BUSINESS

Financial crime has long been one of the most persistent and expensive problems in banking. Despite decades of investment in compliance systems, money laundering and fraud continue evolving, often faster than the tools designed to detect them, noted Shufti.What makes the challenge more difficult today is scale. Financial systems are faster, more global, and increasingly digital. But many of the frameworks used to monitor them are still rooted in an earlier era.That gap is forcing a rethink, and artificial intelligence is beginning to reshape how institutions approach risk.A financial system criminals learned to outsmartFor years, anti-money laundering (AML) systems have relied on rule-based logic, per Fintech Global. Transactions are flagged based on thresholds, locations, or patterns associated with known risks.The problem is that those rules do not stay secret for long.Criminal networks have learned to operate just below detection thresholds, fragment transactions, and mimic legitimate behavior. Over time, systems designed to catch fraud end up generating noise instead, overwhelming compliance teams with alerts that often lead nowhere.At the same time, more sophisticated threats slip through.AI fights financial fraud: from rules to pattern recognitionArtificial intelligence is changing how financial institutions approach detection by moving beyond static rules.”The industry is at a crossroads. Digital native challengers are adopting AI first detection engines, but Tier 1 institutions can’t just rip and replace decades of infrastructure,” Brad Levy, CEO of ThetaRay, told TheStreet.That shift turns compliance into something closer to a living system. Instead of reacting to known threats, it continuously learns what normal looks like and flags what does not fit.The rise of more sophisticated financial threatsFinancial crime is becoming more complex, not less.It increasingly involves coordinated networks, cross-border activity, and in some cases, automation designed to mimic legitimate transaction flows. Confirmed money laundering cases more than doubled in the first half of 2025 compared to the same period in 2024, according to BioCatch.Why these threats are harder to catchCriminal networks now use automated bots to layer transactions across borders, deliberately mimicking legitimate payment flows.Activity is often split across multiple accounts, making it invisible when viewed transaction by transaction.Deep-fake identity attempts rose 230% year-over-year in 2025, according to Shufti, giving bad actors new ways to open accounts undetected.”Financial crime today is 3D chess that can really only be played effectively with AI. We are seeing bot powered layering across borders designed to mimic legitimate transaction volumes,” Levy said.This ability to detect anomalies, rather than just known risks, is one of AI’s most important advantages. It allows institutions to surface behavior that would otherwise remain hidden.Industry shifts toward AI-driven anti-money laundering complianceThe move toward AI driven compliance is not limited to one company or approach. Across the financial system, institutions are exploring ways to use machine learning to improve detection and reduce inefficiencies.Regulatory fines for AML failures totaled approximately $1.23 billion globally in the first half of 2025, a 417% jump from the same period a year earlier, according to ComplyAdvantage. Ineffective transaction monitoring was among the most common drivers.More AI Stocks:Morgan Stanley sets jaw-dropping Micron price target after eventBank of America updates Palantir stock forecast after private meetingMorgan Stanley drops eye-popping Broadcom price targetThe pressure is growing on all sides. “In 2026, financial institutions will accelerate adoption of cloud-native, AI-driven AML and fraud solutions that can surface complex patterns,” said Ahmed Drissi, AML lead for Asia-Pacific at SAS. “Banks that migrate toward explainable, real-time analytics will gain significant compliance and risk advantages.”That growing regulatory attention highlights both the opportunity and the pressure. As financial crime becomes more technologically sophisticated, expectations around detection are rising.Institutions are not just competing on speed and cost anymore. They are also being judged on how effectively they manage risk in a more complex environment.

