Key insights:

• • • AI is supercharging old fraud schemesĚý— By making synthetic identities, deepfake scams, and customer fraud faster, more credible, and harder to detect, AI is amplifying fraud and crime.

    • The real vulnerability may be internal silosĚý— Institutions need to be on the lookout, because what looks like a credit loss, an HR issue, or a payment request may actually be part of a wider multi-vector AI-enabled attack.

    • Institutions already have the tools to respondĚý— Through KYC and internal and behavioral data, financial institutions have the ability to respond to fraud threats — but only if teams connect and act together.

Fraud and crime existed long before AI, of course, but today’s technology delivers an acceleration in speed, scale, and success rate for fraudsters, resulting in billions of dollars in losses for victims. AI-enabled frauds on financial institutions by 2027 in the United States alone, and of detected fraud attempts on financial institutions use AI – and of these, 29% are successful.

To respond effectively to these threats, institutions need to implement a unified response that brings together departments that may not traditionally be partners. This cross-functional coordination should include not only the institution’s fraud and financial crime risk teams but also its credit risk, cybersecurity, and human resources functions.

And this response is critical, because today, financial institutions are being targeted by multiple types of AI-enabled attacks, including tactics such as:

• • • use of synthetic identities to circumvent know your customer/customer due diligence (KYC/CDD) controls and perpetrate fraud or launder money;
    • use of deepfake identities to gain employment, particularly by North Korean IT workers;
    • AI-enhanced “CEO frauds” to deceive staff into taking unauthorized actions; and
    • Bank customers may be targeted by fraud too, presenting further risk to financial institutions.

Let’s look at these threat vectors individually:

Vector 1: Synthetic identities and KYC/CDD

Synthetic identities can be entirely fabricated or may use combinations of real and fabricated personal information to create a new identity. For example, a fraudster may construct a synthetic identity using a Social Security number exposed during a data breach combined with an AI-generated passport.

This threat is real and happening now: identifies that criminals have already used AI to successfully open accounts using falsified documents, photographs, and videos. And according to , synthetic identities were used to open as many as 3% of US bank accounts, representing millions of identities. Not surprisingly, these illicit accounts are used to commit fraud and launder the proceeds of money laundering.

Vector 2: North Korean IT workers

North Korean individuals have successfully gained employment as remote IT workers at American companies, often passing themselves off as US nationals using AI-generated face-swapping technology combined with proxy computers and false identity documents. North Korean IT workers are almost $800 million annually for the regime.

Institutions deceived into employing these workers are not only against North Korea, but they are also exposing commercially sensitive data and systems to an adversary state, increasing the possibility of theft, cyber-attacks, and extortion.

Vector 3: CEO Fraud

A “CEO fraud” is a cybercrime in which an attacker impersonates an executive to deceive an employee into taking actions such as sending unauthorized wire transfers or disclosing sensitive information. AI accelerates these frauds by making them more personalized and credible.

In one of the more well-known examples, in an AI-enhanced CEO fraud in 2024 after the fraudster impersonated Arup Engineering’s CFO and requested a staff member to make several financial transfers. The criminals added credibility to the fraud by using a in which the target recognized many of their colleagues – unfortunately, all of them were deepfakes.

Vector 4: Frauds targeting customers

Where customers are targets, AI provides the scale, speed, and personalization to allow illicit actors to deliver individualized fraud. For example, whereas romance scams previously used repetitive scripts and re-used the same images of the romantic “partner,” fraudsters can now use AI-generated messages, images, or videos, continuously adapting the execution of the scam to the target’s responses and behaviors.

Creating a cross-functional and unified response

The examples above demonstrate the diverse and highly sophisticated uses of AI by illicit actors, both adversary states and criminal networks. Detecting and responding to these illicit activities requires joint action between teams that may not traditionally work closely together.

For example, if an account holder fails to repay a loan, the credit team may consider it to be a default by a legitimate customer and write it off as a credit loss. However, if the account was opened using a synthetic identity, investigation may reveal other accounts that share similar customer data points or transactional patterns. This could reveal a network of accounts that are perpetrating a fraud or money-laundering scheme. To detect and respond effectively, joint action is needed between KYC/CDD on-boarding teams, financial crime investigators, and fraud and credit risk professionals.

Alternatively, for HR teams to effectively identify use of face-swapping videos during a hiring process, knowledge from the organization’s cybersecurity team, especially of deepfake indicators, would be valuable. If a North Korea IT worker is hired and only later identified, cybersecurity and sanctions teams must be involved in the response to mitigate data, network, and compliance exposures.

Detecting and responding to all illicit activities requires joint action between teams that may not traditionally work closely together.

Finally, all staff may be targeted by deepfake fraud, but those in senior positions or departments with financial authority are the most vulnerable. This means it is essential for institutions to deliver employee training using real-life case studies, “near misses,” and scenarios drawn from across the institution and industry. This type of training will increase vigilance and minimize the likelihood of a successful attack.

For customers, financial institutions are well-positioned to identify indicators of fraud due to their extensive datasets of KYC/CDD records, transactional, and behavioral information. Institutions should enhance their customer relationships (as well as meet applicable regulatory requirements) by taking proactive measures to inform and protect their customers.

While AI has accelerated fraud and crime, financial institutions also hold valuable and relevant assets: the knowledge distributed across their cybersecurity, HR, credit risk, financial crime compliance, fraud, and KYC/CDD teams. By connecting these teams together, even in contexts in which these departments have not traditionally been partners, institutions will be well-positioned to protect both themselves and their customers from illicit actors’ sophisticated AI-enabled threats.

You can learn more about the fraud-fighting challenges faced by financial institutions and other organizations here

Key highlights:

• • • AI governance is hard to prove in practice — While our research shows that 44% of companies publish an AI strategy, 76% of those same companies show no evidence of having policies to evaluate the quality of data used to train AI systems.

    • Workers are being left under-prepared and under-protected — Only 14% of companies have policies to mitigate the negative impacts of AI on workers, and only 31% offer any reskilling or training programs around adapting to an AI-integrated workplace.

    • Human rights and ethics appear an afterthought in AI governance — Almost three-quarters (72%) of companies conduct no AI impact assessments, and less than 1 in 10 companies conduct ethical or human rights assessments.

There is a widening chasm at the heart of corporate AI governance, according to a new report, , published by the ¶¶ŇőłÉÄę Foundation and the United Nations Educational, Scientific and Cultural Organization (UNESCO).

The Foundation’s analyzed publicly available information from nearly 3,000 companies across 11 industry sectors, creating the most comprehensive picture yet of how organizations are managing AI.

Beneath the surface of corporate AI governance mechanisms, divergence between the speed of AI adoption and meaningful human oversight is growing. The report’s findings make clear that this is no longer a gap that organizations can afford to ignore, especially when backlash against is growing and are solidifying among consumers in the United States.

Data highlights the illusion of AI governance

Businesses of different sizes and across multiple sectors are adopting AI technology at a rapid pace. When governance exists only in the wording of a strategy or company vision, however, the people most affected by AI systems — workers, consumers, and communities — are left vulnerable. According to the report:

• • • 44% of companies publicly communicate having an AI strategy. However, a gap in AI governance is evident as more than three-quarters of those companies (76%) do not seem to have policies to evaluate the quality of data used to train AI systems.
    • 40% of companies report board- or committee-level oversight of AI. At the same time, strategic signals do not necessarily indicate operational capacity or day-to-day governance. In fact, less than one-third of all sampled companies claim to have an additional team or resource dedicated to AI governance. Moreover, limited information is publicly disclosed on the teams, processes, and accountability mechanisms that translate intent into action.

