It began with a single transaction, a seemingly innocuous wire transfer. Except that, on closer inspection, investigators found it was linked to a series of other suspect payments across accounts, borders, and payment instruments. In total, millions of US dollars had been moved, mostly without detection. 

For payment service providers, every transaction is a risk event. This is the world of the payment ecosystem, the lifeblood of international trade.

Every Transaction Matters: The Financial Crime Risk in Payments

What is the payment ecosystem?

The payment ecosystem is described as the ecosystem that facilitates the movement of money. Many think that it is just banks and credit cards, but it is more than that. The payment ecosystem infrastructure includes a complex web of consumers, merchants, card schemes, fintechs, and systems that facilitate everything from buying a morning coffee to paying an invoice.

In 2026, the global digital payments market is predicted to break the $10 trillion mark, with much of this value flowing across sophisticated payment service providers.¹ 

However, with scale comes risk: the greater the velocity and interconnectedness of money, the greater the opportunity for bad actors to infiltrate and exploit weaknesses.

Why are payment systems a target for financial crime?

Wherever large sums of money are moved quickly, organized crime will always seek ways to get involved. The payment ecosystem, which includes speed, volume, and interconnectedness, is a prime target for bad actors to commit crimes.

1. Volume obscures risk

In 2025 alone, more than 700 million credit and debit card details were compromised by fraud worldwide.² Individually, each of these transactions would have traversed several payment systems in a matter of milliseconds, leaving little time for these systems to detect and flag in real or near-real time, without recourse to sophisticated technologies.

2. Interconnectedness facilitates money laundering

One of the fastest-growing areas for payments is cross-border. 40% of global payment volume involves international transfers.³ While this is great news for global trade, it is also an opportunity for money launderers to use jurisdictions with weaker anti-money laundering monitoring (AML) controls to clean illicit funds. The Financial Action Task Force (FATF) reported that more than $1 trillion is laundered around the world every year, often using legitimate payment channels to mask the proceeds of crime.

3. Diversity of participants introduces diversity of risk

The last few years have seen an explosion in fintechs, non-bank payment service providers, and digital wallets. This has provided more services worldwide. However, this diversification also allows new interfaces and data flows that need to be monitored. Criminals are increasingly exploiting these oversights.

The Financial Crimes

The payment ecosystem is being exploited for a variety of crimes, including:

• Fraud, including card-not-present fraud, account takeover, and identity theft, is estimated to cost US businesses more than $40 billion a year.

• Money laundering is the disguising of the proceeds of illicit activity through legitimate payment channels.

• Sanctions evasion, inadvertently providing financial services to entities or individuals subject to economic sanctions.

• The financing of human exploitation, using legitimate payment systems to funnel revenue from human trafficking networks.

So much so that several major schemes have introduced new rules aimed specifically at preventing the exploitation of individuals for financial gain.

Know your customer (KYC) regulations are broadening

Traditionally, KYC regulations have been focused on banks and other financial institutions. Now, KYC compliance has been expanded to include corporations, payment facilitators, and commercial customers.

Reporting on cross-border activity

Regulators are demanding greater visibility into cross-border activity, particularly when they involve jurisdictions that are defined as high risk.

Data and financial crime controls

Payment providers face a tough challenge: stopping fraud without breaking privacy rules.

Today’s payment service providers need to move beyond the batch reporting typical of the past and toward real-time monitoring, behavioral analysis, and collaborative intelligence.

What does this mean for PSPs?

Financial crime risk management in payments will require a change:

• Real-time analytics and batch reporting are no longer enough. To identify suspicious activity at the speed of each transaction, machine learning and behavioral profiling are required.

• Identity intelligence, PSPs need to bring identity risk indicators into their decision-making, alongside payment risk flags. This will help prevent the onboarding of high-risk customers in the first place.

• Collaboration among financial institutions, fintechs, law enforcement, and regulators will be essential to keep pace with evolving financial crime threats.

• Continuous innovation in compliance, Payment providers need to invest in smart compliance tools to keep up with changing rules and stay ahead of the competition.

The payment ecosystem is the circulatory system of the modern economy. Each compromised transaction can cause financial loss and enable criminal organizations. Changing how crime risk is managed in the payments ecosystem is not just about checking a compliance box; it is about safeguarding international trade.

In a world where a single transaction can have second- and third-order effects, the question is no longer whether financial crime will happen, but whether your organization is ready for real-time transaction monitoring solutions.