Experts say banks that migrate toward explainable, real-time analytics will gain an anti-money laundering compliance advantage.Sulaiman/ Getty Images

AI helps accurately monitor suspicious activityOne of the most immediate benefits of AI is its ability to reduce false positives.Traditional systems can generate massive volumes of alerts, forcing compliance teams to spend time investigating activity that turns out to be legitimate. Between 90% and 95% of alerts generated by legacy AML systems are false positives, according to research cited by Wipro, Fintech Global highlighted. This creates inefficiency and increases operational costs.AI helps narrow that focus.By improving accuracy, it allows institutions to concentrate on genuinely suspicious behavior. That shift does not just improve detection rates. It also changes how compliance teams operate, moving them away from manual review and toward higher value analysis.Fixing the customer friction created by fraud preventionThere is also a customer dimension to this shift.For years, stronger compliance has often meant more friction. Transactions get flagged unnecessarily, payments are delayed, and customers are asked to verify routine activity.In a digital-first financial system, that experience matters.With more precise detection, AI can help reduce unnecessary interruptions, allowing legitimate transactions to move more freely while still maintaining oversight. That balance has been difficult to achieve with traditional systems.The limits of financial institutions’ AI adoptionDespite the momentum, the transition is not without challenges.Large financial institutions are still dealing with legacy infrastructure, regulatory expectations, and internal complexity. Integrating AI into compliance workflows requires more than just new technology. It requires changes in how risk is assessed and managed.There is also the issue of explainability.The biggest barriers slowing AI adoptionLegacy infrastructure at large banks makes full integration slow and risky.Internal complexity requires changes in how risk is assessed, not just new technology.Regulators increasingly expect institutions to justify every decision with a clear, auditable rationale.It is not enough for a system to flag a transaction. It must also provide a clear rationale that can be reviewed and audited.This is shaping how AI systems are deployed, with a growing focus on transparency and traceability.A longstanding financial crime problem meets a new approachFinancial crime is not going away. If anything, it is becoming more sophisticated as technology lowers the barrier for bad actors.What is changing is the industry’s response.For years, compliance systems have been reactive, relying on rules that were always one step behind. AI introduces a model that can learn, adapt, and evolve alongside the threats it is meant to detect.It does not eliminate risk, and it does not replace human judgment. But it does address one of the core weaknesses that has defined financial crime compliance for decades.For the first time in a long time, the system may be starting to keep up.Related: From bulldozers to AI: Caterpillar’s history & next chapter

A brand’s success in one market can create the illusion of universal appeal. In reality, consumer resonance is often highly localized. What works in one country across pricing, positioning, and product mix does not always translate seamlessly to another.That is what makes international expansion inherently risky. Differences in consumer behavior, culture, economic conditions, and competitive dynamics all shape how a brand is perceived. Even well-established companies can struggle if they underestimate these factors, because prior success at home is no guarantee of performance abroad.This makes the latest move by Marks & Spencer particularly notable, not just as a retail expansion, but as a test of whether a legacy British brand can finally translate its appeal to U.S. consumers.Marks & Spencer returns to U.S. apparel retailMarks & Spencer has revealed a new collaboration with Nordstrom to launch a curated selection of bestselling womenswear across 30 Nordstrom stores and online, according to a company announcement.The assortment features over 60 pieces from Marks & Spencer’s core collections, marking the first time the retailer’s fashion line will be available in physical stores across the U.S.”Now is the time to build our brand awareness in the U.S. Fashion market and establish ourselves as a globally trusted brand,” said Mark Lemming, Managing Director of International at Marks & Spencer in the announcement. “We’re delighted to partner with Nordstrom, a partner who shares our values and will support us as we accelerate our growth.”Marks & Spencer’s past U.S. expansion attemptsThis is not the first time the company has tried to enter the U.S. market.Marks & Spencer initially expanded in 1988 through the acquisition of Brooks Brothers from Federated Department Stores, later launching standalone stores under its own brand, according to The Standard.However, the strategy ultimately failed. Misalignment in product assortment, sizing standards, and pricing limited its appeal to American consumers. By the late 1990s, performance had deteriorated significantly, leading to mounting losses. The company closed its U.S. stores and exited the market entirely in 2001.A more recent re-entry in a different category proved more successful. In 2022, Marks & Spencer introduced its food range through a partnership with Target, where products like its Percy Pigs gained strong traction, reportedly selling more than 30,000 bags every week, according to Marks & Spencer.

