uy now , pay later ( BNPL ) technology has significantly changed consumer purchasing behavior . The financial service allows consumers to buy a product or service “ now ” and pay “ later ” in installments over a specified period , with little or no interest , becoming one of the fastest-growing e-commerce services in the world .
However , the rapid expansion of BNPL introduces concerns about its vulnerability to money laundering and other financial crime . A recent study found that fraudsters targeted 23 % of application fraud victims in the U . S . to use their information to open BNPL accounts . 1 Criminals are turning to BNPL due to the industry ’ s relatively nascent regulatory framework and the ease of conducting anonymous transactions .
As BNPL continues to grow , anti-money laundering ( AML ) compliance officers must be aware of the unique risks associated with BNPL and the necessary measures to mitigate them .
This article explores AML and sanctions ( collectively “ AML ”) compliance considerations for the rising BNPL industry , in addition to fraudulent tactics , key financial crime 2 risks and expectations for compliance officers .
BNPL overview The rise of BNPL
Over recent years , the BNPL sector has demonstrated a meteoric rise as a popular alternative to traditional credit systems . In a 2022 report , the Consumer Financial Protection Bureau ( CFPB ) noted that the number of U . S . BNPL loans grew 970 % between 2019 and 2021 ( from 16.8 million to 180 million ), while the dollar volume grew 1,092 % ( from $ 2 billion to $ 24.2 billion ). 3
As depicted in Graphic 1 , the global BNPL market is projected to increase to over $ 9.23 trillion by 2032 , exhibiting a substantial annual growth rate of 29 %. 4
Graphic 1 : BNPL market size — 2022 to 2032 ( Billion US $)
$ 9,226.65
$ 6,937.33
$ 5,255.56
$ 4,011.88
$ 3,086.06
$ 753.53 |
$ 934.37 |
$ 1,167.97 |
$ 1,471.64 |
$ 1,868.98 |
$ 2,392.29 |
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Source : Precedence Research 5
ACAMS Today September – November 2023 33