The Paypers has launched the Financial Crime and Fraud Report 2022, a comprehensive overlook of the current landscape of digital onboarding, fraud management, and financial crime in financial services.
Following the footsteps of its predecessors from past years, this year’s report looks to paint a complete picture of what is currently happening in the fraud and financial crime space, set in the backdrop of a world that tries to recover from a pandemic and an economy that is (and probably will continue to be) deeply affected by war.
The report’s mission is to highlight once again the importance of fighting fraud and financial crime, especially now, when fraud across the globe is increasing (as of the end of January 2022, according to the Office of National Statistics), money laundering-fuelled exploitation of vulnerable people continues to ravage the world, the sheer financial dominance that criminal drug organisations have over government bodies and institutions threatens the economic stability of entire states, forests are illegally cut down, money launderers and terrorist financiers continue to exploit legal loopholes. With just less than 1% of ill-used money being captured and restored, we must understand that there is still a lot to do to better our chances against fraud and financial crime.
Going beyond the report’s mission, this year’s iteration features experts, industry associations, top players, consultants, and financial institutions that have been co-opted to share valuable insights on crucial themes. To highlight some of the key topics found in the report, we mention: creating safe digital economies using IDV solutions, the role of digital ID in establishing trust and enhancing digital onboarding processes, BNPL fraud, corporate identity theft, the benefits of having a risk-based approach to prevent fincrime, regtech in the Metaverse and regtech trends, tackling fraud through collaboration, among many others. The Financial Crime and Fraud Report 2022 also features the latest technology advances for preventing fraud and the new opportunities that appear in tackling the challenge ahead. With the world going online these past few years, we have noticed record-breaking numbers of online fraud rates, with account takeover and identity fraud taking the lion’s share of the heap. APP (authorised push payment) fraud has surpassed card fraud in the UK as a result of the pandemic, while corporate identity theft increased by 46% in 2020.
Financial institutions stand to lose greatly unless they opt for fast, secure, and seamless online experiences for their customers. Experts argue that digital businesses can prevent that via built-in KYC (know your customer) features that will keep fraudsters at bay while improving customers’ journeys.
The report goes through the new dynamic the Metaverse brings, along with new digital customer journeys which are ripe for the take when fraudsters are concerned. Besides the Metaverse, the gambling and virtual sports betting world can benefit too from establishing stronger digital trust at the user journey’s beginning via identity verification, age verification, parent/guardian verification, among others, all of which can make for a clearer, more secure space for all users.
Since it is said to be easier to prevent than to treat, spotting financial crime before it happens trumps having to deal with its effects. Labour costs, increasing regulations, and evolving criminal threats are at the bottom of the high costs that come with financial crime compliance. As regulators continue to make laws stricter and fines more expensive, the report tries to explain the importance of AML (anti-money laundering) compliance, the risks of avoiding it, and the reasoning behind the wider financial crime prevention scene.
The report features an industry mapping of the key players in financial crime and fraud prevention, also revealing their backgrounds, core services, unique selling points, and business partners via in-depth profiles. This overview of the fraud solution providers aims to help merchants, fintechs, and payment service providers grasp the current market opportunities.
The Financial Crime and Fraud Report 2022 is endorsed by Consult Hyperion, KuppingerCole, and FINTRAIL’s FinTech FinCrime Exchange. You can download your free copy here.
iDenfy, identity verification and fraud prevention company based in Lithuania, has introduced a newly-designed method for risk assessment that notifies when any Anti-Money Laundering (AML) risk database hit occurs during the identity verification process.
With the idea to minimize fines, branch out to wider spheres and make compliance simple, iDenfy introduced Anti-Money Laundering (AML) checks for companies. According to the identity verification and compliance company, its service is designed to maximize security for those who want to make sure that they are partnering up with a transparent, professional organization.