Marks & Spencer partners with Nordstrom to reenter the U.S. market.Shutterstock

Marks & Spencer’s new fashion strategy Encouraged by its success in food, Marks & Spencer is now taking a more measured, data-led approach to reintroducing fashion in the U.S.According to company data, 13% of U.S. consumers are aware of the brand’s fashion offering, with particularly strong recognition among women aged 25-34. More than 51,000 customers also shop via its U.S. website annually.Partnering with Nordstrom allows Marks & Spencer to scale efficiently by leveraging an established retail network rather than investing heavily in standalone stores. This “asset-light” wholesale model reflects a broader strategic shift toward building a global presence through scalable partnerships rather than capital-intensive expansion.The approach has already been tested internationally. In Australia, Marks & Spencer partnered with David Jones, initially launching lingerie before expanding into womenswear and menswear following strong performance.Why international brands struggle in the U.S.Marks and Spencer is far from alone in its past difficulties.Industry experts say many international brands fail in the U.S. not because of product quality, but because they underestimate how differently the market operates.Advertising and creative strategist Andrea Cerinza notes that European customers tend to be more conservative in their spending, while U.S. customers are more responsive to aspiration, speed, and convenience.”Breaking into the U.S. market isn’t just about translating your website or increasing ad spend,” said Cerinza. “It’s about translating your strategy, creatively, culturally, and emotionally.”Coverage on more retail business:Aritzia brings back iconic fashion brand after shutdownGLP-1 weight loss disrupting fashion retail demand125-year-old retail chain to close more stores in 2026Jessica Wong, founder and CEO of marketing and PR firm Valux Digital, says that global brands often hesitate to localize out of fear of diluting their identity.”Global brands do not fail because they communicate locally,” Wong said in Forbes. “They fail because they underestimate how deeply local trust systems shape perception, credibility and long-term success.”Analysts from Harvard Business Review support this view, noting that localization is no longer a surface-level adjustment. Companies need to adapt operations, supply chains, and partnerships at a structural level, even at the cost of efficiency, to compete effectively across markets.Marks & Spencer’s financial performance supports expansionThe U.S. expansion comes as Marks & Spencer shows signs of operational recovery following years of underperformance.For fiscal year 2025, the company reported:Revenue growth of 6%Operating profit increase of 22%A 5% rise in Fashion, Home & Beauty market share, reaching 10.5%At the same time, Marks & Spencer continues to streamline its store portfolio. It recorded an £84.4 million ($112.35 million) charge related to its multi-year store rotation program, which includes closures, asset impairments, and accelerated depreciation.The company plans to reduce its full-line store count from 229 to 180 by 2028, signaling a shift toward a more efficient and modern retail footprint, according to a company announcement.Nordstrom faces a challenging but evolving retail landscapeThe timing of this expansion is complex. According to McKinsey & Company’s State of Fashion 2026 Report, the global fashion industry is expected to see only low-single-digit growth amid macroeconomic instability, tariff pressures, and increasingly value-conscious consumer behavior, particularly in the U.S.Despite these challenges, some legacy retailers are adapting. As Fortune retail and leadership expert Phil Wahba noted, competitors such as Macy’s, Bloomingdale’s, Nordstrom, Belk, and Dillard’s have invested in upgrading stores, merchandising, and customer service, efforts that not only support sales but also enhance their value.These efforts are beginning to show measurable results. Nordstrom recorded a 3.3% increase in year-over-year foot traffic in the first quarter of 2025, according to Placer.ai.Still, some analysts remain cautious. Department store partnerships can provide reach, but they also limit control over brand presentation, pricing, and customer experience, factors that have historically been critical to success in the U.S. market.Marks & Spencer’s more calculated second attemptMarks & Spencer’s renewed U.S. strategy reflects a more disciplined and informed approach than its earlier expansion, but it is also fundamentally different.Rather than attempting to establish a standalone retail presence, the company is effectively distributing through established partners, seeking to mitigate the risks that led to its prior exit. However, success will depend on whether the brand can build relevance among American consumers within another retailer’s ecosystem.While the outcome remains uncertain, the combination of improved financial performance, a partnership model, and a deeper understanding of the U.S. market shows that this second attempt is designed for a very different retail landscape than previously. Related: 77-year-old jewelry giant will close 100 stores, shut 2 brands