Fighting financial crime is a growth strategy

As G20 leaders gather in Johannesburg under the banner of resilience and inclusion, the fight against financial crime should be seen not as a cost but as a growth strategy. New evidence challenges the outdated notion that enforcement is a burden, showing instead that clean markets are the bedrock of resilient and inclusive economies. For the G20, embracing this paradigm
is essential to its mission of fostering
sustainable growth.

The evidence: A blueprint for renewal

A compelling blueprint for pro-growth enforcement comes from Italy’s battle with organised crime. Research shows the strong economic renewal that follows effective anti-crime actions. When police operations dismantled hundreds of Mafia-controlled firms, bank lending to legitimate local businesses increased by 2.1%, unlocking an estimated €3.6 billion in new capital. This credit flowed to honest small and medium-sized enterprises and boosted local productivity. Local banks, with close ties to their communities, adapted more smoothly than foreign institutions, highlighting the stabilising role of embedded finance. The lesson is clear: anti-crime policy is pro-growth policy. The G20 is uniquely positioned to translate such national successes into a global blueprint.

A global challenge for inclusive growth

The Italian case carries lessons for the world. Organised crime is a global parasite. It drains trillions from economies. From cartels in Latin America to corruption and crime networks in Africa and Asia, the pattern is the same: criminal dominance misallocates capital, distorts competition and stifles growth. Yet today’s anti-money laundering regime is often costly and ineffective. Banks spend billions on compliance with limited results.

Worse, blunt rules can trigger de-risking: entire regions, remittance channels or groups of customers are cut off to avoid regulatory penalties. Such actions harm the very SMEs and households most in need of finance, particularly in sub-Saharan Africa where remittances are a lifeline.

This confirms a main tenet of economic development: that institutional integrity is a direct input for investment and financial stability, a principle long emphasised by institutions such as the International Monetary Fund and World Bank.

The trilemma: Balancing effectiveness, liberty and inclusion

The challenge for the G20 is navigating a complex policy trilemma. The goal of effective anti-financial crime enforcement and the objectives of protecting civil liberties and promoting financial inclusion are often in conflict. Aggressive AML regulations, while aiming to stop illicit flows, can inadvertently restrict legitimate access to finance. Such de-risking has significant impacts, particularly in the Global South, where financial institutions, fearing penalties, withdraw from entire sectors or regions. A focus on civil liberties is also essential. As financial transactions become more digital, the push for greater transparency can infringe on privacy and increase surveillance risks.

The G20 must balance these competing priorities and ensure that enforcement is not only effective but also proportionate. This approach strengthens, rather than weakens, the financial ties that support inclusive growth. The Italian case demonstrates that success lies in leveraging local, or ‘soft’ information, to make nuanced lending decisions. This is a strategy that mitigates the information asymmetry that often leads to de-risking.

An action agenda for the G20

South Africa’s G20 presidency provides a unique platform to champion a smarter approach. Building on the work of the Financial Action Task Force, the Organisation for Economic Co-operation and Development, and the European Union’s new AML Authority, G20 leaders should commit to an agenda founded on five pillars:

Recognise financial crime as a financial stability issue. Treat organised crime not only as a law enforcement concern but also as a structural risk to growth, competition and credit allocation.

Strengthen coordination across institutions. Improve collaboration among AML authorities, prudential supervisors and local law enforcement, ensuring that intelligence flows seamlessly across borders and sectors.

Invest in data infrastructure. Develop and link credit registries, open company registers and interoperable beneficial ownership databases to provide early-warning indicators of systemic risk.

Leverage technology for efficiency. Move beyond costly, box-ticking compliance by using artificial intelligence and secure data-sharing protocols to target risks more precisely and reduce unnecessary burdens on firms.

Safeguard inclusion and recovery. Support local banks in stabilising credit after enforcement and incentivise post-crime recovery through credit guarantees, green lending and the protection of remittance corridors critical for emerging economies.

A call to action

By declaring that the integrity of the global financial system is a first-order economic imperative, we can foster an environment where capital flows transparently, enterprises compete fairly and inclusive growth flourishes. Italy’s experience shows what is possible: dismantling criminal firms restores justice and also unlocks billions in new investment and boosts productivity. The Johannesburg Summit is an opportunity to scale this lesson globally, to prove that clean markets are not a cost but an investment in stronger, fairer growth.