Workers are being left behind

Research by the International Monetary Fund finds almost , highlighting the acute nature of concerns about job displacement and declining opportunities for some groups. Without sufficient oversight, AI can threaten workers’ rights, amplify bias, and increase surveillance and work intensity, which can enable inhumane decision-making at scale.

The TR Foundation/UNESCO report notes that many companies are adopting AI without the safeguards needed to support workers and help them to adapt to the changes this technology brings. Less than one-third of companies were shown to offer training and reskilling programs for employees who may be adapting to an AI-integrated workplace. Even within the 31% of organizations in which these training programs exist, there is a vast variation in the scope and depth of the training offered.

In fact, many company training programs are not enterprise-wide or structured. Instead, they are ad-hoc or limited to leadership roles. This lack of investment in talent risks undermining the significant investment that companies are making in AI.

Despite growing pressure from regulators, policymakers and social justice campaigners, the ethical impact of AI appears poorly governed, with companies sharing limited information publicly.

The picture on worker protections is equally concerning. Only 14% of companies have public policies in place to mitigate the negative impacts of AI systems on workers, the report shows. This means the majority of companies either have no policies in place or do not publicly communicate them.

What is more troubling is that when workers experience harm, there is almost nowhere for them to turn. Only 2% of companies indicated they had a complaints mechanism — a critical early warning system for potential concerns. The findings suggest many organizations lack a mechanism for AI-related internal complaints beyond the broad generic complaint channel, and this is compounded by low awareness of the areas in which AI systems may infringe employees’ rights and protections.

Ethics and human dignity as an afterthought

Despite growing pressure from regulators, policymakers and social justice campaigners, the ethical impact of AI appears poorly governed, with companies sharing limited information publicly.

Human rights and ethical use of AI are treated as secondary considerations to compliance, according to our research. The majority of companies (72%) do not conduct any impact assessment with regard to AI. Only 7% publicly communicate conducting a fundamental or human rights impact assessment, and just 5% report conducting an ethical impact assessment.

Among those companies conducting some form of impact assessment, the focus skews sharply toward compliance rather than people. The most prevalent assessments are privacy or compliance-focused, with 18% of those companies that conduct some form of impact assessment reporting that they conducted a data protection impact assessment, and 14% reporting they conducted a privacy impact assessment.

How to center people in AI governance

Closing this governance gap is essential for companies in order to adopt AI responsibly and avoid costly legal, ethical operational, talent-related risks.

To support companies in navigating this challenge, offers a free survey to help companies map the areas in which AI is used across products, operations and services, and then benchmark those against peers their sector.

The report also contains case studies from companies that voluntarily shared their responsible practices with us. For example, German software company SAP intentionally designs and deploys its internal AI systems with a human-in-the-loop in which AI automates repetitive tasks and supports decision-making while final judgment and complex problem-solving remain firmly in the hands of employees.

As AI becomes part of core business infrastructure, companies must move beyond statements of intent and toward measurable AI governance.

In another example, BASF, a German chemical conglomerate, has jointly agreed with its workers’ councils on a general reskilling program that covers technical, hard, and soft skills. Finally, Canadian telecom company TELUS’ Indigenous Advisory Council provides guidance on AI ethics issues that directly affect indigenous communities.

Next steps for companies

The TR Foundation/UNESCO report highlights the most impactful concrete commitments that companies can take now to future proof against AI-related risk, including:

• • • investing in structured, enterprise-wide worker-reskilling programs that measure outcomes, not just participation;
    • establishing enforceable human rights impact assessments as a standard part of AI deployment, not as an optional addition; and
    • creating accessible, AI-specific internal grievance mechanisms so that workers and users have a genuine pathway to raise concerns and seek remedy.

As AI becomes part of core business infrastructure, companies must move beyond statements of intent and toward measurable AI governance. While this data demonstrates clear governance gaps, it also presents an opportunity for companies to take the lead on implementing responsible AI that operates openly in the public interest.

You can learn more about

Key insights:

• • • Define your risk appetite — A clearly defined fraud risk appetite aligns prevention efforts with strategic objectives and ensures accountability by establishing acceptable levels of fraud risk across the organization.

    • Create a fraud-specialized team — Dedicated ownership of the vendors that supply fraud solutions by a fraud-specialized team — rather than by the procurement function — is critical to maximizing technology performance and adapting to emerging threats.

    • Establish a specialized prevention division — The rise of sophisticated scams demands the creation of a separate, specialized prevention division to avoid overburdening core fraud teams and ensure targeted, effective responses.

Corporate fraud represents one of the most significant risks facing organizations today. Yet many companies lack the structured governance and technology infrastructure needed to combat fraud effectively.

The solution requires that comprehensive fraud prevention frameworks be built on clear governance, proper technology deployment, and data-driven insights, according to Aaron Frye, Founder & CEO of Lucid Point Consulting. Organizations that implement these five pillars create resilient fraud prevention functions capable of identifying and preventing fraud before it impacts results. These five pillars include:

1. Develop a fraud risk appetite

Effective fraud prevention begins with a well-defined fraud risk appetite that tells the right story to the right stakeholders. Your framework must communicate to your board, executive leadership, and operational teams the level of fraud losses your organization should tolerate, and in which areas you should prioritize fraud prevention investments.

The fraud risk appetite framework must address several key considerations; for example, it should define the level of fraud risk that aligns with the organization’s growth objectives, identify the areas of greatest vulnerability, and evaluate which investments will yield the strongest return. Equally important is the ongoing monitoring and communication of progress through regular reporting on fraud risk metrics, vendor assessments, and investigation outcomes. These actions demonstrate to stakeholders that fraud prevention remains an active priority for the organization and ensures that fraud risk continues to inform organizational decision-making.

2. Establish clear ownership of risk-solution vendors

Many organizations invest significantly in fraud detection tools only to see disappointing returns. The problem often lies not in the tools themselves, but in unclear ownership and accountability for their performance.

Organizations that implement these five pillars create resilient fraud prevention functions capable of identifying and preventing fraud before it impacts results.

If your organization lacks a designated person or team within your fraud strategy function whose job it is to ensure the risk-solution tools you’re getting from vendors are the best for your enterprise, you likely aren’t getting the most out of your vendors. This dedicated fraud service ownership role must act as your internal champion, evaluating vendor performance, staying current with product enhancements, and ensuring integration with other fraud prevention initiatives.

Critically, procurement, sourcing, and vendor management functions should never own this role. These teams, by the nature of their titles and responsibilities, don’t prioritize fraud. They lack the specialized knowledge required to assess whether your fraud detection technology is performing optimally or adapting to emerging threat landscapes. Without dedicated fraud expertise overseeing your technological investments, advanced tools sit underutilized and critical fraud signals go undetected.

3. Develop a fraud governance function

Every organization should have a dedicated fraud risk governance team within its fraud risk management organization. This governance function serves as your second line of defense, working proactively to reduce operational chaos within your fraud strategy, operations, and investigation groups.

