Institutions Grapple with Fraud and Scams

Fraud scams and bank fraud schemes posed significant threats, resulting in global losses of $485.6 billion. Within this category, a breakdown includes:

• Payments, Check, and Credit Card Fraud: Nearly $450 billion in losses, with cheque fraud alone contributing over $20 billion in losses in the Americas, constituting almost 80% of total global cheque fraud losses.
• Payments Fraud: Emerging as the leading cause of fraud losses in every region worldwide.
• Cyber-Enabled Scams: Business Email Compromise, a prevalent cyber-enabled scam, accounted for $10 billion in losses globally.
• Romance Scams and Confidence Schemes: Shockingly, nearly $4 billion in losses were attributed to romance scams and other confidence schemes.

Nasdaq Chair and CEO Adena Friedman emphasized the need for a collective effort to address the complex issue of financial crime. Friedman stated:

“There is an opportunity to work together on a framework and align on measures of success for effective anti-financial crime programs. We all have a responsibility — to ourselves and to the world — to be part of the solution.”

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Crypto Not the Culprit, Stablecoins Take Center Stage

Contrary to expectations, the report did not mention cryptocurrencies, including Bitcoin or Ether, in any of the illicit activities. Gabor Gurbacs, the director of Digital Assets Strategy at VanEck, pointed out the absence of mentions of BTC, crypto, or stablecoins in the Nasdaq report. Gurbacs pointed towards banks and institutions as the "main conduit" for criminal activities, reinforcing the need for collaborative efforts in curbing financial crimes.

Instead, a report by blockchain analytics firm Chainalysis revealed that within the crypto space, stablecoins emerged as the "cryptocurrency of choice" for criminals in 2022 and 2023. The illicit transaction volume of stablecoins surpassed that of traditional cryptocurrencies.