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Why Increasing Your Security Budget Isn’t Stopping Financial Crime

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Why Increasing Your Security Budget Isn’t Stopping Financial Crime

Tristan Prince from NOTO highlights a critical problem in the battle against financial crime: despite increasing investment in fraud prevention, fraud levels are still rising.

According to a recent Gartner survey of fraud professionals, 53% of businesses in the UK plan to increase their spending on fraud prevention and financial crime solutions by 5% over the next 12 months. Yet, 70% of those same businesses acknowledge that fraud and risk levels are actually going up. This creates an unusual scenario, almost like a “bell curve” as companies typically allocate 3% to 5% of their IT budget to cybersecurity and fraud prevention. Yet, Prince points out that once organizations increase spending to more than 10% of their IT budget, the amount of fraud and risk they identify actually starts to go down.

The main reason for this paradox is “operational drag” as when companies layer in multiple siloed solutions, such as separate systems for application fraud, transaction monitoring, and account takeover, the sheer volume of capabilities and data points clouds judgment. Since these different systems are not communicating with one another, trying to prevent fraud at scale becomes harder, not easier. NOTO believes the UK market is currently “heavily fragmented”, making it incredibly difficult for a Chief Risk Officer or fraud director to get a clear picture of the overall risk facing their organization. This fragmented environment is where platforms like NOTO become essential to connect and consolidate all the scattered information.

Having worked in the field for 27 years, Robert Brooker from Opus Advisory Group stresses how quickly the fraud landscape has evolved; payment fraud is now frictionless and fast. However, simply acquiring more technology is ineffective if the implementation and configuration are not correctly managed. The industry often reacts to incidents by “firefighting” and buying a quick fix rather than establishing a proactive, forward-looking tech strategy and Opus Advisory Group argues for a necessary “convergence” across financial themes, including compliance, risk, cyber, fraud, and AML.

Stablecoin issuers get closer to U.S. federal rules with FDIC’s new proposal

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Stablecoin issuers get closer to U.S. federal rules with FDIC’s new proposal

The U.S. Federal Deposit Insurance Corp. formally proposed its approach to stablecoin issuers as one of the federal financial regulators required to write and oversee rules under last year’s Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act.

The FDIC’s proposal —meant to align closely with what its sister banking agency, the Office of the Comptroller of the Currency, proposed in February — will be open for a 60-day public comment period on the lengthy list of 144 questions posed Tuesday by the agency.

The FDIC’s job is to police U.S. depository institutions, and under the GENIUS Act, its role is to regulate such institutions issuing stablecoins from their subsidiaries. To that end, it posed capital, liquidity and custody standards for those firms, though the details won’t be set in stone until the rule is finalized — not likely to occur until the agency spends further months reviewing input and writing the final language. This is the second GENIUS Act proposal from the banking agency after its December pitch on the issuer application process.

As expected under the law, stablecoins won’t enjoy the deposit insurance that the banks maintain on traditional banking accounts, according to the proposal.

The OCC’s earlier proposal had a section that caused some initial concern among crypto policy experts wondering how the agency would allow for rewards programs managed by third-party stablecoin relationships, such as exchanges. In the same vein, the FDIC said that issuers wouldn’t be able to represent that their tokens pay interest or yield “simply for holding or using a payment stablecoin,” according to the staff presentation, including via arrangements with third parties. But crypto insiders have grown comfortable that properly tailored rewards programs shouldn’t run afoul of the rules.

The FDIC’s Tuesday proposal also suggested the capital that issuers will need to maintain to manage the risk of the business, plus “an operational backstop, separate from the capital requirement,” based on the previous year’s operating expenses.  

The agency also addressed “the applicability of pass-through insurance to deposits held as reserves backing payment stablecoins,” proposing that “tokenized deposits that satisfy the statutory definition of ‘deposit’ would be treated no differently” than other deposits.

While the regulators work to implement GENIUS, some of its details are potentially already being overhauled by the work on the Senate’s Digital Asset Market Clarity Act. A clash between the banking and crypto industries over yield-bearing stablecoin holdings turned into a months-long debate that lawmakers have said they’re close to resolving, though the bill hasn’t yet advanced to a needed hearing. Congress comes back from a break later this week.

The OCC, FDIC and other agencies involved in implementing the rule, including the Treasury Department and the markets regulators, have few impediments in crafting regulations the way the Republican appointees want it. President Donald Trump’s White House has broken with past practice and declined to name any Democrat appointees to the many vacancies across the agencies, so there are no Democrats to raise objections to regulatory language.

But the GENIUS Act itself had drawn significant bipartisan support in both chambers of Congress when it was passed into law.

Read More: U.S. FDIC proposes first U.S. stablecoin rule to emerge from GENIUS Act

Morgan Stanley Bitcoin ETF set to begin trading tomorrow under MSBT

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Morgan Stanley Bitcoin ETF set to begin trading tomorrow under MSBT

Morgan Stanley’s spot Bitcoin ETF appears set to begin trading Wednesday after the SEC declared the Morgan Stanley Bitcoin Trust effective and the bank filed its final prospectus.