If a non-fraud governance function owns fraud governance, you are guaranteed not to be getting the best form of governance. Fraud is a specialized discipline requiring dedicated expertise and focus; and your governance team must develop policies, establish standards, monitor control effectiveness, and ensure consistent application of fraud prevention practices across the enterprise.

4. Document existing risks and resource gaps

One of the most important responsibilities of your fraud governance function is identifying and documenting the areas related to fraud risk that your current fraud risk teams don’t have time to review. Due to capacity constraints, it is impossible for many fraud risk teams to cover all open gaps. Your organization must understand those open gaps and not be ashamed to address them.

Create an action plan that documents open risk and self-identified issues that your current team cannot adequately address. This transparency demonstrates clear-eyed realism about your organization’s limitations and creates the business case for requesting additional resources or engaging external consultants to help close these risk gaps.

5. Address the growing scam-prevention challenge

needs its own prevention strategy division within your fraud risk function. Compromised business email, investment scams, and vendor fraud schemes represent an entirely new category of fraud risk that demands specialized attention.

Every organization should have a dedicated fraud risk governance team that serves as its second line of defense, working proactively to reduce operational chaos within corporate strategy, operations, and investigation groups.

There has never been a full manageable grip on fraud prior to the spike in scams. Therefore, you cannot expect your existing fraud risk teams to tackle a new wave of scams as a priority as well as to manage traditional fraud prevention responsibilities. Your core fraud function manages internal control systems, transaction monitoring, and investigation protocols. Adding comprehensive scam prevention to this workload without dedicated resources guarantees that identifying and preventing scams will receive insufficient attention.

Establish a dedicated scam-prevention division focused specifically on emerging scam threats, employee education, scam-specific prevention technology, and response protocols. This specialized approach ensures sophisticated scam schemes receive the expertise and resources necessary while your core fraud function continues addressing traditional fraud prevention requirements.

Going forward into the fight against fraud

In an era of escalating fraud threats, reactive detection is no longer sufficient. Organizations must adopt a proactive stance grounded in strong governance, clear accountability, and strategic resource allocation.

By defining a fraud risk appetite, assigning ownership of fraud prevention tools, strengthening governance, documenting unaddressed risks, and establishing a dedicated scam prevention function, companies can build resilient, forward-looking fraud prevention frameworks. These five pillars enable organizations to anticipate threats, allocate resources effectively, and protect both financial performance and reputational integrity.

Today, the path to fraud resilience begins not with technology alone, but with deliberate, enterprise-wide commitment to proactive risk management.

You can find out more about ways to

Key insights:

• • • AI can improve officer safetyĚý— By helping them prepare for high-risk situations and make better decisions under pressure, advanced technology can enhance officer safety.

    • AI can increase operational efficiencyĚý— AI can reduce administrative burdens and improve efficiency overall, allowing officers to spend more time on police work.

    • Responsible implementation is essentialĚý— To ensure AI strengthens public trust while protecting civil liberties, proper guardrails and oversight need to be enacted.

Each year, during , we pause to honor the brave men and women in law enforcement who have made the ultimate sacrifice in service to their communities. As we pay tribute to those we have lost, we are reminded of the inherent dangers officers face every day.

In recognition of the importance of reflection and advancement, it is imperative that we examine the responsible application of emerging technologies, especially AI, to enhance officer safety, support their objectives, and reinforce overall public safety.

AI is already being integrated into public safety systems in meaningful, measurable ways. When guided by strong ethical principles, transparency, and commitment to community trust, AI can serve as a force multiplier and a protective partner for members of law enforcement. The goal is not to replace officers, of course, but to equip them with better tools, that allow them to reduce risk and return home safely after every shift.

Improving situational awareness and operational readiness

One of the most immediate benefits of AI in law enforcement is its ability to enhance situational awareness. When officers respond to a call, the first minutes on scene are often the most critical — and the most dangerous. AI can help reduce uncertainty by providing rapid access to relevant information.

For example, AI-powered systems can analyze incident data, criminal records, and community reports to give officers a clearer picture of what to expect when they arrive on scene. This includes identifying patterns of violence, recognizing repeat offenders, or flagging locations that may have a history of high-risk activity. Such insights allow for better preparation, smarter deployment, and more informed decision-making under pressure.

Additionally, AI can assist in public records and open-source searches, pulling critical data from comprehensive databases, the internet, and connected devices in seconds rather than hours. This immediate access to information enables faster, more effective responses. In short, AI can save valuable time when seconds count.

Streamlining administrative work to focus on the mission

Law enforcement officers spend a significant portion of their time on administrative duties, such as writing incident reports and managing court schedules and citations. These tasks, while necessary, take officers away from community engagement and proactive policing.

AI can help reduce this administrative burden by automating routine documentation. Natural language processing tools can draft reports based on officer input, ensuring consistency and freeing up time for frontline duties. Similarly, AI-driven scheduling systems can optimize shift assignments, account for court appearances, and manage on-call rotations. This AI-enabled administrative assistance goes a long way in ensuring that staffing levels are appropriate and that officers are not overburdened.

When guided by strong ethical principles, transparency, and commitment to community trust, AI can serve as a force multiplier and a protective partner for members of law enforcement.

By reducing the administrative load, AI allows officers to focus on what they do best — serving and protecting their communities. This not only improves job satisfaction among officers themselves but also increases operational efficiency and public safety outcomes.

Building guardrails for responsible AI use

As with any powerful advanced technology, the integration of AI into law enforcement must be guided by clear policies, oversight, and accountability. The goal is not to deploy AI indiscriminately, but rather to ensure its use enhances safety without compromising civil liberties or public trust.

This requires proactive collaboration between technologists, law enforcement agencies, policymakers, and the communities they serve. Standards must be developed for data privacy, algorithmic transparency, and bias mitigation. AI-enabled systems should undergo rigorous testing and independent review before deployment. Further, officers must be trained not only on how to use these tools, but also on the limitations and ethical implications of using these tools as well.

Finally, public trust is essential. Members of the community need to know that AI is being used to protect their safety and that of law enforcement — it is not a tool to surveil them without cause. Communicating transparently how the AI systems are designed, what data they use, and how decisions are made will be key to maintaining legitimacy and trust with the public.

A future of safer streets and stronger trust

The integration of AI into law enforcement is not about replacing human judgment — rather, it’s about augmenting officers’ judgment. When used responsibly, AI can reduce risk, improve preparedness, and support officers in carrying out their duties more safely and effectively.

In the years ahead, we can expect to see broader adoption of drone first responders, real-time language translation tools, and predictive systems that further help enhance officer and community safety measures. However, technology alone is not the answer. Success will depend on how thoughtfully these tools are implemented, how well citizens’ rights are safeguarded, and how deeply communities are involved in the process.

This week, as we honor those officers who have fallen in the line of duty, let us also commit to doing everything we can to protect those who serve today. AI, when applied with care, can be a powerful ally in their mission, keeping officers safe, allowing them to make better decisions, and together, building stronger, safer communities for all.

The data provided to you may not be used as a factor in establishing a consumer’s eligibility for credit, insurance, employment, or for any other purpose authorized under the Fair Credit Reporting Act.

