Key insights:

• • • SAR volume is significantly underreported — Continuing and amended filings add approximately 20% to the official count yet remain invisible in trend analyses.

    • Filing activity is highly concentrated — A few large financial institutions dominate SARs volume, meaning trends reflect their practices more than systemic changes.

    • Agentic AI will drive a surge in SARs — Agentic AI risks increased noise over actionable intelligence, without addressing the unresolved question of whether current filings yield meaningful law enforcement outcomes.

The Suspicious Activity Reports (SAR) that financial institutions file with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) provide valuable insight, although they may not offer a comprehensive picture.

Prior to meaningful discussions regarding the future of SARs, it is essential for the financial crime community to clarify what is being measured. In 2025, for example, SAR filings of more than 4.1 million, representing an almost 8% increase compared to the total number of SARs filed in 2024.

Every figure FinCEN has published reflects original SARs only. Continuing activity SARs, which represent roughly 15% of all filings, are submitted under the original Bank Secrecy Act (BSA) identification number and never appear as new filings. Corrected and amended SARs add another 5% on top of that. This makes the real volume of SARs activity approximately 20% higher than what is reported.

The average community bank files fewer than one SAR a week, while the largest institutions file more than 500 a day.

Recent FinCEN guidance giving financial institutions more flexibility around continuing activity SARs sounds significant on paper, but as former Wells Fargo BSA/AML chief Jim Richards points out: “It won’t change the reported numbers — because those filings were never counted to begin with.” Financial crime professionals need to keep that gap in mind every time a trend line gets cited.

2025 was steady, not spectacular

There were roughly 300,000 SARs filed every single month of 2025, and the most notable thing is that nothing notable happened. That is likely a first on the volume side and worth acknowledging, but beyond that milestone the year did not hand financial crime professionals anything noteworthy. In a space that has dealt with pandemic distortions, crypto chaos, and fraud spikes that seemed to come out of nowhere, steady volume and predictable patterns are a little surprising. A quiet data set, however, is not the same as a quiet landscape, and financial crime professionals who are reading stability as stagnation may find themselves flat-footed when the numbers start moving again.

For example, one of the most underleveraged insights in the SARs space is just how concentrated filing activity really is. The numbers are stark: The top four banks file more SARs in a single day than 80% of the rest of the banks file in 10 years, according to 2019 data from a .

The average community bank files fewer than one SAR a week, while the largest institutions file more than 500 a day. “50 a year versus 500 a day,” notes Wells Fargo’s Richards, adding that such asymmetry has real implications for how the financial industry interprets trends. Meaningful movement in SARs data, up or down, is almost entirely dependent on what a handful of mega-institutions decide to do.

Not surprisingly, money services businesses (MSBs) are the second largest filing category, and virtual currency exchanges are almost certainly driving recent growth there, even if outdated category definitions make that difficult to confirm directly. Credit unions round out the top three.

The filing philosophy hasn’t changed and shouldn’t

Regulatory noise occasionally suggests that institutions should be more selective about what they file. However, compliance and legal reality have not shifted. No institution has ever faced serious consequences for filing too many SARs, and the cases that result in enforcement actions, reputational damage, and regulatory scrutiny are consistently about missed filings or late ones.

“You’re not going to get in trouble from filing too much,” Richards says. “Nobody ever has, and I doubt if anyone ever will.” For financial crime professionals, the calculus remains exactly what it has always been — when in doubt, file. That posture isn’t going to change, and frankly it shouldn’t.

Yet, here is where the SARs space gets genuinely interesting. Agentic AI use in SARs filings — systems in which multiple AI agents work through a case from screening to decision to documentation — is beginning to move from concept to deployment. The impact on filing volume likely will be significant.

The risk is a system flooded with AI-generated SARs of variable quality, creating more noise for law enforcement to sort through rather than sharper intelligence to act upon.

Whereas a small team today might work through a handful of cases a week, AI-assisted workflows could push that into the dozens. Multiply that across institutions already inclined to file rather than miss something, and the result is a coming surge in SARs volume that could play out over the next two to four years.

“Agentic AI has the potential to be a game changer on how we do our work,” Richards explains. “But I believe it’ll guarantee that there will be more SARs filed and not necessarily better and fewer SARs filed.” Indeed, the critical point for the financial crime community to internalize is exactly that.

The risk is a system flooded with AI-generated SARs of variable quality, creating more noise for law enforcement to sort through rather than sharper intelligence to act upon. Once the largest institutions adopt agentic AI as a best practice, others will follow quickly, and regulators will likely be several steps behind.

The value question can’t wait

The has been in place since 2014. Yet after 12 years of filings, the financial crime community still lacks a clear public accounting of whether that data has produced actionable law enforcement outcomes.

So, the question Richards is asking is one the entire industry should be asking: “Has anybody asked law enforcement?”

This question reflects a larger challenge that the industry needs to confront more aggressively, especially as AI technology is set to dramatically increase filing volume across the board. Increasing the volume without improving how the information is used does not represent progress. If SARs are not generating real investigative value, the solution is not to file more of them faster — instead, the pipeline should be fixed before it grows any bigger.

Please add your voice to ¶¶ŇőłÉÄę’ flagship , a global study exploring how the professional landscape continues to change.Ěý

Key insights:

• • • Convenience has outpaced consumer understanding —ĚýMany users treat apps, prepaid accounts, and rewards programs as simple payment tools, remaining unaware they are entrusting their money to entities with few safeguards.

    • Risk is no longer confined to traditional banks — Some of the most significant financial activities now occur within platforms and brands that do not resemble banks at all.

    • Opacity enables systemic vulnerability — The less transparent an institution’s obligations, leverage, and oversight, the easier it is for financial fragility, misconduct, and systemic risk to grow unchecked.

When you think of where money is held, you generally think of a bank. However, as we look at the financial landscape today, money is being held at a wide range of institutions that often have varying levels of safety and oversight. Entities from Starbucks to Visa to Coinbase hold money for individuals, effectively serving as a bank, but often without the regulatory framework that comes with it.

Behind the scenes, it can seem like . In its daily operation, it collects prepaid funds that resemble deposits, holds them as liabilities, and uses them internally — all without offering interest, cash withdrawals, or FDIC insurance. Starbucks’ rewards program holds $1.8 billion in customer cash, and if it were a bank, that would make it bigger, , than 85% of chartered banks, making the coffee chain one of the .

This dynamic extends well beyond coffee shops. “Popular digital payment apps are increasingly used as substitutes for a traditional bank or credit union account but lack the same protections to ensure that funds are safe,” warns the . If a nonbank payment app’s business fails, your money is likely lost or tied up in a long bankruptcy process.

