When Payment Providers Become the Front Line of Financial Crime

15 Jun, 2026

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An exclusive article by Viktoria Soletsz

Back in the day, crime prevention was the responsibility of those who uphold justice: the police. Today, payment providers, banks, and other financial institutions have become an essential part of that responsibility. In the era of cash transactions, we all remember the classic gangster movies where criminals carried bags full of cash, only for the police to follow the trail and put them behind bars.

Today, criminality looks very different. It has become digital. But the idea is still the same: follow the money.

Since it is impossible to place a police officer next to every person making a transaction, governments have forced digital transactions and eliminated cash, while appointing banks to help protect the financial system. When suspicious funds enter an account, banks are expected to identify, investigate, and stop them. To make sure banks take this responsibility seriously, regulators imposed significant fines when monitoring and control failures occurred.

As a result, financial institutions became the first line of defence against financial crime. And their responsibility changed significantly, too.

The Era of FinTech

FinTech is developing at an incredible speed, and the rapid growth of e-commerce, digital platforms, marketplaces, embedded finance, digital wallets, and alternative payment methods has fundamentally changed how money moves around the world. Technology not only helps users, but criminals also take advantage of increasingly sophisticated systems.

As technology providers take a larger role in moving money, they also take on greater responsibility for identifying and stopping suspicious activity. Payment providers are the customer-facing front-end layer of banking services, which means they are the first to see suspicious activity, long before a bank is even aware of the transaction.

Neobanks and PSPs were originally born to facilitate commerce. Their priorities included improving customer experience, increasing approval rates, supporting new payment methods, accelerating onboarding, and helping merchants grow. They were never meant to be compliance powerhouses, so they have treated financial crime prevention as a compliance obligation instead of a strategic responsibility.

Criminal organisations realised that modern payment infrastructure allows funds to move across multiple jurisdictions, payment methods, and institutions within seconds, while allowing them to exploit regulatory gaps when moving money internationally. Scammers adapted to the digital economy much faster than many legitimate businesses: as commerce moved online, financial crime followed exactly the same path.

Today, digital payment channels have become the primary environment for fraud, money laundering, mule account networks, sanctions evasion, fake identities, and organised criminal activity.

The Inception of Providers

Not many businesses realise it, but the majority of financial providers today simply resell each other’s services under a different name. One acquirer provides processing for multiple payment providers, who then offer their services as Banking-as-a-Service platforms, which then sell through various reseller gateways. By the time the customer receives a financial service, the transaction can pass through multiple entities (sometimes even the exact same ones!) without anyone disclosing it to the end user.

This long payment chain creates additional opportunities to exploit weaknesses, technology glitches, and regulatory arbitrage, where criminals channel transactions through multiple countries and specific providers that allow a transaction to pass when other channels would block it immediately.

The Control Point Paradox

Payment providers are one of the most important control points within the financial system, and this makes them a critical line of defence against financial crime. The only problem is that their motivation was never to fight financial crime, but to increase profit.

These tech companies are privately owned, growth-focused entities. Their goal is to onboard new clients, increase transaction volumes, and come up with features that sell at higher prices. Financial crime prevention is more of a burden rather than a core motive.

This creates a structural paradox. The same infrastructure that gives payment providers unmatched visibility over financial flows is optimised to let those flows pass as smoothly as possible. As long as transactions continue to generate revenue and do not immediately trigger regulatory consequences, there is little incentive to intervene early. Suspicious activities are often only addressed when they become unavoidable, rather than when they are first detected. As a result, the point in the system best positioned to stop financial crime is often the least incentivised to do so.

The Capability Gap

Even though there are more financial institutions than ever before, most of them operate as private, lean organisations rather than heavily regulated and structured institutions like traditional banks. Regulators allowed FinTechs to encourage innovation and competition, giving these providers the flexibility to scale quickly without the operational weight that banks typically carry.

This also means they operate with significantly fewer resources, smaller compliance teams, and less sophisticated control frameworks. Unlike banks, FinTechs were not built with complex monitoring systems or large investigative functions in place. And even though they have access to the same data as banks, this does not necessarily mean that they understand it in the same way.

Regardless of the regulatory exposure, without the right tools, experience, and internal expertise, many providers struggle to identify what actually matters. Signals of financial crime are often missed, misunderstood, or deprioritised because the organisation is not equipped to interpret them correctly. As a result, even when suspicious activity is visible, it does not always translate into action. The responsibility exists, but the capability to carry it effectively does not always follow.

Education as the Missing Layer

All of these challenges point to a deeper issue within the financial ecosystem. Regulation can enforce responsibility, and technology can provide visibility, but neither can fully compensate for a lack of understanding. Today, many of the decisions that shape how money moves are made by people who were never properly trained to carry that responsibility. The systems have evolved faster than the knowledge required to manage them.

The ones who manage payment and banking tasks are not adequately trained to do so. Key areas, such as how payments and banking affect technology, UX, compliance, and other essential aspects of a business, are absent from accounting and economics courses and MBA programmes. Our mission is to set standards and build an ethical and transparent payment and banking industry where everyone is properly trained and informed, and no one benefits from anyone’s lack of knowledge.

Without education, regulation becomes reactive and allows misinterpretation of the controls. Institutions can only recognise the importance of their responsibilities and detect risks better if they understand what they are doing and why they are doing it.

Preventing crime only in order to avoid fines is the wrong approach. The goal is to build an ecosystem that is understood by the people operating within it, and where knowledge becomes the foundation for trust, accountability, and long-term stability for the entire society.

Key Points

Payment service providers have become one of the most important AML control points in the modern financial system.
Criminal networks increasingly exploit digital payment infrastructure, cross-border transaction chains, and regulatory arbitrage opportunities.
Many FinTechs and payment providers prioritize growth, onboarding, and transaction volumes over proactive financial crime prevention.
A capability gap persists as numerous providers lack the resources, expertise, and investigative functions traditionally found within banks.
Education and professional standards remain critical to improving the effectiveness of AML controls across the payments ecosystem.

Some of FinCrime Central’s articles may have been enriched or edited with the help of AI tools. It may contain unintentional errors.

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When Payment Providers Become the Front Line of Financial Crime