$5.5 trillion lost to money laundering every year worldwide, new research shows

Dubai: Money laundering is draining an estimated $5.5 trillion from global economies each year, equivalent to 5% of global GDP, according to new research from Napier AI.

The Napier AI / AML Index 2025–2026, produced in collaboration with GlobalData and Napier AI’s Data Science team led by Dr. Janet Bastiman, ranks 40 countries on their effectiveness in combatting financial crime and highlights how artificial intelligence can transform anti-money laundering (AML) efforts.

The study estimates that financial institutions worldwide could save up to $183 billion annually in compliance costs and that global economies could recover more than $3.3 trillion each year by reducing illicit financial flows through AI-enabled systems.

Napier AI’s analysis shows that China, the United States, Germany, and India experience the largest money laundering losses in absolute terms. Smaller economies, including the UAE, Romania, and South Africa, face higher relative impacts compared with their GDP, underscoring the shared global nature of the challenge.

In the United States, around $730 billion is laundered annually—about 2.5% of GDP—making it one of the hardest-hit markets alongside China. Brazil’s illicit finance losses equal nearly 8% of GDP, while Germany’s total exceeds $200 billion, or 4.5% of GDP.

The United Kingdom sees $195 billion laundered annually, roughly 5.35% of GDP, reflecting continued pressure on compliance systems. Canada and Australia, by contrast, recorded improvements driven by early AI adoption and stronger oversight.

Napier AI CEO Greg Watson said global money laundering remains a “multi-trillion-dollar problem” but added that AI-driven detection systems are beginning to make a measurable difference.

“Compliance teams are drowning in alerts, wasting time chasing false positives,” Watson said. “Smarter, explainable AI systems can help reduce noise, sharpen detection, and deliver real savings.”

Across major financial centers, compliance teams face thousands of daily alerts for potentially suspicious transactions — most of which turn out to be false. The volume of alerts closely correlates with GDP losses, highlighting how overburdened systems enable criminal activity to persist.

The report also points to new money laundering risks emerging from global trade shifts, including the rapid reorganization of supply chains and the introduction of new tariffs. Criminal groups are exploiting these transitions by falsifying invoices, manipulating payments, and rerouting shipments through third countries to obscure their origins.

Survey data in the report shows that 73% of compliance professionals view AI as highly effective for transaction monitoring, and over a quarter rank it as the most impactful tool for detecting suspicious activity.

As global financial systems digitise, Napier AI’s findings underscore that technology-driven compliance reform is essential — not just to cut costs but to safeguard economies from the escalating risks of illicit finance.