Bloomberg ETF analyst Eric Balchunas said in a post on X that the fund looks set to go live April 8, citing a screenshot of the NYSE listing notice. The trust is expected to trade on NYSE Arca under the ticker MSBT.

The filing confirms Morgan Stanley is entering the crowded US spot bitcoin ETF market with a physical product that will hold Bitcoin directly and track the CoinDesk Bitcoin Benchmark 4 PM NY Settlement Rate. The trust will not use leverage, derivatives, or active trading to try to outperform Bitcoin.

The product also arrives with aggressive pricing. Morgan Stanley disclosed a 0.14% annual delegated sponsor fee, which is below the 0.25% level charged by BlackRock’s IBIT and lower than most major spot Bitcoin ETFs currently on the market.

Morgan Stanley said BNY and Coinbase Custody Trust Company will serve as Bitcoin custodians for the trust. The prospectus also says the initial seed creation baskets are expected to total about $1 million, with 50,000 shares created ahead of listing.

This is a notable step because Morgan Stanley became the first major US bank to file for spot Bitcoin and Solana ETFs in January, marking a deeper push into crypto investment products by a traditional finance firm. Morgan Stanley also plans to offer Bitcoin, Ether, and Solana trading through E*Trade in the first half of 2026 through a partnership with Zerohash.

Disclosure: This article was edited by Estefano Gomez. For more information on how we create and review content, see our Editorial Policy.

Trump-linked World Liberty Financial questioned over partner’s prior links to sanctioned network

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Trump-linked World Liberty Financial questioned over partner’s prior links to sanctioned network

A cryptocurrency venture tied to U.S. President Donald Trump is facing fresh scrutiny after partnering with a firm whose “flagship project” had recently involved individuals later sanctioned by the U.S. and U.K.

WLFI$0.09513, a crypto business co-founded by Trump and partly owned by his family, said it carried out due diligence before integrating its USD1 stablecoin with the Southeast Asia-based blockchain project AB DAO.

However, a Times investigation released on Monday found the company was unaware that AB DAO had, until weeks earlier, promoted a resort project linked to figures associated with Cambodia’s Prince Group, an organization U.S. authorities have described as a major transnational criminal network.

The partnership was announced in November, shortly after coordinated U.S. and U.K. sanctions targeting Prince Group founder Chen Zhi and associates for alleged involvement in large-scale fraud. Individuals connected to the group had been involved in AB DAO’s promoted resort project before being removed following sanctions.

CoinDesk has contacted WLFI, launched in September 2024, for comment, but the company had not responded at the time of publication. However, WLFI told The Times it has “no association or relationship with the sanctioned individuals.”

The developments add to broader questions around World Liberty’s governance and external relationships. Reporting by The Wall Street Journal in January revealed that a company backed by United Arab Emirates (UAE) national security adviser Sheik Tahnoon bin Zayed Al Nahyan quietly agreed to acquire a 49% stake in WLFI for $500 million shortly before Trump returned to office.

The deal marked “something unprecedented in American politics,” according to the Wall Street Journal, which cited legal experts raising potential conflict-of-interest concerns. The White House has denied any impropriety.

There is no suggestion that WLFI had any direct connection to the Prince Group, according to The Times. However, the report raises questions about the effectiveness of due diligence around its partnerships.

Lloyds Banking Group and University of Glasgow Launch Four-Year Agentic AI Research Programme

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Lloyds Banking Group and University of Glasgow Launch Four-Year Agentic AI Research Programme

Lloyds Banking Group and the University of Glasgow have officially launched a four-year research partnership designed to explore the transformative potential of artificial intelligence within software and data engineering.

Over the course of the collaboration, the partners will investigate how large language model-based coding tools—specifically agentic AIs—can effectively support and enhance the daily workflows of human engineers operating within a massive enterprise environment.

As the UK’s largest digital bank, serving approximately 28 million customers, Lloyds Banking Group is currently investing significantly in developing new digital software and services, alongside rolling out new training and skills development programs for its colleagues.

Real-world testing across global hubs

To gather rigorous empirical data, the partnership will implement a structured testing methodology. Each quarter, Lloyds Banking Group will task its software and data engineers located in Bristol, Manchester, and Hyderabad to work directly alongside their agentic AI counterparts on varying types of tasks. The primary aim of these quarterly experiments is to meticulously measure the AI’s impact on both the quality and the speed of product delivery.

As the partnership matures and the Group improves its understanding of how to safely harness these AI benefits, successful projects and workflows will be systematically rolled out across the wider data teams, and eventually deployed to all software and data engineering teams within the organization.

