Top Drivers Of Change In Fraud And AML Compliance

Hawk and Celent recently joined forces to produce our insightful new report, Trends in AML & Fraud Convergence in US Mid-Market Banks & Credit Unions, to investigate why many banks are converging their fraud prevention and AML programs.  

The 34-page report is packed with stats – you can download it here:

[Access the full report]

One of the most revealing sections sets out the drivers of change for AML and fraud. What is it that prompts banks and credit unions to review their anti-financial crime processes, technology and teams? 

Containing the rising cost of compliance 

The biggest driver of change is containing cost. It’s easy to see why: in its True Cost of Compliance report, LexisNexis found that 78% of smaller financial institutions had seen higher increases in labor-related compliance costs. Converging the approach to fraud and AML can certainly help to keep costs down – as can the use of proven, innovative technology.  

It’s why more firms are turning to:  

• AI and automation as the key to reducing false positives and manual effort
• Unified platforms to break down silos and duplicated work between fraud and AML teams
• Cloud-based or modular solutions to scale cost-effectively  

Criminal tactics are outpacing legacy systems 

In its 2025 report, Germany’s Financial Intelligence Unit (FIU) flagged an 8.2% surge in crypto-related AML reports, rising from 8,049 to 8,711 suspicious activity reports – now making up 3.3% of all SARs. It’s yet more proof that modern threats demand smarter, real-time defenses. 47% of firms agree that, to keep pace, financial companies need real-time, adaptive fraud and AML tools.

Customer friction #1: Outdated fraud systems risk driving away customers

The need to reduce customer friction is the third biggest driver for change. On one hand, eliminating friction entirely isn’t possible if customers are to be protected from scams. On the other, too many step-up verification processes can create frustration and potential embarrassment for customers trying to make legitimate transactions. Firms that can find the balance between preventing fraud and safeguarding the user experience will also find a competitive edge.

The digital finance explosion is rewriting the rulebook 

Embedded finance, instant payments, and neobanks are growing rapidly - embedded finance is set to triple to $250 billion by 2029, instant payments surged 40% in one year, and neobanks’ market value is expected to reach $2 trillion by 2030, growing over 50% annually. As 40% of survey respondents overhaul strategies to keep pace with the digital finance revolution, a new era of smarter, faster AML frameworks is emerging.

Rising crime volume is straining teams  

The pressure to scale detection without increasing budgets is intense. Automated, scalable systems are no longer optional but mandatory.

AML systems need to keep pace with regulation

33% of the respondents said that keeping up with regulatory expectations is a key driver of how they adapt their AFC programs. This aligns with a 2024 survey by ACAMS, which found that 68% of US financial institutions view interpreting and implementing new guidance from FinCEN and other regulators as a major challenge.

Customer friction #2: Aging AML processes are damaging customer relationships

AML processes can affect customers in a number of ways, from intrusive onboarding and KYC processes through to blocked transactions and account freezes. Ensuring that systems are integrated so that customers are not impacted when information isn’t shared is key to keeping the friction to a minimum.

Artificial intelligence and innovation aren’t optional, they're essential

A quarter of the respondents said that new AFC technology is a driver for change. It’s easy to understand why as traditional AI, generative AI and now agentic AI are making a huge impact on the efficiency and effectiveness of AFC programs. Financial institutions are changing from outdated legacy systems to newer solutions. 

Meeting the challenges with Hawk 

Hawk is helping financial institutions to meet these challenges with our integrated platform for AML, screening, and fraud prevention. Hawk enables smarter, faster detection of suspicious activity while reducing false positives and operational overheads. Designed for modern financial crime risk management, Hawk’s platform supports regulatory compliance, enhances customer experience, and scales effortlessly with the growing complexity of the threat environment.   

Our report with Celent, Trends in Fraud & AML Convergence at US Mid-Market Banks & Credit Unions, examines the current approach to fraud risk and anti-money laundering operations in US mid-market banks, credit unions, and neobanks. The study highlights the challenges and opportunities these institutions face in integrating fraud and AML functions to enhance efficiency and effectiveness. Read the full report.