Shadow banking

Think of a Starbucks gift card as a financial instrument. Technically it is one, but no one seriously worries about it being weaponized for any large-scale financial crimes. Most people’s concerns about a gift card is either losing it. The real concern lies not in lost gift cards, however, but in the broader trend: Nonbank institutions managing vast sums without commensurate oversight — and scale matters. A lost gift card is a personal inconvenience; but an unregulated institution managing billions of consumer dollars in leveraged capital is a systemic one.

Shadow banking encompasses credit and lending activities by institutions that are not traditional banks, and crucially, they do not have access to central bank funding or public sector credit guarantees. And because they are not subject to the same prudential regulations as depository banks, they do not need to hold as high financial reserves relative to their market exposure, allowing for very high levels of leverage which in turn can magnify profits during boom periods and compound losses during downturns.

The shadow banking ecosystem is diverse, and each segment of it presents distinct risks:

• • Hedge funds and private equity firmsĚý— Firms like Blackstone, KKR, and Apollo manage vast capital pools using leveraged strategies under limited oversight. Their size and borrowing levels may mean that market reversals can trigger rapid deleveraging, spilling risk into broader markets.
  • Family officesĚý— A private company or advisory firm that manages the wealth of high-net-worth families, these can operate with even less transparency and often outside direct regulatory scrutiny, enabling them to engage in extreme leveraging and posing risks of sudden collapse.
  • Nonbank mortgage lenders and FinTechsĚý— This group faces lower capital requirements than traditional banks, leaving thinner buffers to absorb losses during downturns, which can be especially concerning considering this sector’s rapid growth.
  • Crypto exchangesĚý— Like much of the cryptocurrency ecosystem, these exchanges operate in jurisdictional gray zones, complicating enforcement and enabling illicit financial flows.
  • Money market funds — While these are generally perceived as safe, they can suffer runs if confidence in underlying assets erodes, which can force fire sales that destabilize related markets.
  • Special Purpose Vehicles (SPVs) and Structured Investment Vehicles (SIVs)Ěý— These investment instruments allow large institutions to move risk off their balance sheets, rendering such activity invisible to regulators.

Shadow banking may be the single greatest challenge facing financial regulation. These non-traditional institutions act like banks, but without the safeguards that make banks accountable. And where accountability is absent, opportunity often fills the void.

The same opacity that makes shadow banking difficult to regulate also makes it attractive to those with less legitimate intentions. Without mandatory reporting requirements, standardized oversight, or the threat of deposit insurance revocation, these institutions can become conduits for money laundering, fraud, terrorist financing, and sanctions evasion in ways that traditional banks simply cannot. The question is no longer whether these vulnerabilities exist, but how they continue to be exploited.

The challenge of regulation

The global financial system has always evolved faster than the rules designed to govern it. What began as a coffee loyalty program and a few alternative lending platforms has quietly morphed into a parallel financial universe, one that moves trillions of dollars with a fraction of the transparency that traditional banking requires. That gap between innovation and oversight is not just a regulatory inconvenience, it’s an open door for illicit actors.

Closing that door will require more than periodic enforcement actions or piecemeal legislation. It will require regulators, lawmakers, and institutions to reckon honestly with how broadly the definition of a financial institution has expanded, and who bears the risk when things go wrong. Because historically, it has not been the institutions themselves; rather it has been the customers, the investors, and ultimately the public.

The first step, of course, is awareness. Recognizing that your money does not need to be in a bank to be at risk and that the custodians of that money need not be offshore shell companies to operate in shadows, can transform how we think about financial safety.

The line between a convenient app and an unaccountable financial intermediary is thinner than most realize. And in the world of financial crime, thin lines have a way of vanishing entirely.

You can learn more about theĚýmany challenges facing financial institutions todayĚýhere

Key takeaways:

• • • An additional funding stream, not a replacement — Ethical capital has the potential to supplement existing access to justice infrastructure by introducing a justice finance mechanism that can fund cases with measurable social and environmental impact.

    • Technology as trust infrastructure — AI and smart technologies can provide the governance scaffolding required for ethical capital to flow at scale, including standardizing assessment, impact measurement, and oversight.

    • Capital is not scarce; allocation is — The true bottleneck is not the availability of funds; rather it’s the disciplined, investment-grade legal judgment required to evaluate risk, ensure compliance, and measure impact in a way that makes justice outcomes investable.

Kayee Cheung & Melina Gisler, Co-Founders of justice finance platform Edenreach, are co-authors of this blog post

Access to justice is typically framed as a resource problem — the idea that there are too few legal aid lawyers, too little philanthropic funding, and too many people navigating civil disputes alone. This often results in the majority of individuals who face civil legal challenges doing so without representation, often because they cannot afford it.

Yet this crisis exists alongside a striking paradox. While 5.1 billion people worldwide face unmet justice needs, an estimated $3.3 trillion in mission-aligned capital — held in donor-advised funds, philanthropic portfolios, private foundations, and impact investment vehicles — remains largely disconnected from solutions.

Unlocking even a fraction of this capital could introduce a meaningful parallel funding stream — one that’s capable of supporting cases with potential impacts that currently fall outside traditional funding models. Rather than depending on charity or contingency, what if justice also attracted disciplined, impact-aligned investment in cases themselves, in addition to additional funding that could support technology?

Recent efforts have expanded investor awareness of justice-related innovation. Programs like Village Capital’s have helped demystify the sector and catalyze funding for the technology serving justice-impacted communities. Justice tech, or impact-driven direct-to-consumer legal tech, has grown exponentially in the last few years along with increased investor interest and user awareness.

Litigation finance has also grown, but its structure is narrowly optimized for high-value commercial claims with a strong financial upside. Traditional funders typically seek 5- to 10-times returns, prioritizing large corporate disputes and excluding cases with significant social value but lower monetary recovery, such as consumer protection claims, housing code enforcement, environmental accountability, or systemic health negligence.

Justice finance offers a different approach. By channeling capital from the impact investment market toward the justice system and aligning legal case funding with established impact measurement frameworks like the , it reframes certain categories of legal action as dual-return opportunities, covering financial and social.

This is not philanthropy repackaged. It’s the idea that measurable justice outcomes can form the basis of an investable asset class, if they’re properly structured, governed, and evaluated.

Technology as trust infrastructure

While mission-aligned capital is widely available, the ability to evaluate legal matters with the necessary rigor remains limited. Responsibly allocating funds to legal matters requires complex expertise, including legal merit assessment, financial risk modeling, regulatory compliance, and impact evaluation. Cases must be considered not only for their likelihood of success and recovery potential, but also for measurable social or environmental outcomes.

Today, that assessment is largely manual and capacity-bound by small teams. The result is a structural bottleneck as capital waits on scalable, trusted evaluation and allocation.

