Nasdaq Chair and CEO Adena Friedman Requires Unified, Public-Personal Collaboration to Fight the $579B World Monetary Fraud Epidemic

In her remarks, Friedman traced the arc of technological transformation in monetary markets from Nasdaq’s founding in 1971 because the world’s first digital inventory market to as we speak’s age of convergence, the place synthetic intelligence, digital funds, tokenization, and shifting geopolitics are reshaping the monetary system. 

She argued that breakthrough applied sciences fulfill their potential solely when folks belief them sufficient to alter how they work and issued a name to motion for america to develop a Nationwide Fraud Technique, bringing collectively monetary establishments, legislation enforcement, Technology firms, and different stakeholders to fight the rising menace of economic crime by way of collaboration. 

Her full remarks, as delivered, comply with under.

Keynote Remarks by Adena Friedman

Within the Sixties and early 70s, the concept of an digital inventory market sounded radical. Markets had all the time been bodily locations. They had been constructed on paper certificates and handshakes.

However in 1971, Nasdaq launched a unique mannequin – one which raised profound questions.

May Technology strengthen the foundations of the market? May IT broaden entry to capital and alternative? May a community of computer systems earn the arrogance of traders?

These questions weren’t answered by a single product launch or technological breakthrough. With every commerce, the brand new, digital market was examined. IT weathered setbacks however stored advancing, changing into extra dependable, extra resilient, extra scaled, and finally extra trusted than the previous, bodily market mannequin. The digital market mannequin that Nasdaq pioneered – based mostly on networked computer systems connecting traders at microsecond pace — earned its place because the dominant mannequin as soon as traders and market individuals noticed IT carry out constantly and show resilience throughout market cycles.

Different technological breakthroughs adopted the identical path.

The web didn’t reshape commerce as a result of folks may all of the sudden construct web sites. Its affect got here when on-line transactions turned commonplace, as soon as customers gained confidence that their digital funds had been safe and that the service provider on the opposite facet was actual.

Cloud computing didn’t rework monetary providers as a result of companies may retailer extra information. IT turned indispensable when establishments trusted cloud infrastructure to run crucial operations securely, reliably, and at scale.

At present, fifty-five years after Nasdaq was launched, we discover ourselves at one other pivotal second. As soon as once more, Technology is opening doorways that appeared unimaginable just a few years in the past.

However historical past teaches us that breakthrough applied sciences don’t rework industries on their very own. They fulfill their potential when folks belief them sufficient to alter how they work, and finally when they’re trusted greater than what was there earlier than.

The Age of Convergence

We live by way of an age of convergence. The monetary system is being reshaped by a set of transformations that might every, on their very own, outline a decade.

Synthetic intelligence, digital funds, always-on real-time shopper expectations, the tokenization of property, and a quickly altering geopolitical atmosphere are all contributing to an unprecedented degree of complexity.

The boundaries that when stored the monetary system in siloes are more and more dissolving. The monetary system is changing into intimately related throughout the globe.

And in a extra related system each alternatives and dangers journey quicker.

New applied sciences are making monetary providers extra accessible, extra clever, and extra environment friendly than ever – however they’re additionally creating new avenues for fraud, cybercrime, and threat.

Historical past means that moments like this aren’t outlined by the applied sciences that emerge, however by the establishments that make them reliable.

And because the monetary system turns into extra related by way of Technology, the problem is capturing the advantages of this progress with out amplifying its vulnerabilities.

Constructing Belief in Interconnected Methods Via Collaboration

The important thing dangers of the age of convergence don’t respect conventional boundaries.

Fraud strikes quicker and quicker throughout establishments and geographies. Cyber threats transfer throughout networks. And operational disruptions can cascade throughout markets, jurisdictions, and asset courses.

No single establishment, regulator, Technology supplier, or market participant has an entire view of that threat. The better the interconnectedness of the system, the extra necessary IT turns into to attach the views of these chargeable for safeguarding IT.

That’s the reason, within the age of convergence, belief is a crucial and shared accountability. Our resilience relies upon not solely on the energy of every particular person group however on the energy of the ecosystem, all working collectively to make IT stronger.

New applied sciences will deliver large capabilities to deal with the challenges that we face, however IT is individuals who work collectively to maximise the applied sciences’ utility that may rework the affect that the applied sciences can have.

Collaboration has change into a strategic necessity in threat administration.

The Pressing Have to Collaborate to Tackle Monetary Crime

And true collaboration is greater than coordination.

The establishments and economies that succeed shall be these which might be keen and in a position to mix insights, share intelligence responsibly, and coordinate actions to guard the monetary system extra successfully than anybody group may alone.

And nowhere is that extra pressing — or harder — than within the battle in opposition to monetary crime.

Monetary crime has change into a multi-trillion-dollar world problem. In keeping with our World Monetary Crime report:

• An estimated $4.4 trillion in illicit funds had been laundered by way of the worldwide monetary system in 2025, and
• Greater than $500 billion was misplaced to fraud

New applied sciences are serving to prison networks speed up their attain. We’re seeing fraudsters use generative AI to deploy scams at unprecedented pace and scale.

In our current world survey of anti-financial crime professionals, 9 out of ten reported a rise in AI-driven assaults over the previous two years.