Bridging the gap between academia and industry

The collaboration offers a unique opportunity to study large-scale engineering transformation in a real-world setting, bridging a critical gap in current industry research. To support this academic endeavor, the partnership will fund and create three new positions at the University of Glasgow: a PhD, a Masters of Research, and a post-doctoral research associate role dedicated to working directly with Lloyds’ engineering teams.

The University’s side of the partnership will be spearheaded by Dr Tim Storer and Dr Peggy Gregory from the School of Computing Science.

“Agentic-driven software engineering is a fast-developing sector with the potential to enable human engineers to work more efficiently by automating some tasks and allowing them to focus their skills on higher-level work,” Dr Storer explained. “However, there has been relatively little research in industry on how integrating agentic AI into software engineering practices can be done effectively in large-scale organisations.”

He added: “Together, we will enable the Group’s plans to increase their software development capacity, produce high-quality research for the benefit of all, and influence national policy and industry standards.”

Responsible scaling and open-source insights

Lloyds Banking Group’s contribution to the project will be led by Dr Shane Montague, head of research engineering, supported by executive sponsorship from Professor Andrew McDonald, enterprise data provisioning, technology platform lead.

Dr Montague emphasized that the initiative aligns closely with the bank’s broader corporate goals.

“Lloyds Banking Group’s mission to Help Britain Prosper means leading innovation that genuinely improves how engineering gets done, with a focus on delivering enhanced digital services for our customers,” Montague stated. “We’re excited to partner with the University of Glasgow to gather rigorous, real-world evidence from day-to-day engineering work, so we can understand what really works and how agentic AI can be applied effectively and responsibly at scale.”

Ultimately, the partners plan to share their findings with the broader technology and financial sectors. Together, they will publish regular research papers documenting their ongoing work and develop comprehensive best-practice documents. These resources are intended to help organisations of all scales effectively integrate AI into their own software and data product development processes.

US Prosecutors Reject Tornado Cash Co-founder‘s Argument for Dismissal

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US Prosecutors Reject Tornado Cash Co-founder‘s Argument for Dismissal

Jay Clayton, the US Attorney for the Southern District of New York (SDNY) and former chair of the Securities and Exchange Commission (SEC), has penned a response to Tornado Cash co-founder Roman Storm’s motion for acquittal, criticizing his alleged criminal behavior.  

In a Tuesday filing in the US District Court for the Southern District of New York, Clayton said that Storm’s criminal use of Tornado Cash was “window dressing at best and outright misdirection at worst,” rejecting arguments that he be allowed to use a civil copyright case in his defense.

The US Attorney’s filing followed a Thursday notice from Storm’s lawyers saying they intended to use a 2026 Supreme Court case, Cox Communications, Inc. v. Sony Music Entertainment, as part of an argument about the Tornado Cash co-founder’s intent to participate in the crimes of which he is accused: conspiracy to commit money laundering and conspiracy to violate sanctions.

Clayton said that Storm’s conduct “bears no resemblance” to that in the Cox case, which involved civil liability for copyright infringement. According to the US Attorney, there was no evidence that the Tornado Cash co-founder implemented effective anti-money-laundering measures.

“The defendant’s conduct simply is not comparable to the conduct at issue in Cox,” said Clayton. “In any event, a civil copyright case has no relevance here in the first place.”

Source: SDNY

Last August, a jury convicted Storm of conspiracy to operate an unlicensed money transmitting business, but deadlocked on conspiracy to commit money laundering and conspiracy to violate sanctions charges, opening the door to a potential retrial. The case has drawn widespread attention from the crypto industry for how developers may be held responsible for their code.

Prosecutors and defense attorneys in the Storm case are scheduled to meet on Thursday. 

Related: US lawmakers move to protect blockchain devs from prosecution

Attorney behind memo calling for end to crypto “regulation by prosecution” gets top DOJ job

Last week, US President Donald Trump fired Attorney General Pam Bondi, substituting Deputy AG Todd Blanche as acting head of the Justice Department until the Senate can vote on a replacement. Blanche, who previously acted as Trump’s personal attorney, also penned an April 2025 memo calling for the end of what he called “regulation by prosecution” in the Justice Department.

Although Blanche did not call out Storm by name, he did say that the department will “not pursue actions against the platforms that [criminal] enterprises utilize to conduct their illegal activities” and called for an end to cases inconsistent with that goal.

Storm cited Blanche’s memo in a March X post after prosecutors called to retry the Tornado Cash co-founder on the two deadlocked counts.

”The 2 counts = up to 40 years in federal prison,” said Storm. “For writing open-source code. For a protocol I don’t control. For transactions I never touched. A jury already couldn’t agree this was criminal. But the SDNY prosecutors want to keep trying with the hope of getting a different answer.”

It’s unclear how Blanche may use his new role to direct DOJ policy, or how long he will remain as acting AG. Clayton has asked a federal judge to consider an October retrial for Storm, but as of Tuesday, no date had been set.

Magazine: Your guide to surviving this mini-crypto winter