Without a way to standardize and responsibly scale analysis of the double bottom line, however, justice funding remains bespoke, even when resources are available.

AI-enabled systems can play a transformative role by standardizing assessment frameworks and supporting disciplined capital allocation at scale. By encoding assessment criteria, decision pathways, and compliance safeguards and then mapping case characteristics to impact metrics, technology can enable consistency and allow legal and financial experts to evaluate exponentially more matters without lowering their standards.

And by integrating legal assessment, financial modeling, and impact alignment within a governed tech framework, justice finance platforms like can function as the connective tissue. Through the platform, impact metrics are applied consistently while human experts remain responsible for final determinations, thereby reducing friction, increasing transparency, and supporting auditability.

When incentives align

It’s no coincidence that many of the leaders exploring justice finance models are women. Globally, women experience legal problems at disproportionately higher rates than men yet are less likely to obtain formal assistance. Women also control significant pools of global wealth and are more likely to . Indeed, 75% of women believe investing responsibly is more important than returns alone, and female investors are almost twice as likely as male counterparts to prioritize environmental, social and corporate governance (ESG) factors when making investment decisions, .

When those most affected by systemic barriers also shape capital allocation decisions, structural change becomes more feasible. Despite facing steep barriers in legal tech funding (just 2% goes to female founders), women represent in access-to-justice legal tech, compared to just 13.8% across legal tech overall.

This alignment between lived experience, innovation leadership, and capital stewardship creates an opportunity to reconfigure incentives in favor of meaningful change.

Expanding funding and impact

Justice financing will not resolve the justice gap on its own. Mission-focused tools for self-represented parties, legal aid, and court reform remain essential components of a functioning justice ecosystem. However, ethical capital represents an additional structural layer that can expand the range of cases and remedies that receive financial support.

Impact orientation can accommodate longer time horizons, alternative dispute resolution pathways, and remedies that extend beyond monetary damages. In certain matters, particularly those involving environmental harm, systemic consumer violations, or community-wide injustice, capital structured around impact metrics may identify and enable solutions that traditional litigation finance models do not prioritize.

For example, capital aligned with defined impact frameworks may support outcomes that include remediation programs, compliance reforms, or community investments alongside financial recovery. These approaches can create durable benefits that outlast a single judgment or settlement.

Of course, solving deep-rooted inequities and legal system complexity requires more than new tools and new investors. It requires designing capital pathways that are repeatable, accountable, and aligned with measurable public benefit.

Although justice finance may not be a fit for every case and has yet to see widespread uptake, it does have the potential to reach cases that currently fall through the cracks — cases that have merit, despite falling outside traditional litigation finance models and legal aid or impact litigation eligibility criteria.

You can find other installments of our Scaling Justice blog series here

Key Insights:

• • • Tokens are being more critical to security — Tokenization, especially of real-world assets like real estate, unlocks value but also invites criminal exploitation; protections and controls must be coded into protocols from the start, not bolted on later.

    • Recent collapse is a warning — The collapse of Terra, the third largest cryptocurrency ecosystem, and its Luna coin in 2022 shows how absent KYC and unsustainable yields amplify financial‑stability risks.

    • Regulators now stress risk‑based supervision — Programs must rigorously implement KYC, risk assessments, transaction monitoring, and sanctions screening. Design-thinking can translate these requirements into enforceable on‑chain controls.

Today, the digital world vibrates with excitement because of tokens, which have shown the potential to unlock value in real world assets. Tokens are digital assets built on blockchain technology, but unlike cryptocurrency, which also used blockchain, tokens are solely used for transactions or as a value currency.

In fact, tokens can represent many different types of value within the digitized world, including digital assets, ownership stakes, and even real-world assets like real estate.

In the real world, of course, buying and selling real estate requires compliance, such as anti-money laundering (AML), counter-financing of terrorism compliance, and other standards promulgated by the intergovernmental Financial Action Task Force (FATF).

With tokens, these regulations can be coded in, but will they? Take for example, due diligence, or know your customer (KYC) regulations, which require some background checking of with whom a financial institutions is doing business.

KYC is arguably the most critical aspect of overall AML compliance; yet failures in this area continue to make the news more and are often cited for being at the root of massive penalties and enforcement actions. If tokenization intends to transform the future of money, then compliance must be in the code.

The tokenization race

The race to unlock value in real-world assets and bring them onto the blockchain is only gaining momentum. Tokenization already is alluring to traditional finance and FinTech crowds alike, and its use in real estate is an easy sell. Luxury villas, coveted penthouse apartments, contemporary homes in the mountains infused with rustic accents — tokenization offers the tantalizing prospect of fractional ownership, input on property management decisions (through governance tokens), investment opportunities, or a combination of these and other options. The movement of value into tokenized real-world assets unlocks amazing opportunities for all — unfortunately, that includes criminals as well.

The criminal element has always been early adopters. In fact, much of the risk-based approach to AML compliance has evolved, in part, from that fact. Criminals exploit any security gaps and continually try novel approaches to mitigate against their risks of being detected and caught.

The initial aversion to regulation in some corners of the crypto community provided a utopia for the criminal element. Then, innovators sought to remove friction from financial services and thus oiled the gears for everyone, again, including criminals. And so, the risks continue to evolve.

Case studies for tokenized compliance

As the tokenized world is being built, efforts to bake in compliance are varied. To understand how to address compliance, consider the focus of the regulator: Their roles is to mitigate any threats to financial stability and prevent money laundering, terrorist financing, proliferation financing, and other crimes. Case studies are often used to cement lessons from compliance training, and the is an excellent reference point for anyone looking to build better tokenomics that incorporates robust compliance.

The Terra/Luna collapse and the ensuing unraveling of the Anchor Protocol, an over-collateralized Terra-based lending and borrowing system, occurred in May 2022. Regulators focused on the threat to financial stability presented by the cascading effects that de-pegged stablecoin TerraUSD that caused the value of the Luna token to free-fall. Criminals exploited the lack of compliance. The Anchor Protocol’s risks were scrutinized, and the impact of no KYC being required and unrealistic yields that gave off Ponzi vibes also were dissected. The entire episode also triggered renewed vigor in the need to develop regulatory mandates for virtual assets and stablecoins.

AML compliance may be construed as friction, but it should not. The challenge with AML compliance in tokenization only lies in the limitation of code and a true understanding of risks. Simply put, the financial utopia that tokenization can bring about will only happen if compliance is coded in up-front and not as an afterthought. Compliance as an afterthought is like baking a cake and then adding raw eggs before serving.

Managing risk continues to be an increasing challenge for traditional financial institutions and FinTech companies, and the usual compliance weak-spots — KYC, risk assessment, transaction monitoring, and sanctions screening — are already known but too often not properly addressed.

