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Deep within the world’s interconnected financial systems, criminal business is flourishing.
Shocking findings were revealed on the Nasdaq stock exchange on Tuesday.
According to a Nasdaq study, more than $3 trillion in illicit funds entered the global financial system in 2023. This includes $782.9 billion for drug trafficking activities, $346.7 billion for human trafficking, and $11.5 billion for terrorist financing.
In addition, there were $485.6 billion in losses due to various frauds and bank frauds worldwide.
“These are just staggering statistics,” Nasdaq CEO Adena Friedman told Yahoo Finance Live at the World Economic Forum in Davos, Switzerland.
Nasdaq added that this number was only a “portion” of the “actual scope” of financial crimes last year.
“Given how much crime goes unreported by victims and undetected in the current financial system, the true scale cannot be accurately measured in numbers,” the report continues. ing.
The findings were drawn primarily from 209 financial crime prevention professionals from North American banks and nonbank institutions with assets ranging from $10 billion to more than $500 billion.
Friedman said the financial system is at risk if financial institutions, governments and other stakeholders do not adequately address fraud issues.
“No single bank, no single institution can solve this problem alone. Law enforcement alone can’t solve this problem alone,” Friedman said. “So it has to be a public-private partnership. It has to be banks working together, sharing information so that we can actually tackle the problem together, and also working closely with law enforcement.”
Given the scope of the problem, Friedman, who has headed Nasdaq since 2017, has moved the stock exchange from being just a destination for listing and trading tech stocks to helping financial institutions combat fraud. is trying to reposition itself.
In 2020, Nasdaq acquired financial crime software company Verafin for $2.75 billion. This business became a major pillar of growth for the company.
Verafin saw a 29% year-over-year revenue increase in the third quarter due to adoption of anti-fraud and anti-money laundering solutions by small and medium-sized banks. Existing customers also brought additional business to his Verafin.
The company recently appointed Brendan Brothers to lead its new financial crime unit. Brothers is a co-founder of his Verafin.
“Verafin was a home run,” JPMorgan analyst Michael Cho said in a client note obtained by Yahoo Finance. “While the competitive environment is always a consideration, Verafin has been replacing internal systems to gain market share from competitors and further penetrate the market.”
Brian Sozzi I’m the executive editor of Yahoo Finance. Follow Sozzi on Twitter/X @BrianSozzi And even more linkedin. Have a tip about a deal, merger, activist situation, or more? Email brian.sozzi@yahoofinance.com.
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