By Paul Buelens, Head of Product Management, EastNets
Cyber attacks, skimming, altering payment terminals, installing malware within ATM’s and phishing for card and personal details are just some of the fraud threats impacting businesses and financial institutions on a global basis.
Fraudsters continue to evolve attempting new strategies to steal money. The optimal approach is to get one step ahead, with the right strategy, tools and technologies within a financial institution’s arsenal.
Continuing to improve KYC (Know Your Customer) controls is a step in the right direction – both to appease regulatory demands and to strengthen fraud and money laundering protection. Financial institutions need to enhance their due diligence and build in effective checks from the on-boarding stage right through to the transactional stage.
There are indeed hurdles to overcome, including territorial boundaries, local legislation or no legislation to combat fraud, different privacy laws, lack of resources in different domains, lack of prioritization, inefficient cross border assistance, and aging ATM and POS terminals. Add these challenges to the many disguises and high tech sophistication of fraudsters, and the complexity continues. Financial institutions will need a flexible, more proactive and multifaceted approach to effectively combat financial crime. These steps should be taken to ensure a comprehensive anti-fraud program:
• Report and share incidents (law enforcement, regulators, partners)
• Keep your staff updated, including branch employees with a documented plan to address the various forms of fraud
• Combat fraud in a structured, prioritized way
• Maintain a safe and secure payment platform
• Have an effective AML solution in place
• Identify the money flow and react accordingly
• Enhance customer fraud awareness
In order to be well equipped and prepared for such versatile attacks financial institutions need to have the right tools in place to identify, analyze and prevent them. It is ideal to implement tools that can be easily customized with variable parameters to address multi-channel fraud.
In addition, it is beneficial for financial institutions to employ an enterprise compliance management framework, which includes a common platform for anti-fraud and anti-money laundering capabilities, also features Know Your Customer controls, real-time watchlist filtering, advanced workflow capability, case management, regulatory and management reporting, risk assessment functionality, and full audit capture.
To effectively prevent fraud losses and manage regulatory risk and controls, a common integrated platform is optimal as well as a scalable solution that can handle the high volume of data. A financial institution today can know their customer better and catch more fraudulent activity with an integrated environment the bridges the compliance and financial crime gap.
Financial institutions should strive to combine silos for compliance and fraud prevention, and leverage and access customer data stored in many places throughout the complex internal enterprise within a financial institution.
With evolving regulations and potentially high maintenance costs it is important to look for flexible systems that can aggregate data and processes across anti-money laundering and fraud systems and silos to improve risk protection, meet global regulatory demands, streamline operational efficiencies and reduce fraud losses.