Speed and Deception: How Instant Payments and Hybrid Scams are Outpacing Financial Crime Defences
A fundamental shift in financial crime is forcing banks and regulators to rethink how they combat illicit finance. Criminals are no longer specialising; they are weaving together fraud, money laundering, cyber-attacks, and sanctions evasion into complex, high-speed schemes that exploit the very systems designed for convenience, such as instant payments. This convergence of threats has turned what was once a strategic goal for compliance departments—creating a unified defence—into an urgent operational necessity.
Background and Context
The landscape of financial transactions has been reshaped by the demand for speed. Systems like the UK's Faster Payments Service and the U.S. FedNow network allow money to move in seconds, collapsing the detection window that financial institutions once relied on to identify suspicious activity. This acceleration, coupled with the increasing sophistication of cyber-enabled crime, has created a perfect storm. A single phishing attack can now trigger an account takeover, which in seconds feeds a money laundering network, potentially moving funds across borders before traditional, retrospective checks can even be initiated.
Key Figures and Entities
Industry experts highlight that this evolution demands a new philosophy of compliance. According to Sebastian Hetzler, co-CEO of financial crime compliance firm IMTF, the change is driven by the fact that "financial crime itself has converged." He explains that modern typologies rarely sit within a single domain. "Fraud increasingly feeds money-laundering flows, cyber-enabled attacks accelerate account compromise and mule activity, and sanctions evasion exploits trade and crypto channels," Hetzler notes. This interconnectedness means that "treating these risks in isolation creates blind spots at exactly the points criminals exploit."
Legal and Financial Mechanisms
The traditional compliance model, with its distinct teams for fraud, anti-money laundering (AML), and sanctions, is structurally ill-equipped to handle these hybrid threats. A fraud investigation might close a compromised account, but it may fail to recognise that the stolen funds are part of a larger laundering scheme that an AML team would have flagged, had it seen the full context. Hetzler argues that these linear handoffs between specialised teams are no longer effective because criminal activity now unfolds across multiple stages "often within hours or minutes." The solution, he suggests, is a move towards cross-functional, intelligence-led workflows where alerts, customer data, network relationships, and external intelligence are assessed together in a unified case view. This requires moving from siloed data ownership to an integrated, 360-degree view of risk.
International Implications and Policy Response
The failure to adapt to converging risks poses a systemic threat to the integrity of the global financial system. Regulators and supervisors are increasingly aware of this gap and are shifting their focus. Instead of simply checking whether institutions have controls in place, they now demand evidence of "timely detection, coherent investigations, and explainable outcomes," Hetzler observes. International standard-setting bodies like the Financial Action Task Force (FATF) continue to push for greater transparency and effective, risk-based approaches. The challenge for policymakers is to foster international cooperation and develop frameworks that enable secure data sharing across borders and institutions, allowing them to keep pace with criminals who operate without regard for jurisdictional boundaries.
Sources
This report is informed by expert analysis from IMTF, public information on instant payment systems like Faster Payments and FedNow, and the standards and guidance published by international bodies such as the Financial Action Task Force (FATF).
