Banks are struggling to keep up with the 22 crimes defined by the EUs 6th Anti-Money Laundering Directive, with human trafficking emerging as one of the most prevalent problems, suggests the report, based on interviews with compliance and risk management pros in the FS sector.

According to the UN, there are an estimated 25 million victims of trafficking worldwide, while BAE Systems research finds that a third of UK banks have revealed that human trafficking already accounts for significant financial losses.

More than three quarters of UK banks are concerned that money laundering is currently happening in their customers’ transactions. Nearly half admit to having to investigate criminal financial activity linked to human trafficking and 40% aren’t confident in their ability to identify human trafficking signs amongst transactions. Only one in five banks are confident they can stop transactions or behaviour linked to the trafficking of human beings.

This problem could hurt banks' standing with customers: a BAE Systems survey says two thirds of Brits would leave their bank or financial institution if they fail to demonstrate a proactive approach to money laundering or ethical practices linked to money laundering.

Peter Fisher, financial crimes product director, BAE Systems, says: “Money laundering is a challenge that goes way beyond financial risk and corporate reputation. Yet it is also shrouded in opacity.

"At this moment, criminals are rushing to take advantage of every opportunity to exploit gaps in the global financial system. They look for vulnerabilities in the industry’s defences - whether that’s environmental, jurisdictional, or technological - and it is the role of the financial institutions compliance professional to close these gaps as much as possible.”