You can find more on the challenges facing law enforcement here

Key insights:

• • • Prediction markets sit in a regulatory gray zone — Prediction markets’ economic function often looks much closer to gambling than traditional finance.

    • That ambiguity creates an AML blind spot — This blind spot allows potentially weaker controls around KYC, source of funds, sanctions screening, and suspicious activity reporting.

    • Banks and payment processors should focus on actual risk, not labels — Reputational, legal, and financial crime risk exposure can arise long before regulators clarify the rules.

Prediction markets have grown into a multi-billion-dollar ecosystem, offering the ability to enter into a contract to predict the outcomes on everything from elections and sports games to economic data and weather events. Yet as these platforms expand, they operate in a regulatory gray zone that raises serious questions for banks, payment processors, and compliance professionals.

Yet, the classification question that regulators and financial institutions continue to debate is not merely academic. It determines whether prediction market platforms will face the same anti-money laundering (AML) and know-your-customer (KYC) obligations as casinos and sportsbook venues, or whether prediction markets can continue to operate with minimal compliance oversight. This distinction has real consequences for the financial system.

“Prediction markets are not just a classification problem, they represent a structural gap in how financial crime risk is currently understood and managed,” says James Lephew, Founder & CEO of , a Charlotte-based consulting firm that serves major gambling operators and financial institutions globally.

Clarification is required in classifying this sector

Prediction markets occupy an ambiguous middle ground. Market operators position their platforms as financial derivatives or forecasting tools rather than gambling venues, emphasizing price discovery and statistical analysis over chance-based wagering. A contract on the outcome of a presidential election or a sports event, they argue, reflects crowd-sourced probability estimates grounded in information aggregation, not gambling luck.

Yet the fundamental mechanics raise legitimate questions. A user who buys a contract predicting that a candidate will lose an election is, in economic terms, wagering money on an uncertain outcome. The distinction between betting on a football game and trading a contract on the outcome of that same game becomes difficult to defend from a regulatory standpoint — and this classification matters enormously.

The distinction between betting on a football game and trading a contract on the outcome of that same game becomes difficult to defend from a regulatory standpoint — and this classification matters enormously.

If prediction markets are treated as gaming operations, they trigger Title 31 obligations under the Bank Secrecy Act, including currency transaction reporting, suspicious activity reporting (SAR) requirements, and comprehensive KYC procedures. If on the other hand, prediction markets are classified more akin to financial markets, these requirements may not apply. Currently, many prediction market platforms claim financial market status, allowing them to operate outside gaming regulations and with potentially weaker AML controls.

There is a compliance gap

Without clear regulatory classification, prediction markets create a significant AML blind spot. Casinos must report cash transactions exceeding $10,000, conduct source-of-funds reviews, and maintain detailed customer profiles. Sportsbooks face licensing requirements, geolocation checks, and responsible-gaming safeguards. Prediction market platforms, by contrast, often operate with minimal reporting obligations.

This gap introduces concrete risks. Digital wallets and cryptocurrency channels can obscure the source of funds. Structuring and layering of sources become easier without robust verification, further clouding who exactly playing in these markets. Collusive trading through multiple accounts allows value transfer that may go undetected. And VPN use and foreign payment channels can enable sanctions evasion.

Further, without mandatory SAR reporting, suspicious patterns tied to money laundering, terrorist financing, or market manipulation may never reach law enforcement.

“What we’re seeing is an AML blind spot,” says Lephew. “Platforms enabling financial flows with characteristics of gambling, but without the controls that regulators would normally expect.” Until classification catches up with the technology, he adds, this blind spot remains open — and exploitable.

Why this matters for banks and processors

Banks and payment processors that support prediction market platforms may carry significant reputational and legal risk if they haven’t conducted thorough due diligence — and they cannot rely on a platform’s self-classification as a financial market or forecasting tool. Nevada and other jurisdictions are actively examining whether these platforms constitute gambling, echoing concerns from the American Gaming Association that products carrying similar economic risks deserve similar regulatory treatment.

If a product allows participants to wager on uncertain outcomes and creates risk that is substantially similar to gambling, it should face AML and customer identification requirements proportionate to that risk.

“Risk must be assessed based on how the product actually behaves, not how it is marketed,” Lephew explains. And that means evaluating whether a platform applies robust KYC procedures, verifies the source of deposits and beneficial ownership, screens against sanctions lists, reports SARs to the government, prohibits contracts on high-risk events such as assassinations or terrorism, and uses geolocation controls to block users in restrictive jurisdictions. Those answers matter far more than whatever label the platform chooses, Lephew says.

The path forward

Regulators have several options. One approach applies gaming regulations uniformly, treating all prediction markets with economic characteristics similar to gambling as gaming operations subject to Title 31. A second approach creates explicit financial market classification with statutory AML obligations and enhanced scrutiny of high-risk contracts. A third option adopts a tiered or risk-based framework, classifying contracts on lower-risk events such as economic data or weather under financial market rules, while sports and election markets could face enhanced scrutiny. Violent outcome markets would be prohibited entirely.

Regardless of which path regulators choose, the principle should be the same: Classification should follow economic function. If a product allows participants to wager on uncertain outcomes and creates risk that is substantially similar to gambling, it should face AML and customer identification requirements proportionate to that risk.

Financial institutions should not wait for regulatory clarity. They should apply rigorous due diligence now, treating prediction markets with a heightened level of scrutiny appropriate to their actual risk profile rather than their claimed legal status.

The goal is not to eliminate prediction markets, but to ensure they operate within a framework that prevents money laundering, terrorist financing, and market abuse. “If it looks like gambling, behaves like gambling, and carries the same financial crime risk, it should be regulated accordingly,” Lephew notes. “Anything less creates systemic exposure.”

You can find out more about the challenges financial institutions face in their anti-money laundering efforts here

Key insights:

• • • Protecting SNAP requires modernization and accountability — This includes providing chip-enabled cards, stronger monitoring, recipient education, retailer oversight, cross-agency coordination, and fair reimbursement for victims.

    • Skimming is a growing problem — In the context of financial fraud, skimming refers to the illegal capture of personal data, typically through concealed electronic devices placed over legitimate card readers.

    • The harm can be immediate and severe — If their food benefits are stolen through skimming, vulnerable households can lose essential food funds, deepening food insecurity in their community.

Electronic Benefit Transfer (EBT) cards serve as a critical resource for the millions of Americans who depend on the nation’s Supplemental Nutrition Assistance Program (SNAP) to keep food on the table. The typical SNAP household is low-income and often includes children, seniors, or individuals with disabilities, who have earnings that fall at or below the federal poverty level. Based on household size, income, and other qualifying factors, these families receive monthly monetary assistance to help cover basic nutritional needs at authorized retailers.

Think of an EBT card as a debit card specifically designed for food benefits. Recipients use it to access their monthly balance at approved stores, making the process straightforward and dignified. However, like any electronic payment system, EBT is not immune to exploitation. One of the most pressing threats is a type of fraud known as skimming, which puts vulnerable households at serious financial risk.

What is EBT skimming?

Skimming, in the context of financial fraud, refers to the illegal capture of personal data, typically through concealed electronic devices that are placed over legitimate card readers. In the case of EBT fraud, criminals generally install tampered card terminals to steal EBT card information, including account numbers and PINs.

