Europe tightens its grip on money laundering – but criminals remain ahead

Europe stands on the verge of its most comprehensive reform of anti–money‑laundering (AML) rules in decades. A new EU authority, a common rulebook and even tougher requirements are intended to close the gaps criminals have exploited for years. Yet developments are heading in another direction.

Ninety‑eight percent of European financial institutions report record‑high compliance spending. At the same time, money laundering is increasing – both in Denmark and across Europe. A Danish case from December 2025 illustrates the problem. Police carried out nationwide raids and charged six people with running an underground banking network connected to organised criminal groups. The network moved millions of Danish kroner through fake invoices, cash deposits, cross‑border transfers and cryptocurrency. Behind the façade were retail shops, shell companies and digital assets – exactly the sort of structures that thrive in the gaps between regulations and authorities.

This case is not unique; it reflects a wider European problem.

Limited impact

Less than two percent of criminal proceeds in Europe end up being confiscated, even as the financial sector was spending another €80 billion on fighting financial crime in 2025. The impact on crime is negligible. Europe has more rules than ever. The problem persists.

The EU’s upcoming reforms raise high expectations. A new European Anti‑Money Laundering Authority (AMLA) and a common rulebook aim to harmonise requirements, close national loopholes and strengthen supervision. For financial firms, this means another wave of implementation: new risk assessments, policies, processes and technologies. For many, it will be the third major transformation programme in less than ten years.

The rationale makes sense: fragmented oversight across countries has created weak spots.

An uncomfortable answer

But a crucial question arises: do new rules actually reduce money laundering, or is Europe repeating an exercise that has already shown limited effect? The answer is uncomfortable. Harmonisation is necessary but does not solve the core problem.

Regulation still focuses primarily on the financial sector. Criminals increasingly operate outside it. Money laundering now takes place within a far broader ecosystem. Cash‑based money laundering is increasing, even though citizens use less cash. Criminals use small retail and service businesses to get dirty money into the economy. Trade‑based laundering is growing rapidly, with false invoices, manipulated prices and complex supply chains hiding illicit value as legitimate trade.

At the same time, digital channels accelerate the trends. Stablecoins, decentralised exchanges and peer‑to‑peer crypto platforms move value globally at a speed traditional controls cannot follow. Fraud has become one of the largest sources of criminal revenue in Europe; losses exceeded $100 billion in 2025. Crime networks organise themselves like corporations, with structure, pace and scale. When one door closes, another opens.

Only traces detected

Here lies the central weakness in Europe’s efforts. New rules strengthen control where laundering is already difficult, while criminals exploit blind spots between sectors, authorities and countries. Financial firms face increasing demands; criminals adapt and move on.

If Europe wants to reduce money laundering, tightening rules further isn’t enough. Information sharing needs to increase in speed and scale. Data must flow in real time across countries and industries – not only within the financial sector. Initiatives such as Denmark’s ODIN network and the UK’s FUSION programme show potential, but the efforts must broaden and connect more closely. Law enforcement needs more teeth. When only a fraction of illicit funds are traced and seized, the deterrent effect vanishes. Investigation, prosecution and confiscation matter more than yet another compliance requirement.

Regulation must be based on actual criminal behaviour. The focus should shift from institutions to flows of money and networks. Efforts must follow how criminals operate. The challenge is straightforward: criminals operate as agile, global networks. Europe does not. Harmonisation creates uniformity. Uniformity doesn’t stop organised crime. Only strong networks can break criminal networks.

Read the article in Danish in Børsen.