## FIGHTING TECH-FUELED CRIME

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**Canonical URL:** [FIGHTING TECH-FUELED CRIME](https://www.imf.org/-/media/files/publications/fandd/article/2025/09/el-khoury.pdf)

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### Overview
- The Department of Justice announced the largest-ever US crypto seizure: "$225 million" from pig butchering scams that use advanced technology and social engineering such as romance or investment schemes, often employing AI-generated profiles, encrypted messaging, and obscured blockchain transactions.
- Federal agents collaborated across jurisdictions and used blockchain analysis and machine learning to track "thousands of wallets" used to scam "more than 400 victims".
- The seizure was a significant enforcement success but also highlighted that authorities often play catch-up in a fast-changing digital world while criminals continue to adapt.

### Criminal techniques and trends
- Common techniques:
  - AI-generated profiles and bots for impersonation and deception.
  - Encrypted messaging apps and anonymity-enhancing tools to coordinate cross-border transactions.
  - Stablecoins and lightly regulated virtual asset platforms to hide bribes and embezzled funds.
  - Deepfakes, voice-cloning, and fake-document generators to bypass verification protocols.
- Criminal reliance on traditional finance persists (banks, informal money changers, cash couriers), but these channels are being reinforced or supercharged by new technologies.
- AI lowers barriers to entry, enabling fraudsters to bypass verification protocols many banks and regulators still use.

### Scale and key statistics
- Annual illicit crypto activity growth has averaged about "25 percent" in recent years.
- Illicit crypto activity may have surpassed "$51 billion" last year, according to Chainalysis.
- The DOJ action tracked "thousands of wallets" and more than "400 victims".
- India’s Unified Payments Interface records "more than 18 billion monthly transactions", demonstrating interoperability scale.

### Challenges for authorities
- Authorities are constrained by jurisdictional limits, legacy processes, and underresourced agencies, making tracking proceeds generated by organized crime nearly impossible in many cases.
- Delays in implementing the FATF’s “travel rule” hinder better identification of senders and receivers in cross-border digital transactions.
- Legal frameworks and supervisory models often lag, limiting timely access to digital evidence and oversight of nonbank financial institutions offering cross-border services.
- Fragmented and uneven regulatory responses, including in regulation of crypto exchanges, leave openings for criminals.

### Innovations, safe payment corridors, and positive developments
- Regional payment innovations illustrate potential to combine inclusion with AML/CFT considerations:
  - Singapore and Thailand have linked fast payment systems enabling real-time retail transfers using mobile numbers.
  - Indonesia and Malaysia have connected QR codes for cross-border payments.
  - India’s Unified Payments Interface shows how openness and standardization drive scale and inclusion ("more than 18 billion monthly transactions").
- The IMF’s “safe payment corridors” work helps countries build trusted channels for legitimate flows without undermining new payment platforms; a pilot with Samoa showed targeted safeguards and collaboration with regulated providers can preserve remittance access while maintaining financial integrity.
- The FATF issued a June recommendation requiring originator and beneficiary information for cross-border wire transfers, including those involving virtual assets, to enhance traceability.

### Policy recommendations and institutional actions
- Modernize cross-border payment systems focusing on transparency, interoperability, and risk-based regulation.
- Bring virtual assets under AML/CFT regulation and tighten regulation of virtual asset service providers.
- Invest in regulatory technology:
  - AI-powered transaction monitoring.
  - Blockchain analysis tools.
  - Capacity to trace crypto transfers and detect synthetic identity fraud.
- Strengthen human capital by hiring and retaining data scientists and financial crime specialists in enforcement and supervisory agencies.
- Foster public-private partnerships to codevelop tools that spot emerging risks.
- Adapt legal frameworks to enable timely access to digital evidence while preserving due process.
- Evolve supervisory models to oversee both banks and nonbank financial institutions offering cross-border services.
- Encourage consistent and coordinated implementation of FATF and Financial Stability Board global standards, supported by national investments in effective AML/CFT frameworks.
- Promote regulators and fintechs as partners and sustain multilateral engagement to foster fast, cheap, transparent, and traceable cross-border payments anchored on interoperable standards that respect privacy.

### Risks and consequences of inaction
- Fragmented efforts and technological lag in governments risk enabling criminals’ growing technological advantage, which can:
  - Undermine financial integrity.
  - Destabilize economies.
  - Weaken fragile institutions.
  - Erode public trust in systems meant to ensure safety and fairness.
- The cost of delayed responses is structural and systemic, not only fiscal.

*Chady El Khoury, assistant general counsel and division chief, IMF Legal Department.*

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_Source: https://www.imf.org/-/media/files/publications/fandd/article/2025/09/el-khoury.pdf_