Unlike most modern credit and debit cards, EBT cards still rely on magnetic stripe technology, not more secure embedded chips. This outdated system makes them especially vulnerable to cloning, or the creation of counterfeit cards that contain the victim’s account number and PIN. Once a thief captures the data, they can create these counterfeit cards and drain benefits almost immediately, often within minutes of the monthly benefit deposit.

The result is that much needed food benefits, meant to last an entire month, are stolen without warning or recourse.

Why is EBT skimming so devastating

The consequences of EBT skimming go far beyond financial loss. For recipients, the theft of SNAP benefits can have immediate and severe impacts on their household food security and well-being. Other reasons why this form of fraud is particularly harmful include:

• • • Irreplaceable funds — For low-income households, SNAP benefits represent a critical portion of their monthly food budget. Once stolen, these funds are often impossible to replace. Families may be forced to skip meals, rely on emergency food pantries, or divert money from other essential needs like rent or medicine.
    • Outdated security technology — Despite advances in payment security, most EBT cards still use magnetic stripes, which can be easily copied with inexpensive skimming devices. By contrast, EMV chip technology, standard on most consumer credit and debit cards, makes cloning significantly more difficult.
    • Speed and precision of theft — Thieves often time their attacks to coincide with the monthly benefit deposit cycle. Once benefits are loaded, stolen card data is used rapidly, sometimes within minutes, making recovery nearly impossible.
    • Targeting vulnerable populations — EBT skimming preys on some of the most vulnerable members of society, including seniors, disabled individuals, and families living paycheck to paycheck. Many recipients may not have the resources or knowledge to monitor account activity regularly or to lock their cards after use, leaving them at greater risk.

Beyond skimming: A broader challenge of fraud, waste & abuse

While skimming is a serious and visible form of EBT fraud, it is only one symptom of a larger systemic challenge that fraud, waste & abuse cause in federal benefit programs.

Other forms of fraud include: retailers trafficking in EBT benefits for cash, which is a violation of SNAP rules; misrepresentation of income or household size during application; duplicate or ineligible benefit issuance; and administrative errors that lead to overpayments.

Each instance, whether intentional or not, erodes public trust in the entire benefit system, strains limited program budgets, and diverts resources from those individuals who need them most.

With federal funding for social programs under constant scrutiny and subject to periodic budget constraints, it is imperative that every dollar is protected and used appropriately. Preventing fraud is not just about saving money — it’s about ensuring that limited public resources serve their intended purposes of reducing hunger and supporting economic stability.

How to prevent fraud, waste & abuse in SNAP

Addressing EBT skimming and broader program vulnerabilities requires a well-rounded strategy that features technology, policy, education, and oversight working together.

On the technology side, one of the most impactful steps forward would be transitioning EBT cards from outdated magnetic stripes to EMV chip technology. This upgrade alone would significantly reduce skimming risks, and federal investment in that infrastructure is a necessary part of making it happen. Alongside that, state and federal agencies should be leveraging data analytics and real-time transaction monitoring to flag suspicious activity, like multiple withdrawals across different locations within a short window of time.

Education also plays a bigger role than many people realize. A large portion of EBT users simply do not know how to protect themselves. Basic habits like covering the keypad when entering a PIN, routinely checking account balances, and reporting lost or stolen cards right away can go a long way in reducing exposure.

One of the most pressing threats is a type of fraud known as skimming, which puts vulnerable households at serious financial risk.

From an oversight perspective, the U.S. Department of Agriculture — the government agency that oversees SNAP — and state agencies need to conduct regular audits of authorized retailers and hold them accountable. Any retailer found engaging in trafficking or enabling skimming should face deauthorization and legal consequences as well. Equally important is making sure that victims of confirmed fraud are not left without recourse. Clear and consistent policies for replacing stolen benefits can help restore trust in the program and prevent the food insecurity that this type of fraud directly causes.

Finally, none of this works in isolation. Effective fraud prevention depends on strong coordination between state human services departments, law enforcement, financial institutions, and technology providers. Information sharing and joint task forces strengthen the ability to detect threats early and respond quickly when issues arise.

Protecting the safety net

SNAP is one of the nation’s most effective tools in the fight against hunger. However, its success depends on both integrity and accessibility. Skimming and other forms of fraud not only steal from individuals, but they also undermine confidence in the entire system.

Policymakers, administrators, and citizens must prioritize modernization, accountability, and victim protection. By addressing vulnerabilities like EBT skimming and reinforcing safeguards against waste and abuse, we can ensure that SNAP remains a reliable and secure resource for the millions of individuals who rely on it.

You can find out more about how public agencies are working to fight fraud in government benefit programs here

Key insights:

• • • Getting at the core legal question — In a case brought by defendant Ongkaruck Sripetch, the Supreme Court is deciding whether the SEC must prove investors suffered measurable financial loss before courts can order disgorgement, which would require fraudsters to give up illegal profits.

    • Why it’s high-stakes — Disgorgement is a major SEC enforcement tool — representing billions of dollars annually — so a new requirement to prove investor losses could sharply limit when and how much the SEC can recover.

    • How the justices seemed to lean (so far) — Questions at the argument before the Court suggested skepticism toward Sripetch’s position, with several justices asking why it would be an unfair penalty to take back ill-gotten gains and noting the practical difficulty of proving each investor’s exact loss.

If you’ve ever wondered how the U.S. Securities and Exchange Commission (SEC) actually gets money back after it catches a fraudster, one of its biggest tools, disgorgement, is now under the microscope. This week, the U.S. Supreme Court heard arguments in a case, Sripetch v. SEC, that sounds technical on paper but has at its core a simple question: When the SEC makes a fraudster give up illegal profits, does it have to prove that investors suffered measurable, out-of-pocket losses first?

The case centers on Ongkaruck Sripetch, who the SEC says pocketed illicit proceeds through a classic pump-and-dump scheme from 2013 to 2017. Pump-and-dumps often involve penny stocks in which a person will hype up the price of these thinly traded stocks, then sell into the price spike they caused and walk away richer. Other stock traders who bought into the hype are the ones left holding the bag.

Sripetch admitted violating securities law and, in his subsequent criminal case, was sentenced to 21 months in prison. Separately, in the SEC’s civil action, a federal court in California ordered Sripetch to repay more than $3 million in ill-gotten gains plus interest.

The Supreme Court case isn’t a serious argument against the SEC’s ability to seek disgorgement — numerous courts have recognized the remedy for years, and Congress has since written the SEC’s ability to pursue it into federal law. The core question in the case is narrower, yet crucial for the SEC’s mission. It asks whether the SEC must show that victims suffered pecuniary or economic harm before a court can order disgorgement. Federal appeals courts have split on that point, which is why the Supreme Court agreed to take the case.

What is disgorgement, exactly?

Think of disgorgement as a legal give it back order. If a person or company makes money by breaking the securities laws — say by manipulating prices, lying to investors, or running a Ponzi-style scheme — disgorgement is designed to strip the profits away from that wrongdoing and the wrongdoers. In theory, it’s not about punishing someone for being bad, rather it’s about making sure crime doesn’t pay.

In real markets, harm can be scattered across thousands of trades, mixed up with normal price swings, and hard to trace to one bad actor. Disgorgement, on the other hand, gives securities regulators a way to focus on the part that’s often the clearest: How much ill-gotten profit the fraudster made.

