Rising Financial Crime Risks in India: Insights from Kroll’s 2025 Financial Crime Report
Mumbai, Maharashtra – In a revealing report released by Kroll, a leading independent provider of global financial and risk advisory solutions, the landscape of financial crime in India is set to become increasingly perilous. The 2025 Financial Crime Report indicates that a staggering 96% of executives in India’s financial and professional services sectors anticipate a rise in financial crime risks by 2025, significantly higher than the global average of 71%. This alarming statistic underscores the urgent need for organizations to reassess their compliance frameworks and risk management strategies.
Key Drivers of Financial Crime Threats
The report identifies several critical factors contributing to the anticipated rise in financial crime, including cybersecurity threats, the increasing use of artificial intelligence (AI) by criminals, evolving regulations, geopolitical tensions, and sanctions. Notably, the Asia-Pacific (APAC) region exhibits the highest average of concern, with 82% of respondents expecting an uptick in financial crime.
Cybersecurity stands out as the leading catalyst for risk exposure, with 76% of respondents highlighting it as a primary concern. The report also notes that the growing sophistication of AI tools used by criminals is a significant threat, with 72% of executives acknowledging this risk. Other contributing factors include increased incidents of predicate crimes (44%), financial pressures on individuals (48%), and challenges posed by remote working environments (44%).
Compliance Programs: A Cause for Concern
Despite the overwhelming consensus on rising risks, only 36% of Indian executives believe their organization’s financial crime compliance program is “very effective.” This discrepancy raises critical questions about the preparedness of organizations to combat financial crime. The report highlights two main reasons for the ineffectiveness of compliance programs: a lack of technological investment and weak governance structures. Only 36% of respondents strongly agree that their compliance programs are adequately equipped with the necessary technology, while 40% express doubts about the robustness of their governance infrastructure.
The Role of AI in Compliance
As organizations increasingly adopt AI and machine learning technologies, the perception of their effectiveness in enhancing financial crime compliance is mixed. While 68% of respondents believe that AI developments will benefit their compliance programs, only 32% report seeing a “very positive impact” on their frameworks. Alarmingly, the percentage of executives who view AI as beneficial has decreased from 37% in 2023 to just 20% in the current report. This decline reflects growing concerns about the dual-edged nature of AI, with 52% of respondents acknowledging that AI poses significant risks to compliance.
Cryptocurrency and Geopolitical Risks
The report also sheds light on the rising concerns surrounding cryptocurrencies, with 56% of respondents indicating that the financial crime threat posed by digital currencies is a moderate to significant concern. However, only 28% of organizations have compliance programs that address cryptocurrency-related risks, with an equal percentage planning to do so in the future.
Geopolitical risks are another pressing issue, particularly in light of recent global events. Only one-third of respondents feel “very prepared” to tackle geopolitical challenges over the next year, with many expressing concerns about the evolving sanctions landscape. The report indicates that nearly half of the respondents lack confidence in their compliance programs’ ability to evaluate supply chain threats, with cybersecurity (64%) and political instability (44%) identified as the most prominent threats.
The Path Forward: Strengthening Compliance Frameworks
As the financial crime landscape becomes increasingly complex, the need for robust compliance frameworks is more critical than ever. Tarun Bhatia, Regional Managing Director and Co-Head of APAC Investigations Diligence and Compliance at Kroll, emphasizes the importance of strengthening governance structures and investing in technology to mitigate risks. He notes that while 96% of respondents expect financial crime risks to rise, only one-third believe their compliance programs are effective, highlighting a significant gap that needs to be addressed.
Vicky Gala, Associate Managing Director at Kroll, adds that the Indian government and regulators are actively working to update guidelines and regulations to address the challenges posed by technological advancements. As the impact of AI continues to evolve, compliance professionals must remain vigilant and equipped with the best tools and strategies to protect their organizations.
Conclusion
The findings from Kroll’s 2025 Financial Crime Report serve as a wake-up call for organizations in India’s financial and professional services sectors. With the anticipated rise in financial crime risks driven by cybersecurity threats, AI, and geopolitical uncertainties, it is imperative for businesses to enhance their compliance frameworks and governance structures. As the landscape evolves, staying ahead of financial crime will require a proactive and informed approach, ensuring that organizations are not only prepared to face the challenges of tomorrow but also equipped to thrive in an increasingly complex risk environment.