Indeed, Elisa de Anda Madrazo, FATF President, the importance of effective risk management for AML compliance, stating last year that “a significant change has also been made in separating out the assessment of the effectiveness of risk-based supervision of the financial (including virtual asset service providers) and non-financial sectors into two immediate outcomes.” This is a clear signal to regulatory authorities and virtual asset service providers alike that risk assessments, integral to the risk-based approach, must be a foundational element of operations.

Tokens of affection

In a tokenized world, real-world assets can be a darling example of FinTech and compliance symbiosis. Designing the AML compliance business requirements into code can be quite easily done if coders truly understand the desired outcomes from compliant tokenomics.

Whatever the course of action, regulatory inaction concerning virtual assets and stablecoins has evaporated and regulatory clarity continues to be enhanced. Perhaps, the next step to help tokenization gain traction is to provide regulators with true tokens of affection: Tokenization in which AML compliance is baked into protocols.

You can learn more about the challenges faced in fighting money laundering and other financial crimes here

Key insights:

• • • Blockchain data exceeds Wolfsberg expectations — Public, attribution-rich ledgers give crypto firms immediate access to behavioral, network, and cross-chain signals that traditional banks must retrofit or request from third parties.

    • Crypto companies can leverage this data — With abundant labeled history and real-time on-chain context, crypto companies can combine rules, supervised machine learning, and unsupervised discovery to identify emerging typologies faster and with clearer explainability.

    • SARs become actionable intelligence, not just checked boxes — By including wallets, hashes, and traceable flows, this data can turn SARs filings into ready-to-investigate leads for law enforcement, thereby converting compliance from a cost center to a competitive advantage.

The Wolfsberg Group’s on modernizing suspicious activity monitoring comes at a crucial time for cryptocurrency companies. Traditional financial institutions are being encouraged to go beyond basic transaction monitoring by including behavioral analysis, network effects, and various risk indicators in their anti-money laundering (AML) programs. For cryptocurrency companies, the framework describes capabilities that blockchain data infrastructure was essentially built to support.

Wolfsberg’s recommendations map almost perfectly to what blockchain businesses already are able to do. While traditional banks work to update legacy transaction monitoring systems with new capabilities, crypto companies operate in an environment in which the data for complex monitoring already exists. For crypto companies, this shouldn’t be seen as simply having to adapt to a new standard, but rather as a unique opportunity to set a new standard.

Investigation advantages built into the technology

Traditional financial investigations operate within closed systems. Investigators, at the start of an investigation, primarily have access to data points from their institution and what is available online. They may then need to gather additional information, each controlled by different institutions with their own legal requirements and timelines. The financial trail crosses multiple organizations, jurisdictions, and record-keeping systems that do not communicate with each other. With Suspicious Activity Reports (SARs) filings, investigators are often forced to close an investigation with gaps in the full picture.

Cryptocurrency investigations begin with transparency. Blockchain attribution tools offer visibility into fund flows throughout the entire ecosystem. The financial trail is recorded on a public ledger, in which tracking money doesn’t require negotiating with counterparts or waiting for legal approvals. This fundamentally changes what’s possible during an investigation. Questions that would take traditional investigators weeks to answer through formal channels or go unanswered by the time the SAR is due can be resolved in hours using attribution data and on-chain analysis.

The data available to cryptocurrency companies means they can move past compliance as a check-the-box exercise and start getting creative when thinking about what’s actually possible.

The Wolfsberg framework emphasizes “expanded risk indicator coverage” by analyzing data points beyond transaction amounts, dates, and counterparties. Blockchain companies have easy access to this data — wallet age, complete transaction history, interaction patterns with decentralized finance protocols, network connections to known bad actors, mixing service usage, cross-chain behavior, and anomalies that would be invisible in traditional banking. The data exists and is readily available for use in innovative and unique ways.

Detection models that can do more than react

Wolfsberg recommends combining three approaches: i) rules-based monitoring for known risks; ii) supervised machine learning for identifiable patterns; and iii) unsupervised methods for detecting emerging threats. Cryptocurrency companies can implement all three at the same time because the underlying data supports each approach.

Rules-based monitoring handles obvious cases such as sanctioned wallet addresses, direct transfers from darknet marketplaces, and transactions routed through high-risk jurisdictions. This represents baseline coverage that almost every crypto company will already have implemented. Adding the ability to look up scam wallets that are self-reported by victims online and community reporting capabilities in blockchain forensic tools, the foundation for much more effective risk mitigation is easily established.

Using blockchain’s historical data, models can be trained on years of confirmed criminal activity that law enforcement or blockchain tools have already identified. As traditional banks can’t access validated historical data across the entire payment ecosystem at this scale, they typically must rely on internal data and industry guidance to develop their models. Cryptocurrency companies, however, can utilize blockchain history and attribution databases that document known illicit activity. This means models can be trained on nearly unlimited applicable data from the past and can even be trained on near-real-time data as it gets added to databases.

Yet, it is with unsupervised learning that crypto companies can genuinely innovate beyond what traditional finance does by feeding attributed wallets, self-reported fraud wallets, and public blockchains directly into machine learning or AI models. With this, companies can analyze complex, interconnected patterns of activity that allow models to continuously identify emerging typologies and patterns in near real-time and potentially instantly expose gaps in a scenario’s current coverage.

It is with unsupervised learning that crypto companies can genuinely innovate beyond what traditional finance does by feeding attributed wallets, self-reported fraud wallets, and public blockchains directly into machine learning or AI models.

The data available to cryptocurrency companies means they can move past compliance as a check-the-box exercise and start getting creative when thinking about what’s actually possible.

SAR quality as intelligence product

The Wolfsberg framework addresses SAR quality directly, highlighting the problem of financial institutions filing too many low-value reports because their systems generate alerts that they cannot fully resolve. Indeed, institutions file thousands of SARs because they have unanswered questions or are unsure of exactly what is going on due to a lack of available data, not because they’ve identified actual money laundering.

Blockchain data changes what SAR filings can look like in ways that matter for law enforcement. When attribution tools indicate that funds originated from a wallet cluster associated with ransomware, were transferred through a mixing service, appeared in a customer’s deposit address, and were immediately withdrawn to a known cash-out service, the SAR can describe the exact pattern of suspicious activity with on-chain evidence for each step.

Including wallet addresses and transaction hashes in SAR narratives provides investigators with something traditional bank SARs rarely offer: immediate starting points they can follow without additional legal process, immediately making the SAR actionable intelligence.

Law enforcement agencies are overwhelmed with SARs, and it often feels like an investigator’s SAR filings don’t lead anywhere. However, when investigators can include information that helps law enforcement investigate and prosecute cases quickly and effectively, those investigators also may start seeing activity on the blockchain, such as illicit actors’ wallets slow down or funds be seized from a scammer’s wallet. This not only helps with the feedback loop but also confirms to an investigator that their work is making a real difference.