Indeed, that not a punishment framing is important because the SEC has other ways to punish those convicted of securities law violations — such as civil penalties, disbarment from serving as an officer or director, industry suspensions, and more. Disgorgement is supposed to be different — an action that aims at profits, not pain. The government’s position in the Sripetch case puts it bluntly: Disgorgement is meant to strip ill-gotten gains from wrongdoers, not to compensate victims for their losses.

And disgorgement is not a niche tool. The SEC regularly collects big sums of seized money through disgorgement. According to recent figures, the SEC obtained about $1.4 billion through disgorgement in fiscal 2025 (excluding certain amounts), and $6.1 billion the year before, which represented nearly three-quarters of its total financial penalties for that year.

Those numbers may help explain why this Supreme Court fight is being watched so closely: The outcome could either keep the SEC’s playbook intact or force it to do a lot more legwork before it can ask courts to order payback.

The arguments before the Court

Earlier this week, both sides argued before the Supreme Court as to the potential future use of disgorgement and what requirements the SEC might have to meet when requesting court to order it.

Sripetch’s argument — Lawyers for Sripetch told the Court that the SEC shouldn’t be able to get disgorgement unless it can show that investors actually suffered financial harm, such as a price drop caused by the fraud or some other measurable loss. If the SEC can’t prove that kind of harm, the lawyer argues, then making Sripetch pay money looks less like giving it back and more like an impermissible penalty that the SEC is not allowed to levy.

The government’s argument — Lawyers for the U.S. Justice Department, defending the SEC, said the proof-of-loss requirement makes no sense. Disgorgement, in their view, is about the defendant’s gains, not the victim’s losses. One government lawyer summed it up as a straightforward principle: Disgorgement is intended to ensure a defendant does not profit from their own wrongdoing.

At this week’s argument, the justices sounded (at least generally) more sympathetic to the government than to Sripetch. Justice Amy Coney Barrett pressed the defense on its basic logic: If the court is only taking away ill-gotten gains — money the wrongdoer was never entitled to — why is that a penalty at all? Justice Ketanji Brown Jackson made a similar point, suggesting disgorgement would only feel like punishment when someone is forced to pay money that was rightfully theirs.

When Sripetch’s lawyer suggested the SEC should have to identify and prove each victim’s dollar loss, Justice Sonia Sotomayor’s response was basically, Why would anyone bother? If the SEC has to run a mini-trial on every investor’s exact harm just to reclaim the fraudster’s profits, disgorgement would be unworkable in many cases.

The practicality of that point is a big deal in securities fraud. In real markets, harm can be scattered across thousands of trades, mixed up with normal price swings, and hard to trace to one bad actor. Disgorgement, on the other hand, gives securities regulators a way to focus on the part that’s often the clearest: How much ill-gotten profit the fraudster made. The idea is deterrence-by-math — if you can’t keep the profits, the incentive to run the scheme shrinks.

The Supreme Court’s ruling, when it comes, could re-shape how the SEC negotiates settlements, litigates fraud cases, and talks about remedies and punishments going forward.

Still, some justices raised broader concerns about how disgorgement gets used in the real world, such as whether certain applications start to look punitive, or whether they raise questions about a defendant’s right to a trial by jury. However, the Court also seemed interested in deciding only the question of the requirement to prove victims’ losses and leaving those bigger constitutional debates for another day.

Why this matters (even if you aren’t the SEC)

If the Supreme Court agrees with Sripetch and requires proof of investor pecuniary harm, the SEC could face a higher hurdle in cases in which misconduct is real, but losses are tough to quantify on a trade-by-trade basis. That could mean fewer disgorgement awards, smaller ones, or more pressure to rely on classic penalties instead.

If the Court backs the government, however, disgorgement stays what it has largely been — a fast, flexible way to reclaim profits from securities fraud and a core part of how the SEC tries to keep the securities markets honest.

Either way, the ruling will shape how the SEC negotiates settlements, litigates fraud cases, and talks about remedies and punishments going forward. With the Court expected to issue its decision by the end of June, securities lawyers and stock market mavens will be keeping an eye on this case.

You can find more about the challenges facing the SEC here

Key insights:

• • • Tariffs erode supply chain integrity, not just margins — Rapid policy shifts can destabilize manufacturers’ supplier relationships, customs compliance, and production networks.

    • Unpredictability is the real threat — Changing duty rates and exemptions undermine forecasting and inventory planning, creating bottlenecks that ripple across customer commitments.

    • Adaptation beats anticipation — Leading manufacturers aren’t waiting for policy clarity, rather they’re adapting to the uncertain environment now.

Tariffs have presented significant challenges for manufacturers, increasing input costs and undermining the stability of global supply chains. During the Trump administration, tariffs have become a focal point in debates over the broader economic implications of trade policy. Since 2025, has included a 10% minimum global tariff on a broad range of imports, additional measures targeting China, and various product- and country-specific actions — all developments that have reshaped corporate sourcing strategies and international trade planning.

In February, the U.S. Supreme Court’s decision inĚý marked a pivotal shift in trade authority. By a 6-3 vote, the Court held that the President lacked the constitutional authority under the International Emergency Economic Powers Act (IEEPA) to impose tariffs, emphasizing that such measures constitute taxes and are therefore within exclusive legislative domain of the U.S. Congress. The ruling invalidated many tariffs implemented by President Trump in 2025, providing some legal clarity while also raising questions about the future of US trade policy. Although the decision limits executive power, uncertainty still persists regarding how Congress will exercise its reasserted authority and what new legislative or trade measures may follow in such a dynamic and uncertain economic environment.

This Supreme Court’s ruling does not eliminate tariffs but rather shifts their governance by curtailing unilateral executive authority under IEEPA and reasserting Congress’s constitutional role in setting tax and customs policy. That means, of course, that tariffs will not disappear but instead will become more politically negotiated and legislatively codified. For supply chain leaders, this introduces a different kind of uncertainty that will be rooted in legislative timelines, committee negotiations, and the potential for prolonged policy stalemates.

Indeed, it’s unclear whether tariffs imposed through statute will prove more durable and harder to reverse than those enacted via executive order. Ultimately, this legal shift underscores the need for manufacturers to take a proactive adaptation and not one of complacency.

For corporate risk professionals, particularly those within manufacturing companies, these developments carry substantial implications. Tariffs extend beyond increasing import prices and affect profitability, workforce planning, and long-term supply chain resilience. They introduce volatility into customs procedures, supplier qualification, cross-border logistics, and production network design. When trade rules change rapidly, as they have in recent months, the integrity of global supply chains is increasingly difficult to maintain.

Why tariffs hit supply chain integrity so hard

In a global supply chain, every cross-border movement is governed by import and export rules set by the countries involved. Tariffs change those economics immediately, and they also trigger a chain reaction that ripples through sourcing, logistics, compliance, and planning. For example, the (CBP) has had to issue repeated implementation updates on new tariff actions, including guidance tied to imports from China, Canada, and Mexico, underscoring how quickly operating conditions can change for importers. That creates several clear risks to supply chain integrity.

One of the first impacts is on supplier relationships. When tariffs make a sourcing region less viable, manufacturers are often forced to move away from long-established suppliers and instead quickly on-board alternatives in lower-tariff markets. That may reduce immediate cost pressure, but it can also weaken quality control, transparency, and reliability if the new suppliers prove to be less able.