At present’s unhealthy actors function inside refined networks. They share information. They share intelligence. They function with the dimensions and coordination of multinational companies.

We are able to see the elevated sophistication play out within the information as we speak. Via Nasdaq’s Verafin platform, and utilizing the facility of our consortium information community throughout 2,800 banks, mixed with new AI deployments that we’ve got developed, we have been in a position to uncover hidden connections and dangers that no single establishment – not even the world’s largest banks – can see on their very own.

In a single current case my crew shared with me, a monetary establishment started investigating what gave the impression to be a small variety of unrelated fraud alerts.

On their very own, the circumstances appeared remoted.

However as we related alerts throughout our consortium community, a a lot bigger image got here into focus.

What began as a handful of alerts finally revealed a coordinated fraud ring spanning greater than 1,000 accounts throughout over 45 monetary establishments.

This crime ring was perpetrating a number of crimes, from identification theft and cash laundering to stolen checks and deposit fraud.

Lots of these establishments had been investigating items of the exercise independently. However no single monetary establishment had sufficient visibility to see the total community.

Solely by utilizing the most recent developments in AI Technology to attach insights throughout our consortium information had been we in a position to determine the broader sample, hyperlink the exercise collectively, and expose the true attain of this fraud ring working throughout the monetary system.

If the menace is more and more interconnected, our response have to be as nicely.

IT takes a community to battle a community.

The Resolution

Happily, we shouldn’t have to start out from scratch – we’ve got some necessary foundations in cross-organizational, public-private collaboration right here within the US.

In cybersecurity, FS-ISAC (the Monetary Providers Information Sharing and Evaluation Heart) demonstrated that when establishments are given trusted frameworks to share Information, widespread requirements for participation, and acceptable authorized protections, they’re keen to work collectively to strengthen the resilience of the broader ecosystem.

We’ve got seen comparable leads to different areas of economic crime detection. Via Part 314(b) of the Patriot Act, monetary establishments have been in a position to collaborate on investigations involving cash laundering and terrorist financing.

Inside the Nasdaq Verafin platform alone, establishments have participated in additional than 130,000 collaborative investigations, serving to uncover patterns and networks that may have remained hidden if every group was working independently.

When establishments are given the flexibility to share intelligence responsibly, they change into simpler.

And after they work alongside legislation enforcement and different public-sector companions, they will help disrupt prison networks earlier than extra customers and companies are harmed.

Name to Motion

That’s the reason I consider america ought to take the subsequent step. Not by creating a brand new regulator. Not by establishing a brand new enforcement company. And never by imposing a brand new set of obligations on monetary establishments.

As a substitute, I consider we must always work towards the event of a Nationwide Fraud Technique for america.

A technique designed to deliver collectively monetary establishments, legislation enforcement, telecommunications suppliers, Technology firms, fee networks, and different key stakeholders round a shared framework for collaboration. We envision a technique that:

• Promotes accountable Information sharing, establishes widespread greatest practices, creates better alignment round prevention and disruption efforts, and helps make sure that intelligence strikes as shortly because the threats we’re working to cease.
• IT would invite all of the industries impacted by the rip-off ecosystem to affix, with a view to work collectively to detect and stop assaults earlier than they hurt customers and companies.
• IT would construct on current efforts already underway throughout each the private and non-private sectors, whereas offering the readability and secure harbors essential to encourage broader participation.
• And IT would create a constructive suggestions loop between the personal sector and legislation enforcement, with monetary establishments being additional empowered to file joint SARs and legislation enforcement offering well timed, crucial suggestions that enhances the standard of future reporting and the effectiveness of response in opposition to prison networks.

The USA already has a mature AML/CFT framework – a framework that the present Administration is actively working to modernize for the truth of as we speak’s threats.

By aligning a brand new Nationwide Fraud Technique with a modernized AML framework, we’ve got a chance to create a extra related, intelligence pushed method to combating monetary crime, one which protects victims, strengthens establishments, and helps disrupt prison networks earlier than hurt happens.

As a result of this problem is just too giant and evolving too shortly for any single establishment to resolve alone.

The way forward for monetary integrity will rely not solely on the applied sciences we deploy, however on our willingness to work collectively alongside the Technology to make the system extra trusted than what was there earlier than. That’s once we know that we’ve got leveraged these new applied sciences to be the very best of their means.

Closing

In conclusion, the defining attribute of this second in our business is that the boundaries that when separated markets, establishments, and jurisdictions have gotten much less distinct.

That’s the reason collaboration – inside and throughout the personal and public sectors – is so necessary.

The applied sciences shaping the way forward for Finance will proceed to evolve, however the elementary problem will stay the identical: making certain that belief retains tempo with innovation, and that relies upon completely on folks.

In 1971, the query was whether or not traders would belief an digital market constructed on new, untested networked-compute Technology.

At present, the query is – how can we maximize the advantages of a number of groundbreaking applied sciences by working collectively to extend belief in a much more advanced monetary system?

The reply, I consider, begins with recognizing that in an interconnected world, safeguarding confidence is a shared accountability. None of us can do IT alone.

Watch Adena Friedman’s full keynote address at the American Banker Most Powerful Women in Banking Conference.