The Evolving Role of the CFO in Combating Financial Crime: 3 Important Steps

Financial crime is evolving faster than finance teams can keep up. Deepfakes fool executives into authorizing wire transfers. Synthetic identities slip past “know your customer” tools. The fraud playbook changes every quarter.

CFOs used to focus on balancing books and managing compliance. Today, they must act as strategic leaders in the fight against fraud. The stakes are higher, the tactics more sophisticated and the responsibility squarely on leadership.

The Biggest Financial Crime Risks Facing Companies

The scale, speed and sophistication of financial crimes are worsening. Emerging technologies like deepfakes have emboldened fraudsters to target everyone from individuals to the C-suite.

The same tactics that compromise individual consumers can devastate corporate accounts.

The Rising Cost and Complexity of Financial Crime

Looking at the bigger picture is key, as the same people who orchestrate or fall victim to fraud may be sitting just one cubicle away. According to the Federal Trade Commission, consumers lost more than $12.5 billion to fraud in 2024, a 25% year-over-year increase. Corporate losses follow similar trajectories, yet many companies remain unprepared.

As fraud grows more complex, detection, incident response and prevention become more challenging. Traditional safeguards no longer suffice against modern threats. However, for many organizations, prevention isn’t a priority.

PwC’s 2024 Global Economic Crime Survey revealed that only 59% of companies completed an enterprise-wide fraud risk assessment in 2024. This may be because the stakes haven’t been made clear to stakeholders. An effective risk assessment process isn’t just a matter for a select few industries. Fraudsters are picking targets indiscriminately.

Why CFOs Must Lead the Fight Against Financial Crime

Enron is synonymous with financial fraud. Years have passed, but the scheme to hide billions in debt is still among the largest corporate fraud cases in history. Using market-to-market accounting, then-CEO Jeffrey Skilling hid the company’s losses.

Andrew Fastow could have blown the whistle when he became CFO. Instead, he concealed the losses to maintain the illusion of profitability. The fact that several CFOs have been involved in large-scale accounting fraud demonstrates that they wield immense power. In the right hands, it could be used to stop deceit, embezzlement and money laundering.

Historically, the CFO’s role has been to manage a company’s financial activities, ensure compliance with relevant regulations and protect vital assets. This used to be a reactive, numbers-focused role. Today, it’s less about traditional financial oversight and more about strategic leadership.

Are AML and KYE Policies Operating Effectively?

The immense cost of compliance is a constant pressure point. Anti-money laundering (AML) and know your employee (KYE) policies require substantial investment and continuous oversight. The cost of AML compliance alone is $23.5 billion per year in the United States.

Senior oversight of AML and KYE policies falls to finance leaders. Even if they haven’t been involved historically, they need to take charge, as the stakes of AML noncompliance are incredibly high.

Ensuring these policies operate effectively mitigates fraud risk. CFOs must ask whether current frameworks stop bad actors and deliver measurable protection. Effective programs require regular testing, employee training and technology integration.

Key Areas Where CFOs Can Make the Biggest Impact

Strengthening internal controls, unifying risk insights and fostering awareness form the core pillars of a CFO-led fraud mitigation strategy. Each area demands different skills but serves the same goal.

1. Strengthen Internal Controls and Risk Assessments

Financial crimes are becoming increasingly difficult to spot. People fall victim to them every day. Experienced fraudsters can catch even the most careful person off guard. CFOs must strengthen controls to protect both the organization and its employees from increasingly sophisticated attacks.

Deep knowledge of internal systems will help them identify irregularities others miss. For instance, Thomas Fischer, the former CFO of Community Health Network, demonstrated this in 2014 when he filed a whistleblower complaint after uncovering fraud. Nearly a decade later, the company agreed to pay him $6.3 million as part of a $145.7 million settlement.

Fischer’s case demonstrates how CFOs can leverage their position to expose wrongdoing. His understanding of financial controls allowed him to identify problems others overlooked. In the end, he even shared in the recovery.

2. Leverage Technology for a Unified View of Risk

Historically, fraud prevention has been siloed. To effectively combat the scale, speed and sophistication of modern financial crimes, companies need a comprehensive view of monetary activities and risk signals. Unifying dashboards allows for real-time, data-driven prevention, enabling them to respond faster and make more informed decisions.

CFOs bridge the gap between technology and traditional accounting knowledge. Data analytics allows them to see how small-dollar transactions add up to significant fraud. Pattern recognition tools can flag anomalies human reviewers might miss, turning scattered data into concrete evidence of fraud patterns.

3. Foster a Culture of Ethical Conduct and Awareness

CFOs have close connections to the C-suite and oversight of all financials. This position allows them to spearhead organization-wide anti-fraud campaigns. In doing so, they shape corporate culture directly. When finance leadership treats fraud prevention as a priority, the entire organization follows. When they treat it as a checkbox exercise, employees notice.

Case Study: Detect and Respond to Financial Crime

CFOs want to take proactive steps to uncover and address financial crime. Marvin Pyles, the former CFO of Indian River State College, blew the whistle on fiscal fraud, alleging he was fired after raising concerns about gross mismanagement, fraud and the misuse of funds. Pyles said he uncovered millions of dollars in fraud.

He reported discovering false vendors and improper uses of donor funds, among other irregularities. When he uncovered mismanagement, he took action, demonstrating what proactive leadership looks like in practice. He fought to correct the books despite pushback, a difficult but necessary task.

Leading With Integrity and Strategic Vision

Even with a well-trained team and the latest technology, financial crime won’t disappear. The tools will get better, the tactics more refined and the targets more vulnerable. CFOs who embrace their new role can protect their companies from catastrophic losses, while those who cling to outmoded spreadsheet models leave them exposed.