Building programs that lead instead of follow

The Wolfsberg framework also makes clear that innovation in AML isn’t optional. Criminal networks evolve too quickly for static rule sets and outdated monitoring systems. Advanced approaches need to be explainable, properly validated, and integrated into broader risk management frameworks.

Financial institutions need to build models that fully use available blockchain data, then validate them against on-chain patterns that can be directly observed. They should also train their investigators to understand blockchain attribution and network analysis — not just how to read a blockchain explorer, but how to interpret what attribution tools reveal about fund flows and network connections. When filing SARs, institutions need to include the on-chain evidence that makes their filings immediately actionable for law enforcement.

Traditional financial institutions are modernizing systems designed for the pre-internet era, while cryptocurrency companies are building compliance programs in a data-rich environment that makes certain investigations more effective than they’ve been in the past. The opportunity here isn’t just about meeting the Wolfsberg recommendations; rather the opportunity is showing what becomes possible when compliance programs are built with these capabilities from the ground up and when the data advantages inherent to blockchain technology get used to their full potential.

That will be what changes how regulators think about the industry — and what turns compliance from a cost center into a competitive advantage.

You can find more ofĚýour coverage of SARs and related effortsĚýto combat financial crimes here

Key insights:

• • • Accelerating bank-fintech partnerships — Acting Comptroller Hood emphasized the importance of innovation in the financial sector, advocating for more freedom for fintech companies and encouraging banks to engage responsibly with digital assets.

    • Advancing financial inclusion — Hood said he passionately supports initiatives aimed at increasing capital access for underserved communities and promoting economic participation, highlighting financial inclusion as a critical civil rights issue.

    • Modernizing regulation to stimulate growth — The Acting Comptroller stresses the need for individualized, risk-based supervision and reducing regulatory burdens to unleash growth in the financial sector.

In February, Rodney E. Hood, former chair of the National Credit Union Administration Board, became the first African American to be name Acting Comptroller of the Currency. And although his historic appointment may be temporary — as Jonathan Gould is undergoing hearings for the permanent position — Acting Comptroller Hood is living up to his assertion that, “Acting does not mean inactive.”

At the June U.S. Chamber of Commerce Capital Markets Forum, Acting Comptroller Hood for the regulatory agenda of the Office of the Comptroller of the Currency (OCC), which included these highlights:

Ready all players: Green lights for crypto & fintech

The first two of Acting Comptroller Hood’s cited priorities focused on innovation: first, by allowing fintech firms to operate more freely; and second, by expanding the ability for banks to hold digital and cryptocurrency assets.

He cited his desire to focus on “accelerating bank-fintech partnerships,” adding that “innovation is the currency of progress.” He also encouraged “expanding responsible engagement with digital assets” by participating in “the architecture of a new financial frontier.”

These priorities represent a full turn towards the modernization of the financial system, as it seems that the government now is recognizing that these technologies are not going away. Renewing and updating the regulations surrounding these issues is better than trying to put “new wine in old wineskins.” Simply put, when new things emerge, we need to create new ways to govern them.

Further, Hood also indicated his passionate support for initiatives designed for financial inclusion, capital access for underserved communities, and fuller economic participation. “Financial inclusion is the civil rights issue of our time,” Hood said, adding that viewing fintech companies as a way to help underserved people access banking services is critical.

In the speech, Hood mentioned modernizing regulations as his last major initiative, perhaps for impact. He hailed regulatory rightsizing as one of the OCC’s most consequential priorities, noting that each financial institution requires individualized, risk-based supervision, not a one-size-fits-all approach. (Interestingly, on the OCC website under the , however, reducing regulatory burden is listed first, indicating its true place in the priority matrix.

Modernizing regulation to unleash growth

Overall, each of Hood’s main points send us the same direction — toward modernization of the US financial system via new technologies and markets, and by opening up more ways for financial institutions to move money.

While nothing here points to reducing requirements around anti-financial crime regimes, the effect of this loosening of the spigot likely will introduce new and divergent risks into many financial institutions. The logic behind this is simple: more products, more ways to move money, and more customers is a formula that adds to proportionate increases in risk. Illicit actors are sure to be standing ready to take advantage of the situation.

Indeed, smart financial services companies will keep anti-financial crime efforts front-and-center, empowering their traditional lines of defense to ensure that business growth is from legitimate customers operating legal enterprises. One area that will affect financial crimes departments is the . This typically refers to customers or businesses that are legal but may be considered unsavory, such as firearms or adult entertainment.

Economics and opinions aside, financial crimes teams are overwhelmed and the winds are blowing more work in their direction. Monitoring legitimate businesses by applying the same kind of due diligence standards meant to stem the flow of criminal money creates more noise. Although it is possible to collate funds from illicit activity into a business that already walks close to the line of legality, being classified as high-risk is hardly a good way to evade scrutiny. These businesses will remain high-risk for reasons unrelated to reputational risk, and financial crimes teams will still review them for unusual behavior rather than because of a moral judgement.

Hood also discussed reassessing capital requirements so that such standards are not excessive. This — while it could contribute to shaky institutions that grow artificially large and risk collapse — could also just be a great way to stimulate investment in the sector. The proof will be evident over the next couple of years.

Combining all these elements that Hood outlined draws an interesting picture. Fintechs are going to be empowered to onboard new customers, especially because so many people are underbanked. At the same time, banks will be required to keep less capital on hand and will be free to lend out more to a broader definition of qualified borrowers. Speculative digital assets and cryptocurrencies will now be on the balance sheets of these same banks with fewer capital requirements.

Assessing each bank with a tailor-made, risk-based approach is wonderful in theory but in reality, it requires time, effort, and expertise. A flood of innovation and capital may continuously stimulate the economy and become the so-called rising tide that lifts all ships; but there are other potential futures that do not look quite as rosy. For example, the financial services sector could find itself drowning in customers, unable to keep up with the many requirements that will inevitably stay in place.

What can the financial industry do in response?

Innovation in the banking sector means the same in the criminal sector, and we must continue to strive for innovation in areas of law enforcement, intelligence, and anti-crime. Institution leaders need to consider acquiring targeted technological tools to make team members more powerful.

AI and automation may take away some entry-level jobs, and people must become adept at leveraging new tools and honing stronger skills to stay competitive. In collaboration with automated systems, people can do more, better. This means institutions’ compliance & risk departments, as always, must continuously train workers to stay at the cutting edge of required skillsets.

Additionally, institutions should find new ways to intelligently target criminal networks instead of just monitoring and reviewing the typical big, unusual, or fast transaction patterns. Behavioral typologies, intelligence analysis of where money is used in supporting illegal activity, and a better understanding of the humans involved, are all available to a department willing to innovate. At this point, banks and other financial services institutions cannot let the criminals out-think the financial industry.