This is already showing up in manufacturer behavior. , a nonprofit organization dedicated to supporting manufacturing leaders, reported that in January, more than half (57%) of manufacturers said that US tariff policies were having a moderate or significant negative effect on confident decision-making related to sourcing, pricing, and investment timing. The same research found that companies were increasingly shifting from passive monitoring their supply chains to making active changes in sourcing.

Even after the Supreme Court’s legal invalidation, many impacts of previously imposed tariffs persist, as retroactive refunds are not guaranteed — indeed, the government has for such refunds. And these administrative delays in duty recovery can strain cash flow, while companies that already restructured their operations by relocating suppliers, renegotiating contracts, or investing in new logistics infrastructure cannot easily unwind those changes.

Clearly, the economic and operational consequences of past tariffs have already altered global sourcing maps, and those manufacturers that had shifted production to Southeast Asia or Mexico during the 2025 tariff surge may maintain those footprints even if duties are lifted, due to sunk costs or new regional advantages. This illustrates how even temporary policy shifts can have permanent effects on supply chain integrity.

Tariffs force structural changes and create bottlenecks

Tariffs also create operational instability. When duty rates, exemptions, and country-specific rules change, manufacturers’ ability to forecast their trade strategy becomes more difficult, and inventory planning becomes less reliable. Customs processing can become more complicated as companies work through classification questions, preference claims, and changing documentation requirements.

For manufacturers running lean networks, that unpredictability can be dangerous. Delays at ports, shipment holds, or reworks tied to customs compliance can ripple across production schedules and customer commitments. The CBP has specifically noted ongoing tariff implementation updates through its Cargo Systems Messaging Service, which only underscores how much administrative attention that manufacturers now need to dedicate to keeping updated on trade compliance.

Tariffs can also break the logic of just-in-time supply chains. If landed costs become unstable or sourcing risk rises, companies often shift toward just-in-case strategies by holding more inventory, extending forecast horizons, or redesigning production footprints. That may improve resilience in the short term, but it also ties up working capital and reduces efficiency.

Manufacturers Alliance research describes this as a move toward tactical adaptation rather than true resolution. In other words, many manufacturers are learning how best to operate in a tariff-heavy environment; however, as the system becomes more buffered, more complex, and often less efficient, it’s unclear when or whether things will return to a state resembling the previous stability.

How supply chain professionals can mitigate tariff risk

For corporate risk and supply chain leaders, the most practical response starts with supplier diversification. Overconcentration in one tariff-exposed region creates avoidable vulnerability. Manufacturers also should use supplier information management technology to map sub-tier dependencies, because tariff exposure often sits deeper in the supply base than tier-one suppliers alone reveal.

Other strong mitigation strategies include nearshoring to reduce long-distance logistics exposure and scenario planning to stress-test tariff shocks before they happen.

Those manufacturers best positioned for continued disruption ; instead, they are building flexibility into sourcing, inventory, and trade compliance now.

The bottom line

The Supreme Court’s decision in Learning Resources marks a significant check on executive power around tariffs, but it does not signal a return to stable or predictable trade policy. Tariffs remain a potent and politically salient tool, now subject to legislative rather than unilateral control.

For manufacturers and their corporate risk professionals, the imperative remains unchanged: Supply chains must be designed not just to survive today’s tariffs, but to adapt to the next wave of trade policy disruption. Indeed, resilience is no longer a function of cost minimization alone. It requires transparency, agility, and a deep understanding of how legal, political, and economic forces converge at the border. The most effective manufacturing companies will continue to be those that treat tariff exposure not as a compliance afterthought, but as a core dimension of supply chain integrity.

You can find out more about the challenges manufacturers are facing from tariffs here

Key insights:

• • • Human rights and environmental sustainability in sports are inseparable — Environmental harms from major sporting events — such as pollution, extreme heat, and flooding — directly undermine fundamental human rights including health, housing, and safe working conditions.

    • Mega sporting events require an integrated, lifecycle-wide approach — From supply chains and stadium construction to urban planning and event delivery, the sports industry’s environmental footprint and human rights impacts span the full lifecycle of these events, demanding a single, integrated playbook.

    • Accountability extends to sponsors and partners, not just hosts and organizers — As scrutiny from regulators, media, and civil society grows, sponsors and corporate partners are increasingly seen as responsible for the combined human rights and environmental impacts of the events they support.

This blog post was co-written with Sreeratna Kancherla and Anna J. Christians of the Henekom Group.

Sports are entering a defining decade. The convergence of climate and nature risk, growing environmental accountability, and increasing scrutiny of how mega sporting events affect the communities that build and host them has brought a long-overdue challenge to the center of sports governance.

Due to their scale, frequency, and global reach, the upcoming FIFA World Cup 2026 and the 2028 Olympics to be held in Los Angeles, alongside competitions such as the 2027 Rugby World Cup and the ICC Men’s T20 World Cup, form part of an ambitious pipeline of major events in a generation. How the sports sector responds to that challenge will shape how the next era of global sport is planned, delivered, and remembered.

Human rights due diligence during mega sporting events and environmental sustainability are often thought of as neighboring agendas, related but managed separately. In practice, however, they are inseparable. When air quality deteriorates, the right to health is at stake. When flooding displaces communities, the right to housing and livelihood is at stake. When extreme heat makes outdoor labor dangerous, the right to safe working conditions is at stake.

The environment is the condition in which human rights are either protected or violated, and sustainability, properly understood, is the commitment to preserving those conditions for current and future generations.

The need for an integrated playbook

The case for an across the lifecycle of sport reflects the scale and complexity of the sporting industry’s impact, with emissions comparable to those of a midsize country, according to . The industry’s heavy reliance on plastics across stadiums, equipment, and apparel contributes to pollution that worsens the global environmental crisis. And those environmental choices carry human consequences at every stage, for the workers who build the facilities, the residents who live alongside them, and the fans who attend the events.

The environmental footprint of the sports industry touches people across the entire lifecycle of a major event. The supply chains necessary to deliver a mega-sports event span facility development, apparel, technology, and food & beverage. These industries are among the highest risk for labor exploitation, migrant worker abuse, and unsafe working conditions. When a host city builds a stadium and hosts events there, the environmental impact is measurable and so is the human rights impact on the workers building the stadium. Indeed, this impact extends to the neighborhoods that may be displaced to make room for it, and to the residents left to live alongside its infrastructure once the event has ended.

You can find more about the resources, tools, and information that cities and organizations need to addressĚýhuman trafficking around large-scale sporting events at the Thomson Reuters Institute’s Large-Scale Public Events Toolkit here

In addition, major events that rely on street circuits or temporary urban infrastructure can significantly reshape public space and surrounding neighborhoods. Air pollution, construction zones, and rising short-term rental demand also may displace residents and the unhoused population, restrict access to services, or place pressure on already fragile housing markets. In these cases, mega-sports event planning intersects directly with citizens’ rights to housing, mobility, and access to public space.

Expanding accountability

, rooted in the , is the structured process that makes those consequences visible and gives sustainability strategy its human accountability. Because environmental and human rights impacts are inseparable in practice, that accountability extends beyond organizers and host governments to the sponsors and corporate partners of the event. Many operate in sectors which already face scrutiny over their global supply chains; and therefore, alignment with a contentious event can amplify these vulnerabilities while inviting additional public and regulatory attention.

