The role of anti-financial crime in ESG: expanding the governance pillar

Environmental, Social, and Governance (ESG) criteria have become a cornerstone of how investors, regulators, and the public evaluate corporate integrity. 

While the “E” and “S” pillars often attract the most attention, the Governance pillar is now rapidly expanding, and anti-financial crime (AFC) has become one of its defining elements.

For banks, insurers, and investment firms, demonstrating strong AFC controls shows accountability, builds long-term trust, and demonstrates that ethical governance is embedded in how business is conducted.

Why financial crime belongs in ESG

Governance has traditionally focused on board structure, shareholder rights, and executive remuneration. 

But with financial crime, corruption, and money laundering posing systemic global risks, effective governance now also means having the ability to prevent, detect, and respond to illicit activity.

The importance is clear across three dimensions:

• Investor expectations: ESG-focused investors now evaluate AFC controls as a sign of responsible management. Weak financial crime prevention can downgrade ESG ratings and deter capital.
• Regulatory pressure: Supervisors expect greater transparency in AML, KYC, and due diligence processes, linking compliance performance directly to governance standards.
• Reputation management: A single financial crime failure can damage not only a company’s credibility but also its ESG position, which increasingly influences access to financing and partnerships.

Strong anti-financial crime frameworks are therefore becoming a measurable part of what “good governance” truly means.

How anti-financial crime strengthens ESG

Integrating AFC into ESG strategies enhances both compliance and sustainability outcomes. 

When governance structures are supported by effective AML and risk controls, the result is greater transparency, accountability, and resilience.

1. Transparency and accountability

Thorough AML measures, including KYC, transaction monitoring, and PEP/RCA screening, show that an organisation is managing financial risks responsibly and maintaining oversight of its counterparties and clients.

2. Stronger stakeholder trust

Customers, investors, and regulators gain confidence when AFC practices are part of day-to-day operations. 

Demonstrating control over illicit finance risks reinforces your organisation’s integrity and long-term stability.

3. Resilience against risk

Financial crime not only exposes firms to regulatory penalties but can also threaten business continuity. 

Institutions with strong AFC frameworks are better positioned to adapt to new threats, protect assets, and maintain sustainable performance.

By linking AFC with ESG goals, organisations can align compliance excellence with business sustainability and social responsibility.

The road ahead

As ESG frameworks evolve, the role of anti-financial crime in governance will only grow in importance. 

Investors, regulators, and rating agencies are increasingly linking effective AML and AFC systems to sustainable business leadership.

Institutions that integrate AFC into their ESG strategies will stand out for their credibility and resilience, while those that overlook it may find their governance scores and investor confidence decline.

The future of sustainable finance belongs to organisations that treat financial crime prevention as both a compliance duty and a cornerstone of ethical business.

Act now

Strong governance begins with strong controls. Strengthen your AFC framework, enhance your ESG profile, and earn the trust of your investors and stakeholders.

Reinforce governance and investor confidence with Trapets’ AML solutions.Book a demo today.