When we hear that an administration hopes to remove regulations and shrink government, we think there will be fewer jobs in compliance. Yet, the opposite is likely true, since these priorities signal a shift to making it easier for financial institutions to do business, exploit digital technologies, and add customers. Naturally, the combination leads to increased volumes in risk, and therefore, the work of risk & compliance professionals remains important and massive.

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Further affirming this promise, Trump issued an to establish a cryptocurrency working group, which was tasked with proposing new regulations for digital assets and exploring the creation of a national cryptocurrency reserve, thereby continuing the pledge to swiftly reform the country’s cryptocurrency policy.

As a part of the new administration, Mark Uyeda, the new Acting Chair of the U.S. Securities and Exchange Commission (SEC), announced plans to to develop a comprehensive and clear regulatory framework. The primary objective of the task force will be to assist the Commission in establishing clear regulatory boundaries, providing realistic paths to registration, crafting sensible disclosure frameworks, and deploying enforcement resources judiciously. The overarching goal is to transition from what has been termed regulation by enforcement to a more structured regulatory approach.

What will be the regulatory approach?

Looking forward, it will be necessary to establish a regulatory framework for cryptocurrencies that could be similar to that of the banking industry. It is probable that the SEC, as opposed to the Commodity Futures Trading Commission, will emerge as the final regulator for this sector. Such a regulatory structure would offer the advantage of clearly defining the role and significance of cryptocurrencies both within the United States and outwardly in other global economies.

You can learn more about cryptocurrencies’ role in US financial markets in the , available on YouTube

Recently, the SEC’s Division of Enforcement’s own Crypto Assets & Cyber Unit has been rebranded as its Cyber & Emerging Technologies Unit, with the aim of this rebranding seemingly focused more on fraud and retail use. This change continues with the SEC’s overall theme of inserting regulation early in the process rather than doing so by enforcement actions.

The current administration’s dynamic stance on cryptocurrencies signals a pivotal shift in the regulatory landscape. From President Trump’s assertive moves to establish a cryptocurrency-friendly environment to the proactive measures by the SEC and the U.S. Senate Banking Committee, it is evident that cryptocurrency is poised to become a fundamental component of the financial system. However, the juxtaposition of regulatory clarity and the inherent risks of digital assets necessitates a balanced and thoughtful approach. As we advance, it is imperative to construct a robust framework that fosters innovation while safeguarding the integrity and security of the nation’s financial ecosystem.

Sen. Tim Scott (R-SC), Chairman of the Banking Committee, delivered the for the Committee’s hearing on Investigating the Real Impacts of Debanking in America. In his address, Scott emphasized that the use of cryptocurrency and other digital assets in banking is fundamental to participating in a free and fair society. This suggests an intention to limit financial institutions’ ability to de-bank or de-risk based on digital currency usage.

While this notion appears advantageous, it raises several concerns regarding the future of cryptocurrency. Additionally, there was minimal discussion on the use of cryptocurrencies in illegal activities and the associated risks. As a former chief of the SEC’s Office of Internet Enforcement once noted: “Every single crime you can conceive of is easier to do now because of crypto.” Thus, it would seem imprudent to proceed with improperly regulated cryptocurrency while simultaneously attempting to de-risk it.

Is crypto the future?

The indication is clear that decentralized finance, particularly cryptocurrencies, will be a significant trend in the future. In this context, it is essential to acknowledge that the US will play a crucial role in establishing a regulatory framework around this asset. Given the stance of the current administration, a comprehensive reassessment of the previous regime’s actions is necessary to ensure an optimal position for implementing regulations.

A hint of foreshadowing can be observed in the joint submission of — submitted by the SEC and Binance, the largest cryptocurrency exchange in terms of daily trading volume — to stay the regulator’s lawsuit against the cryptocurrency exchange. While, this joint filing references the potential influence of the recently established SEC task force, it also underscores a shift in the economic sphere, shown by the judge granting a in the lawsuit. Indeed, it is likely that there will be a change in regulation significant enough to settle this lawsuit within the 60-day stay that the court has granted.

Conclusion

It is clear that the current administration has decided to set itself apart from prior administrations in many ways, and crypto regulation is a very visible way to show the difference. Congress and the SEC along with other actors are poised to make crypto a fundamental part of the US financial system. In the not-so-distant future, the impacts of these new changes will become more apparent.

Nonetheless, the juxtaposition of regulatory clarity with the inherent risks associated with digital assets warrants a balanced and prudent approach. Moving forward, it is essential to develop a comprehensive framework that promotes innovation while ensuring the integrity and security of the financial ecosystem.

You can find more about the challenges and opportunities of cryptocurrency here

The federal government’s Financial Crimes Enforcement Network (FinCEN) — the agency responsible for collecting and disseminating transaction data from financial institutions under the Bank Secrecy Act — recently released data for the total number of SARs filed in 2024.

SARs are the documents that financial institutions must file with FinCEN whenever behavior by employees or customers is detected that may be associated with criminal activity or is otherwise deemed suspicious, a standard that can differ depending on the institution. Most SARs are filed by depository institutions (banks, savings & loan associations, credit unions) and money services (businesses that transmit or convert money, such as PayPal and Venmo). The rest are filed by loan or finance companies, casinos, insurance companies, and securities/futures firms.

Counting SARs is tricky

In 2023, a record 4.6 million SARs were filed, and historically the total number of SARs filings has been rising at a rate of about 3% to 5% per year. However, FinCEN’s year-end statistics for 2024 suggest that this trend may not continue, and that the total number of SARs filings for 2024 will be slightly fewer than for 2023, which was the highest year ever for SARs filings.

Calculating the final SARs numbers for 2024 is a bit tricky, however, because FinCEN isn’t expected to release its official final analysis of 2024 SARs data until April or May, and the numbers may look a bit different by then. Indeed, FinCEN’s records indicate that a total of 3,801,691 SARs were filed in 2024, somewhat fewer than the 3,809,823 recorded in 2023 — but nowhere near the official 2023 number of 4.6 million.

So why the discrepancy?

According to Jim Richards, president of RegTech Consulting and former Global Head of Financial Crimes Risk Management at Wells Fargo, the catch is that the lower numbers only reflect original SARs, not SARs that are categorized as amended or corrected, or those that report continuing activity from a previously filed SAR.

“FinCEN only counts SARs by their original filing number, so there is an estimated 20% to 22% more amended, corrected, or continuing activity SARs,” Richards says, adding that all of these will be added to the final count.