As the regulatory landscape, advocacy groups, and the media intensify their focus on the impact of these mega-sport events, sponsors are increasingly seen not only as influential stakeholders, but as actors with a degree of responsibility for the combined environmental and human rights impacts of the events they fund and support.

Moving from principle to practice

For example, Mercedes-Benz Stadium in Atlanta — home of the NFL’s Atlanta Falcons along with a venue for soccer and concerts — demonstrates that environmental performance and community impact are the same priority and can be pursued through a single design brief. Indeed, it was the first stadium worldwide to receive for zero waste, and its 2.1-million-gallon system helps prevent flooding in neighboring communities. Additionally, the stadium created targeted employment through the and delivered staff training to more than 700 people.

The same integrated logic is now being applied at the event level. Ahead of the FIFA World Cup 2026, host city organizing committees in Houston and Dallas introducedĚýthat address labor exploitation, including human trafficking risks, alongside targeted environmental measures. These measures are treated as a single procurement workstream to be addressed through an integrated response.

Leadership, legacy & the decade ahead

The organizations that will define the next decade of global sports are those that treat human rights and environmental sustainability not as parallel strategies but as two expressions of the same obligation to the people and communities on which sports depend.

This means designing facilities with both environment and humanity in mind from the outset, managing worker rights and environmental standards together across supply chains, and placing extreme heat measures, labor protections, community access, and sustainability targets within a single accountable governance framework.

Governing bodies, organizing committees, sponsors, and host cities that act on this integrated approach have the opportunity to build systems that are more responsible, more durable, and more trusted to define what credible and future-ready sports event management looks like.

You can find more about the impact of mega-sporting events on communities here

Key takeaways:

• • • The FIFA World Cup is a catalyst, not the root cause — Mexico City’s housing affordability crisis predates the coming tournament. Rental prices have been rising uncontrollably for years, displacing thousands of families annually. The World Cup will accelerate and amplify an already existing problem.

    • The 2024 rental reform is a step in the right direction, but it has significant limitations — Capping rent increases at the annual inflation rate was a necessary measure, but its impact has been limited by grey areas in the law.

    • The real battle is formalization — No housing regulation can be fully effective if a large portion of the market operates outside of it. Until authorities find ways to make formal rental agreements genuinely attractive and accessible for both landlords and tenants.

On the eve of the 23^rd playing of the FIFA World Cup, Mexico stands as one of three host countries for one of the most significant sporting events in the world. It will feature matches in Mexico City, Guadalajara, and Monterrey, and it will be co-hosted alongside the United States and Canada.

Organizing such an event carries notable financial benefits, including a surge in tourism, job creation, and substantial foreign investment — all of which generate a local economic spillover that strengthens the national marketplace. At the same time, Mexico’s major capitals— especially its World Cup host cities — have been undergoing a level of urban transformation that has significantly altered the daily lives of its residents. Chief among these changes is the sharp rise in rental costs, which has been pushing residents toward the cities’ outskirts. According to government figures, are displaced each year due to the uncontrolled increase in housing prices in Mexico City alone.

Mexican authorities had to get to work

Legal changes to real estate regulation in Mexico City are not isolated, and what is implemented in the capital often sets a precedent for the rest of the country. Time and again, Mexico City has served as a laboratory for new policies, and when these are proven effective, they become models for nationwide reform.

According to government figures, more than 20,000 households are displaced each year due to the uncontrolled increase in housing prices in Mexico City alone.

That said, in August 2024 — after the city’s head of government noted that rentals costs in none of the boroughs of Mexico City fall below the city’s minimum wage, and that 9 out of 13 boroughs average rents that exceeded twice the minimum wage — the Official Gazette of Mexico City published a decree amending Articles 2448-D and 2448-F of the Civil Code for the Federal District, imposing limits on rent increases for residential properties. Previously, the monthly rent increase could not exceed 10% of the agreed-upon rent. That paragraph was amended to establish that rent increases shall never exceed the inflation rate reported by the Bank of Mexico for the previous year.

It is worth noting that the prior 10% cap was nearly three times the general annual inflation rate calculated by the Bank of Mexico in 2025, which stood at 3.69%.

More than a year after these reforms took effect, however, 2025 closed with an average increase in rental prices of . With the FIFA World Cup approaching, prices are expected to continue rising uncontrollably due to the influx of tourists drawn by the event. This concern is well-founded: Ahead of the 2022 World Cup in Qatar, empowered landlords to raise rents by more than 40%.

Mexico City’s rental reform also introduced additional measures. For example, a digital registry for lease agreements was established, to be immediately authorized and managed by the Government of Mexico City. Landlords now are required to register lease agreements within 30 days of their execution. Furthermore, landlords are prohibited from refusing to rent to tenants on the grounds that they have children or pets.

The registration requirement carries real consequences: Should a landlord fail to register a contract within the stipulated period, their ability to invoke legal protection mechanisms in the event of a dispute with a tenant becomes significantly more complicated.

Regardless of the efforts, it’s not all smooth sailing

That said, the reform contains certain grey areas that limit its scope. For instance, it only applies under specific conditions — most notably when a lease has been in place for three years or more. A landlord can effectively circumvent the cap by choosing not to renew an existing contract and instead requiring the tenant to sign a new one at a higher price.

A separate but equally significant obstacle to the reform’s effectiveness is the rapid growth of short-term rental platforms. In recent years, the proliferation of temporary accommodation services has steadily reduced the supply of traditional long-term rentals, as more properties are listed on platforms such as Airbnb, Vrbo, or others. Indeed, every 48 hours, three housing units in Mexico City are . And from a national perspective, the Tourism Gross Product reached approximately US $151.5 billion, equivalent to 8.7% of Mexico’s GDP.

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Every 48 hours, three housing units in Mexico City are converted into Airbnb listings.

This problem is further compounded by the scale of informal rental arrangements. According to the National Housing Survey conducted by Mexico’s National Institute of Statistics and Geography (INEGI), there are more than 200,000 informal rental agreements in Mexico City — none of which involve formal contracts.

Forcing the real estate market into formalization

This brings us to the central challenge facing city authorities with regard to housing: The need to incentivize the formalization of the real estate market. This is already complicated by the country’s low tax culture and the requirement for landlords to enter a specific tax regime that raises their tax burden. Additionally, rental contracts are not only essential for protecting tenants’ rights, but they also are equally important for landlords — because without a legally binding agreement, there is no guarantee that the terms of any arrangement will be honored.

Paradoxically, the recent reform may actually push the informal market further underground. By requiring landlords to formally declare their rental income, the regulation inevitably creates a sense of heightened oversight — one that informal landlords may seek to evade rather than comply with.

To the authorities of Mexico City, the message is clear — punitive measures alone will not bring the informal market into the fold. Tax benefits for landlords who register their contracts, streamlined and accessible digital registration processes, and legal protections that make formal agreements genuinely advantageous for both parties could go a long way toward building trust in the system.

The 2026 FIFA World Cup will come and go, of course, but the people of Mexico City will remain. They deserve a housing market that works for them — not one that treats their homes as a commodity to be priced beyond their reach every time the world turns its attention to their city.

You can find out more about the