Rising Transnational Financial Fraud and Investment Risks in the U.S.: Navigating Geopolitical and Cyber-Enabled Threats

The U.S. financial landscape in 2025 is increasingly shaped by transnational financial fraud, driven by geopolitical tensions and cyber-enabled tactics. From sanctions evasion involving sanctioned Russian oligarchs to AI-generated deepfakes targeting investors, the risks are evolving at an unprecedented pace. These threats are not only eroding investor confidence but also forcing a recalibration of capital allocation strategies.

Geopolitical Tensions Fuel Fraud and Regulatory Scrutiny

The U.S. government has intensified enforcement against transnational criminal organizations (TCOs) and sanctions evasion. For instance, OFAC imposed a $215.9 million penalty on GVA Capital for managing investments on behalf of a sanctioned Russian oligarch, underscoring the risks for gatekeepers who facilitate illicit financial flows [1]. Similarly, Family International Realty faced a $1.08 million settlement for transferring property from sanctioned Russian oligarchs to their family members [1]. These cases highlight how geopolitical conflicts, particularly with Russia and Iran, are creating fertile ground for fraud.

The rise in tariff evasion and customs fraud further complicates the picture. Agencies like U.S. Customs and Border Protection are targeting schemes involving false declarations and undervaluation, reflecting the broader economic pressures from global trade tensions [5]. Meanwhile, the DOJ’s reorientation of the Foreign Corrupt Practices Act (FCPA) to prioritize national security threats—such as cartel operations and corruption that harms U.S. companies—signals a shift toward aggressive enforcement [4].

Cyber-Enabled Fraud: AI and Cryptocurrency as Double-Edged Swords

The integration of artificial intelligence and cryptocurrency has introduced new vulnerabilities. AI is being weaponized for “AI washing” and identity deepfakes, enabling fraudsters to manipulate investor sentiment through synthetic content on platforms like TikTok and WhatsApp [3]. Cryptocurrency, meanwhile, has become a tool for large-scale laundering, with illicit addresses receiving up to $40.9 billion in 2024 [2]. The professionalization of on-chain illicit activities, including infrastructure services for laundering, has made these crimes harder to trace [2].

Regulators are responding with heightened scrutiny. FINRA has issued warnings about generative AI-enabled fraud, including synthetic identities and cybercrime-as-a-service, while the SEC has updated Regulation SCI to address cybersecurity threats [1]. Coinbase, a leading crypto exchange, has implemented U.S.-centric security measures, such as in-person onboarding and camera interviews to detect deepfake impersonation, reflecting the industry’s compliance-driven adaptation [1].

Investor Confidence and Capital Allocation in a High-Risk Environment

Despite a generally optimistic outlook for 2025—73% of U.S. institutional investors do not anticipate a recession—geopolitical and cyber risks are tempering enthusiasm. A Natixis survey found that 63% of investors view high valuations as a significant portfolio risk, while 64% fear geopolitical tensions escalating into new conflicts [1]. The same survey noted that 91% of investors see regulatory uncertainties in China as a major deterrent to investment, with many shifting capital to other emerging markets [1].

The velocity of geopolitical risk is also accelerating. Abrupt U.S. tariff policies in 2025 disrupted markets, forcing investors to adopt dynamic stress-testing and scenario planning [4]. PGIM’s 2024 Global Risk Report highlights that 56% of institutional investors rank geopolitical risk as their top concern, yet one-third plan to increase risk-taking in 2025, signaling a strategic pivot toward resilience [3].

Regulatory Responses and the Path Forward

Regulators are closing gaps in oversight. The Financial Action Task Force (FATF) has designated Iran, North Korea, and Burma as high-risk jurisdictions, urging enhanced due diligence [6]. Meanwhile, the OECD’s Crypto-Asset Reporting Framework (CARF) mandates annual reporting on cross-border crypto transfers, aiming to improve transparency [2].

For investors, the message is clear: adapt or face systemic risks. Firms are increasingly prioritizing real-time monitoring, enhanced liquidity management, and AI-driven AML systems to mitigate threats [3]. However, the challenge lies in balancing innovation with security. As one-third of investors plan to take on more risk in 2025, the focus must remain on robust compliance and scenario planning [3].

Conclusion

The confluence of geopolitical tensions and cyber-enabled fraud is reshaping U.S. financial markets. While regulatory efforts are tightening, the sophistication of fraud schemes continues to outpace defenses. Investors must navigate this landscape with caution, leveraging technology not just for growth but for resilience. The coming years will test the adaptability of both regulators and market participants, with the stakes higher than ever.

Source:
[1] U.S. Sanctions Review: A Recap of OFAC's 2025 Enforcement Actions and a Look Ahead [https://www.globalinvestigations.blog/sanctions-2/u-s-sanctions-review-a-recap-of-ofacs-2025-enforcement-actions-and-a-look-ahead]
[2] 2025 Crypto Crime Trends from Chainalysis [https://www.chainalysis.com/blog/2025-crypto-crime-report-introduction/]
[3] PGIM survey: Investors to Continue Risk-On Appetite in 2025, Despite Geopolitical Uncertainty [https://www.pgim.com/in/en/institutional/about-us/newsroom/press-releases/pgim-survey-investors-to-continue-risk-appetite-2025-despite-geopolitical-uncertainty]
[4] Key Insights: National Security Enforcement Under Trump [https://www.dechert.com/content/dechert/en/knowledge/onpoint/2025/7/national-security-enforcement-under-trump.html]
[5] Geopolitical & Cyber Risks Remain Top Threats in 2025 [https://www.dtcc.com/news/2024/december/04/geopolitical-and-cyber-risks-remain-top-threats-to-the-financial-services-sector-in-2025]
[6] Financial Action Task Force Identifies Jurisdictions with Anti-Money Laundering Deficiencies [https://www.fincen.gov/news/news-releases/financial-action-task-force-identifies-jurisdictions-anti-money-laundering-3]