When all these filings are added in, the total number of SARs for 2024 should land somewhere in the 4.5 million to 4.6 million range, roughly the same as 2023. Current numbers show about 8,000 fewer SARs filings for 2024, however, so the final tally may be a bit lower, but not by much.

Top reasons for SARs filings

Nevertheless, there some interesting nuggets of information to be gleaned from the 2024 SARs data, including that the top four reasons financial institutions gave for filing a SAR in 2024 were i) suspicion concerning the source of funds; ii) transactions without a lawful purpose; iii) check fraud; and iv) suspicious EFT or wire transfers.

Of course, there were other frequently mentioned reasons that banks filed SARs in 2024, including such factors as credit card or debit card fraud, identity theft, Automated Clearing House (ACH) fraud, account takeovers, elder exploitation, and forgeries.

And regardless of what the official SARs stats for 2024 reveal, there are many reasons for the consistent rise in SARs reporting, including such notable factors as:

Check fraud

Over the past few years, the number of check-fraud SARs that have been filed has skyrocketed, due primarily to an alarming rise in national and international crime rings that steal mail — and any checks contained therein — from postal carriers and mailboxes. Then, the fraudsters alter the payee on the checks and deposit them in a different account.

In 2024, there were 682,276 check-fraud SARs filed, up from 665,505 in 2023, and very close to the record number of 683,000 check-fraud SARs filed in 2022. By contrast, there were only 350,000 check-fraud SARs recorded in 2021, which may mean that 650,000 or more check-fraud SARs — almost 2,000 per day — appears to be the new normal.

Elder exploitation

FinCEN also has issued advisories related to elder financial exploitation, another form of fraud that has risen dramatically in the past few years. In 2023, 160,394 SARs were filed that were related to elder financial exploitation, but preliminary FinCEN data suggests that the final number for 2024 could be more than 200,000. There were only 72,173 elder exploitation-related SARs filed in 2021, which means that reported instances of elder financial exploitation have almost tripled over the past four years.

Elder financial exploitation is much more pervasive than these stats suggest, however, because most of these types of crimes go unreported.

Digital crime

Trends such as the increase in SARs for identity theft, account takeovers, synthetic identity fraud, ACH fraud, and electronic fund transfer fraud are all directly related to the growth in online banking and commerce. In fact, cash has dropped to 31% of reported instruments for suspicious financial activity, falling from 40%, says RegTech’s Richards. Meanwhile, wire transfers as a portion of reported instruments for suspicious financial activity, have gone up to 35% from 24%.

It should be noted however that SARs only report suspicions of fraudulent activity, not actual fraud itself, and of the many millions of SARs reported each year, only a few thousand ever result in direct legal action.

Information sharing and defensive filing

Another source for the continual rise in SARs reporting comes from a steady increase in information sharing among financial institutions, the federal government, and international governments. Sharing information about suspicious financial activity spreads awareness and alerts financial institutions to situations that they might otherwise overlook, resulting in more SARs filings overall.

Yet another generator of SARs reports is so-called defensive filing, a better-safe-than-sorry tactic that financial institutions use to avoid being accused of overlooking a potentially problematic situation. Richards notes that every financial institution sanctioned for SAR filings was sanctioned for failing to file SARs or filing late SARs. In fact, Richards says he has never heard of a financial institution being sanctioned for filing too many SARs.

Looking ahead to 2025 and beyond

Given the consistently high incidence of fraud over the past few years, there is no reason to expect that 2025 will be much different. FinCEN tracks more than 90 types of financial malfeasance, from Ponzi schemes to human trafficking, so opportunities for wrongdoing abound.

A steady stream of data breaches also ensures that sensitive personal information will continue to make its way into criminal hands, and there is no shortage of people eager to exploit cracks in the system and the limitations of law enforcement.

You can find out more about SARs and how financial institutions handle threats of fraud here

To combat this, financial institutions must leverage both internally and externally developed fraud models. Ideally, these models aim to identify, prevent, and deter risky behavior on their platforms with minimal friction for their valid customers.

Internally developed fraud remediation models are proprietary systems created within the financial institutions themselves. These models are tailored to the specific needs and risk profiles of the institution, allowing for a highly customized approach to detecting and preventing fraudulent activities. By leveraging internal data, historical fraud patterns, and insights from their own customer base, financial institutions can develop models that are finely tuned to their unique environment.

Such internally developed models provide the advantage of direct control and flexibility to make adjustments as new fraud patterns emerge. They also allow institutions to build on their existing technological infrastructure and integrate fraud detection more seamlessly into their operations. However, developing these models can be resource-intensive, requiring significant time, expertise, and ongoing maintenance to ensure these solutions remain effective against increasingly sophisticated fraud tactics.

Third-party models drive fraud recovery

On the other hand, external or third-party models are attractive to financial institutions for multiple reasons.

First, third-party models may offer financial institutions their fastest go to market option. If a financial institution has an urgent, time sensitive exposure to fraud, for example, it may choose to quickly implement a third-party model instead of taking months or years to develop one internally. In doing so, the institution can save significant amounts of exposed funds.

Internally developed fraud remediation models are proprietary systems created within the financial institutions themselves that are tailored to the specific needs and risk profiles of the institution.

Second, a third-party model may be more technologically sophisticated or nuanced to measure risk variables that many financial institutions couldn’t otherwise. As fraudster techniques evolve, fraud modeling organizations may be more able to predict and react quickly to the latest fraudster developments. And for financial institutions that have competing priorities, effectively outsourcing fraud research, development, and management can offer a huge benefit.

Third, third-party models can leverage multiple clients’ data to benefit a single institution’s entire customer group. If one financial institution is hit with a fraud attack, for instance, the model could analyze the exposure, remediate it, and apply the remediation protections across the entirety of the model’s customer base. In doing so, other financial institutions may benefit from the third-party’s broader industry vision. This group benefit aligns all the financial institutions involved towards the common goal of improving fraud loss prevention.

Although third-party models can be valuable tools to mitigate fraud exposure, they often bring additional regulatory and compliance scrutiny. Over the past five years, regulators in the United States have increased their intensity and scope when reviewing fraud model use. Primarily, regulators — such as the Office of the Comptroller of the Currency (OCC), the Federal Reserve, and the Federal Deposit Insurance Corporation (FDIC) — use model risk governance and model risk management programs or frameworks to ensure that financial institution models are applied appropriately, effectively, as expected, and without bias.

Regulators hold model owners — those who ultimately implement and use the models (most commonly the financial institutions) — responsible for complying with regulators’ requirements. Even if the model was developed by a third party, the financial institution is still most often liable for compliance in the on-boarding, validation, and regularly cadenced monitoring of the model. Unfortunately, many financial institutions struggle to satisfy these regulatory requirements for their third-party models precisely because they do not own them.

