Financial institutions are increasingly integrating their fraud and anti-money laundering (AML) systems, but intelligence and governance gaps remain.
New fraud and AML convergence research from Datos Insights, commissioned by data and AI leader SAS, finds 86% report missed links between fraud activity and money laundering.
Fraud and AML Convergence: Closing the Speed Gap – based on a survey of 165 fraud and AML executives across 21 countries in seven global regions – examines the convergence of fraud prevention and AML compliance, commonly called FRAML. The report argues that real-time payments now move funds faster than institutions can connect their fraud and AML intelligence and intervene.
“Fraud and AML teams can look at different pieces of the same risk and still miss the connection,” says Serpil Hall, strategic advisor for fraud and AML at Datos Insights. “Technology can help bridge those gaps, but technology alone is not the answer. The institutions making progress are also connecting data, case management, investigations and information sharing so they can see more of the risk in broader context and act sooner.”
Shared infrastructure ≠ shared intelligence
Historically, banks’ fraud and anti-money laundering units were not designed to operate as a unified function. Each answers to different regulations and runs on different legal clocks. Institutions are closing the gap where it’s least disruptive: the technology. Meanwhile, changes that require people and process shifts lag behind.
The result is connected systems but disconnected intelligence.
- 71% are actively converging fraud and AML detection and monitoring technology, but only 13% are doing the same for governance, policies and organisational structure.
- 72% run fraud and AML analytics on shared infrastructure but keep separate models and processes; just 1% report sharing data, models, infrastructure and governance across both functions.
- 87% describe their ability to build a unified view of customer risk across fraud and AML as partial, with significant gaps.
Silos remain the biggest barrier to greater alignment between fraud and AML. Nearly 9 in 10 (88%) institutions rate organisational silos, including separate reporting lines, as a primary or major barrier, ahead of technology limitations (73%) and data governance and quality issues (70%).
The strain is felt in day-to-day operations, too: 64% cite legacy technology among their biggest internal challenges, while 63% call out high false-positive rates.
Inside the speed gap: Real-time payments, next-day detection
Fraud systems score transactions in milliseconds, while AML monitoring typically runs after the fact, often in overnight batches. As real-time payments become the norm, the margin between the two is fading.
Nearly three-quarters of institutions (73%) say their fraud and AML teams share data often or always during active investigations. That figure drops to just 17% for automated monitoring – the layer that works without someone needing to notice a problem first. The result is often a connection made after an investigation is initiated rather than one flagged automatically before money moves.
Operating separately carries measurable consequences, too, including duplicate alerts or cases, cited by 81% of institutions, and higher operating costs from duplicated teams or technology (71%).
“Financial crime convergence is a risk problem, not just a compliance exercise,” says Stu Bradley, senior vice-president of risk, fraud and compliance solutions at SAS. “Regulators will increasingly expect institutions to identify and prevent illicit behaviour before the money laundering even starts. That’s only possible when fraud and AML are working from the same strategic playbook and sharing data up front.”
FRAML, from concept to market reality
The research findings arrive as fraud and AML convergence evolves from a long-discussed industry concept into a real-world operating model. Urgency is increasing as AI-charged scams, deepfakes, mule networks and real-time payments further blur traditional boundaries between fraud and money laundering.
“Many of the banks I speak with are already sharing data or exploring common case management, with the aim of getting fraud and AML working closer to real time,” says Hall.
For institutions still early in the process, the report outlines practical first steps, such as connecting their existing fraud and financial crime compliance solutions rather than replacing them.
“Institutions don’t have to rip and replace their entire financial crime ecosystem to make progress,” says SAS’ Bradley. “Modernise step by step. Start with the risks that matter most, strengthen data sharing across the monitoring lifecycle and ensure a shared investigative environment.”