Scaling New Heights: Navigating Fraud Challenges in 2025

In 2025, the financial landscape resembles a treacherous mountain range - each peak representing an evolving fraud threat that demands not only cutting-edge technology, but also a cohesive, global response. As financial institutions strive for resilience, the journey to the summit of robust fraud defence requires strategy, innovation, and collaboration.

A Look Back: The Continued Rise of Fraud in 2024

2024 was another year of record-breaking highs for financial crime, and not in a good way. Small and medium-sized enterprises (SMEs) were particularly vulnerable - 41% fell victim to fraud, facing average losses of £3,808. Common schemes included billing fraud (26%), phishing scams (24%), and account takeovers (23%). But the issue wasn’t just domestic. Cross-border fraud, particularly within the UK and Europe, surged to rates nine times higher than domestic fraud, exposing regulatory weaknesses and the limited reach of existing defences. 

It's believed that just 13% of fraudulent incidents were reported last year, and in the UK, only 1% of funds were ultimately recovered. This gap between impact and intervention reflects the urgent need for transformation in how fraud is detected and prevented.

As a result, regulatory responses have intensified. In the UK, the Economic Crime and Corporate Transparency Act 2023 introduced a corporate offence for failure to prevent fraud, taking effect from 1 September 2025. This landmark legislation holds companies criminally liable unless they can prove they had "reasonable" fraud prevention measures in place. Further regulatory involvement has come in the form of APP Reimbursement rules, placing 50% liability on sending and receiving banks for faster payment fraud. Meanwhile, the FCA increased scrutiny on brokers, citing inconsistent suspicious activity reporting. 

The Climb: Key Fraud Trends in 2025

As financial institutions adapt to this shifting terrain, five critical trends and priorities are reshaping how fraud risk is approached:

1. Cross-Border Collaboration and Data Sharing

Fraud is not confined by geography. Global fraud networks exploit regulatory fragmentation, with cybercriminals operating across borders and jurisdictions. To counter this, data sharing through federated learning - a method that allows institutions to train shared models without exposing underlying data - is emerging as but one of many powerful solutions. The effectiveness of such models relies heavily on the quality of data being shared. Financial Institutions have been rolling out ISO 20022 payment message types which allows for much richer data sets in payments. This has brought a significant increase in data volume, which can be used to enhance fraud measures. Unlocking the ability of ISO 20022 to provide more structured data allows systems to unlock richer insights, but it is vital that that data is accurate, consistent, and fit for purpose in the fight against fraud to release the power of new monitoring systems.

However, the privacy implications are significant. Achieving the right balance requires greater international collaboration between regulators, policymakers, and financial institutions. Without a coordinated approach, the benefits of federated systems may be stifled by legal and operational barriers.

2. Governance Over Technology Alone

Technology is essential - but insufficient on its own. Strong governance and oversight must underpin every fraud prevention strategy. From private banks and payment service providers (PSPs) to central banks, a layered defence model rooted in robust policy, procedure, accountability, and regulatory engagement is needed.

This includes building fraud risk frameworks aligned with business risk appetites, introducing internal incentives to report and escalate fraud threats, and fostering a culture where fraud prevention is seen as a strategic imperative - not just a compliance checkbox.

3. Predictive Models Over Rules-Based Systems

Traditional, rules-based systems are rapidly becoming obsolete. Fraud typologies evolve as quickly as technology itself, constantly outpacing traditional defences, and leaving static systems blind to emerging threats. A shift toward AI-driven, predictive analytics is key - using synthetic data to train models, and validating them on real-world inputs, gives firms the adaptability they need to stay ahead.

By embedding these systems within fraud operations, institutions can move from reactive postures to proactive detection - intercepting fraudulent behaviour before it causes damage.

4. Breaking Down Internal Silos

Too often, fraud risk is isolated from broader financial crime functions like AML, transaction monitoring, or KYC. This siloed approach limits visibility, information sharing and stifles collaboration across risk domains. Fraud must be embedded within an integrated financial crime strategy - one that unifies processes, systems, and data across the enterprise.

Aligning fraud with broader financial crime frameworks can lead to faster detection, improved mitigation, and more informed strategic decision-making.

5. A Common Fraud Language: Standardised Typologies

Combatting fraud also requires a shared vocabulary. Right now, typologies are defined inconsistently across firms, regulators, and jurisdictions - making cross-comparison, benchmarking, and collaboration nearly impossible.

A single, labelled fraud taxonomy, adopted across the industry, would create clarity. It would allow firms to map their exposure, assess risk in context, and apply mitigation strategies with greater precision.

Projective Group: Your Guide to the Summit

At Projective Group, we recognise that navigating the future of fraud prevention requires a multi-layered approach - combining strategy, innovation, governance, and execution.

Our Fraud Health Checks and Fraud Maturity Cycle Assessments benchmark fraud risk against regulatory and industry practice ensure your fraud operations are running efficiently, effectively, and are integrated into your financial crime frameworks.

Developed by consolidating terminology used across the industry and aligning it with practices observed in other jurisdictions, our taxonomy is designed to standardise fraud typologies. By leveraging this common framework, firms can map their inherent risks, align controls to their broader risk appetite, and lay the foundation for a fraud strategy that is both proactive and resilient.

Our payment experts work with numerous financial institutions, including Financial Market Infrastructure firms, banks and PSP’s and have extensive knowledge of cross-border transactions, implemented ISO 20022 payment message type standards and detection tool calibration. Our team is well placed to support your organisation in identifying key opportunities, mitigating emerging threats and realising benefits.

Our managed services and managed capacity solutions support firms in optimising process-driven tasks, from transaction monitoring and fraud referrals to SAR reporting. Through our Financial Crime Training Academy, teams receive expert, consistent training - enabling institutions to scale confidently and compliantly.

Reaching the Peak

The road to a fraud-resilient future is steep - but not insurmountable. By embracing innovation, fostering international collaboration, and embedding fraud prevention into the core of operations, organisations can not only protect themselves, but also contribute to a stronger, more unified financial ecosystem.

At Projective Group, we stand ready to guide your ascent - equipping your organisation with the insights, tools, and support needed to meet the challenges of 2025 and beyond.

Ready to reach the summit? Get in touch to learn how our fraud solutions can help secure your organisation’s future.