Confidentiality can cause compliance complexities

For a third-party model developer, their ultimate value to customers is found within the model itself: how fast it can be implemented, what it uniquely measures, how it acts, and how well it performs. These characteristics — a developer’s secret sauce, if you will — are proprietary to each model, and if their unique blend is published or known outside of the company, the model could be replicated. This, of course, would cause the developer to lose any competitive advantage and value to the marketplace. Thus, even after selling the model to financial institutions, third-party fraud model developers are incentivized to keep their valuable model characteristics private.

However, this private nature presents difficulties for regulators, that want to know about the model’s risk variables, weights, and who and what they generally identify; but developers, not surprisingly, want to protect the dissemination of their data. This places the model users, often financial institutions, in the precarious position between the regulators and developers.

Although third-party models can be valuable tools to mitigate fraud exposure, they often bring additional regulatory and compliance scrutiny.

Financial institutions want the fraud protection that third-party models can provide, while regulators want to ensure the models in market don’t adversely impact consumers. For all parties to align towards stopping fraud with minimal consumer impact, they may choose to meet in the middle. As model use proliferates, regulatory burdens may increase as well.

Thus, while financial institutions prepare for increasingly thorough documentation requirements from the OCC, FDIC, and other regulatory authorities, third-party fraud model developers would be prudent to similarly prepare and create sharable documents that present more information than historically given, while protecting the minute details. For their part, regulators might consider easing their requirement timelines, knowing that those parties they might question may not have immediately available answers.

In summary, a compliance headache can feel nearly as costly as fraud losses. These compliance difficulties and fraud losses can be remediated most quickly if developers, financial institutions, and regulators can align on reasonable documentation parameters and expectations to reduce the burden on all parties.

You can find more about the regulatory and compliance challenges faced by financial institutions here.

Financial regulatory impact

Trump has been an outspoken supporter of digital assets and cryptocurrencies. At a Bitcoin conference earlier this year, he promised to build a government stockpile of Bitcoin and to fire U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler on the first day of his administration.

Although it may be up for debate whether Trump can actually fire Gensler, he can demote him from the chair position and designate a new chair. The likely replacement would be Republican Commissioner Hester Peirce or her Republican colleague, Mark Uyeda. Although Gensler could stay on for the remainder of his term as Commissioner through 2026, it is customary in such situations for chairs to step down with such a change in power in the presidency.

Crypto is a big winner

Bitcoin prices spiked to an all-time high on election night above $75,000 as the outcome of the election unfolded, and the US stock market exploded the morning after the election, clearly indicating some investors were very bullish on the Trump win.

And perhaps the most notable race beyond the Trump victory that is relevant to financial services regulation, occurred in the Ohio U.S. Senate race in which Sen. Sherod Brown (D-Ohio), Chair of the powerful Senate Banking Committee, lost his race. Brown has been an outspoken critic of crypto-assets and a close ally of Gensler. The crypto industry targeted Brown, raising an estimated $40 million through various political action committees and contributions for his victorious opponent, Bernie Moreno, a businessman from Ohio.

However, Sen. Senator Elizabeth Warren (D-Mass.), a staunch crypto critic, easily won a third term, defeating pro-crypto candidate John Deaton. With the Democrats losing control of the Senate and Brown’s defeat, however, Warren stands to be the next ranking member of the Senate Banking Committee.

Sustainable investingĚý& deregulation

Trump’s presidency is set to have profound implications for sustainable investing. A cornerstone of his campaign promises includes rolling back green regulations that currently hinder oil and gas drilling and coal mining. If enacted, these deregulatory measures could significantly boost shares in traditional energy sectors, reversing the gains made under the Biden-Harris administration’s climate policies.

Trump also has expressed a firm intention to rescind all unspent funds under the Inflation Reduction Act, a landmark climate law from the Biden-Harris administration. This act encompasses hundreds of billions of dollars in subsidies for electric vehicles, solar power, and wind energy. The rollback of such funds could stymie growth in renewable energy sectors, although comprehensive changes would likely necessitate congressional approval. It’s worth noting that several Republican lawmakers have shown support for parts of the Inflation Reduction Act, indicating potential resistance within Trump’s own party.

Broader economic implicationsĚý

A Trump presidency is expected to foster a more protectionist trade environment. His previous tenure was marked by trade wars, particularly with China, which saw tariffs imposed on a range of goods. Renewed trade hostilities could disrupt global commerce, create supply chain bottlenecks, and increase costs for consumers and businesses alike. The ripple effects would be felt globally, with economies closely tied to US trade policy bearing the brunt.

The regulatory landscape under Trump is also expected to see significant shifts. Deregulation would be a key theme, affecting sectors from energy to finance. While this might spur short-term economic growth by reducing compliance costs for businesses, it could also lead to longer-term risks such as environmental degradation and financial instability. The rollback of regulations designed to mitigate climate change could have severe environmental consequences, while less stringent financial oversight might increase the likelihood of market excesses and crises.

You can hear the recent Thomson Reuters Institute Insights podcast about on Spotify here.

On the fiscal front, Trump’s proposed tax policies could lead to substantial changes in the US economy. Tax cuts, particularly for corporations and high-income earners, might stimulate investment and economic activity; however, these measures could also exacerbate income inequality and increase the federal deficit, leading to potential long-term economic challenges.

Individual industry sectors could also see various impacts. The energy sector, for example, stands to gain significantly from Trump’s proposed policies. Rolling back regulations on oil, gas, and coal industries would likely lead to increased production and profitability. However, this could come at the cost of environmental sustainability and could slow the transition to renewable energy sources.

In the technology sector, the outcome could be mixed. On one hand, deregulation might benefit tech companies by reducing operational constraints; but on the other, increased tariffs and trade tensions with key markets like China could disrupt supply chains and affect profitability.

Further, Trump’s stance on healthcare could lead to attempts to dismantle or alter the Affordable Care Act. This could result in significant changes in healthcare coverage and costs, impacting both consumers and providers. The pharmaceutical sector might benefit from deregulation, but broader healthcare access issues could arise.

ConclusionĚý

Even though no one can predict the future for certain, the election of Donald Trump is set to bring profound changes to the economic and regulatory landscape of the United States. Emerging markets, sustainable investing, and various sectors will all feel the impact of his policies. While some industries might benefit from deregulation and tax cuts, the broader implications could include increased market volatility, environmental risks, and challenges to global trade dynamics.

As we look ahead, it is crucial to consider these potential outcomes and prepare for the complexities and opportunities they present. The economic and regulatory shifts under a Trump administration will undoubtedly shape the global landscape in significant ways, demanding careful analysis and strategic response from businesses, investors, and policymakers alike.

Additional reporting for this post was supplied by dispatches from Todd Ehret of Regulatory Intelligence