How businesses can prevent themselves from financial crime- an expert advises

1. What are the biggest challenges that corporates face when it comes to fraud management?

Money moves around the world faster now than ever before, and many electronic transfers are settled in real time. Most financial transactions are completed with no face-to-face interactions. These are good things; they facilitate global trade and keep the wheels of global commerce turning. However, these transformational capabilities come with risks that must be managed. Managing these risks effectively and doing so in a way that doesn’t introduce friction to business operations and the customer experience are the biggest challenges facing businesses when it comes to fraud management.

Fraud threats are evolving as quickly as money moves. Criminals are becoming more sophisticated and are singularly focused on exploiting any situation and any weakness. For example, according to the Federal Trade Commission in the United States, between 1^st January and 22^nd September this year, U.S. citizens have lost more than $145M to COVID-19 scams. In the U.K., during the first half of 2020, U.K. Finance tells us a total of £207.8 million has been lost to authorised push payment fraud.

Criminals leverage technology and are constantly refining their tactics to commit fraud and find new ways of hiding their activities. The rising use of mobile devices and contactless transactions have also opened more channels for cyberattacks. In this environment, corporates are challenged to balance expectations for instant, real-time and seamless services with the need for security.

2. How is automation playing a role in fraud and risk management?

Automation is enabling corporates to deliver better fraud and risk management systems and formulate effective prevention strategies.

The fuel powering intelligent automation is data. For example, intelligent automation technology, a combination of robotic processing automation (RPA) and artificial intelligence (AI), can act on and analyse large volumes of structured and unstructured data efficiently, leading to valuable, accurate insights that would be out of reach otherwise.

Automation can also help reduce operational costs and streamline workflows. Employees spend less time on manual, time-intensive tasks, and focus instead on the strategic aspects of fraud and risk management.

3. What technological and infrastructure investments do corporates need to make in order to keep ahead of criminals?

Keeping ahead of criminals is a never-ending race. Fraud prevention really is an area where up-to-date capabilities and techniques can make a difference. As fraud continues to evolve, so do financial crime prevention technologies. Therefore, it is vital for businesses to make the appropriate technological investments, not only to keep pace with current challenges, but also to stay ahead of any potential emerging threats. Corporates can take advantage of tools such as advanced analytics to detect characteristics that are indicative of previous attacks and uncover new attack vectors by identifying unusual behavior patterns. Intelligent automation and insightful data management systems can be utilised to optimise operations and results. With effective technology, corporates can maximise data assets to monitor, detect and combat emerging threats, as well as reduce false positives and minimise customer friction.

For all organisations nowadays, security is a differentiator. Everyone wants to do business with corporates that provide security and have integrity. Trusted providers can help advise, and implement, various tools to ensure that corporates have the appropriate and most up-to-update capabilities.

4. How can corporates formulate optimal “best practices” for fraud prevention and risk management?

Best practices consist of several key elements. As mentioned earlier, appropriate technology investment and implementation is considered a best practice. Sharing data with peers and creating a data consortium is another powerful best practice; it can improve data integrity and detection accuracy, allowing for better fraud prevention and management. Shared data insights drive increased collaboration between corporates, financial institutions, law enforcement and regulators, something all can benefit from. Common data usage can facilitate more effective fraud risk management while also assisting law enforcement.

Internal collaboration is also a best practice. Enterprises can share data, as well as use common technology and tools, such as alert and monitoring systems, across different business units, from corporate finance to sales departments. This enables corporates to generate more reliable data and gain a better overview of risk.

5. How can robust fraud prevention and risk management strategies be a differentiator for businesses?

Combatting financial crime and any associated activities is an increasing priority for corporates and their customers. Beyond the immediate effect on business, preventing fraud and countering money laundering support the moral imperative to limit the impact of crime on society. Fraud and money laundering are not victimless crimes – they are often conducted by the same organised crime groups that perpetrate human trafficking and drug trafficking, both predicate crimes for money laundering. With the access organisations have today to more innovative and advanced technologies, they can better defend their customers, and conduct business securely and seamlessly.

A robust fraud prevention and risk management strategy can be a key differentiator for organisations versus the competition. It enables corporates to retain customer trust, create better relationships with partners and regulators, and develop a better reputation amongst society.