In today’s worldwide scene of complex financial crimes, for many, the goal is to establish efficient security measures for various industries. A recent “Global: 2021/2022 Digital Transformation and Cloud” survey shows that cross-border regulation, tax, cybersecurity, and governance remain top-of-mind issues for digital transformation. iDenfy’s CEO, Domantas Ciulde, agrees with this proactive approach adding that “The goal is to establish efficient security measures for various industries.”
iDenfy’s risk database covers Politically Exposed Persons (PEPs) information, international sanctions, and law enforcement watchlists, such as Interpol, World Bank, FBI, Europol: Europe Most Wanted, alongside reviewing negative media. For instance, a “PEP” is a person with a prominent public position that automatically makes them susceptible to corruption, bribery, or similar money laundering crimes. Companies need to be careful, as such people carry a high-risk profile.
Since not one, but multiple databases are used for iDenfy’s screening, false positives are reduced. The company’s new automated AML Screening provides the needed information and scans entities in seconds. Compared to paper-like traditional banking methods, according to iDenfy, these results are granted due to advanced data and analytics techniques used in iDenfy’s software, such as artificial intelligence. As iDenfy’s Chief Business Development Officer, Darius Sulte states, the latest database screening option is the needed extra precaution that shows more accurate results along with the potential customer risk level.
Due to constantly changing compliance regulations, iDenfy’s new approach suggests protecting businesses from fraudulent activity – to monitor the data lists daily. According to Domantas Ciulde, monitoring allows an organization to maintain a high, consistent reputation proactively. Conducting in-depth background screening of Sanctions and watch list checks helps understand the risk around potential customers or investors.
Since new regulations are frequently published, and news about political figures are constantly updated in the media, iDenfy automated Ongoing Monitoring approach ensures efficiency. Simply put, it’s impossible to follow the news in every media source manually, eventually leading companies to waste time sources.
United Nations was the first to introduce a global measure to tackle one of these problems – money laundering – with the presentation of the UN Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances in 1988. The issue remains relevant to this day, and according to iDenfy, it’s no longer an arguable subject, but a matter of action, where meeting compliance obligations is a must.
“Scaling your business is vital. Having proper tools that ensure security instantly and automatically should be at the top of your company’s priority list. Monitoring the data daily is essential to detect risky customers or partners at the correct time. Screening during onboarding is not enough since costumes can become risky afterward.” – expressed Domantas Ciulde.
AI-powered digital identity verification solution provider, Shufti Pro, revealed new data in its Global ID Fraud Report 2021 which shows insights from ample research of 11 months of verification. The report highlights the changing fraudulent activities and advanced manipulation techniques that the company faced in 2021. Experts from Shufti Pro have also made fraud predictions that will threaten the corporate sector in 2022.
The ceaseless increase in ID and financial fraud with each passing year put the retailers and customers in unwanted situations. Shufti Pro captured around 33% of tampered identity documents solely in 2021. Sudan, Kenya, Cameroon, and Ethiopia were the primary targets of bad actors with biometric fraud attempts surpassing 50% in 2021. MRZ manipulation, counterfeit documents, and imitated security features are some of the reasons that caused an increase in fraud.
COVID-19 pandemic resulted as a big reason to further push the increase in fraudulent activities. The report found that the fraud rate recorded in 2020 was approximately 21%, while in 2021, even though the physical restrictions began to lift, the overall scam rate was increased by a whopping 3%. COVID-19 pandemic and the recurring lockdowns favored the fraudsters and they fully targeted the businesses and customers in the holiday season. Impersonation fraud, synthetic ID scam, account takeover, and chargebacks were some of the most encountered fraud attempts this holiday season.
“We are surprised to see the remarkable turn of fraudsters from simple manipulation of identity documents to tech-driven tampering to dodge identity verification,” said Victor Fredung, the CEO of Shufti Pro. “As we move on to 2022, I would advise businesses in every industry to employ robust mechanisms to combat identity thieves and financial criminals.”
The key takeaways from the report include:
Around 30% of the phishing emails sent every day are opened by victims and 12% of them click on the malicious link given. Considering the growing trends of fraud, it is observed that phishing attacks will be greatly used by fraudsters to carry out illegal activities
Millions were laundered through virtual assets in 2021 and considering the fraud cases it is predicted that crypto and NFT-based criminal activities will increase significantly in the coming years
The trends in remote working will provide fraudsters an edge to easily target companies that are employing remote working, especially during a pandemic
UK shoppers will face stricter identity checks in coming weeks as retailers get ready for new anti-fraud rules that come into force on 14 March.
Buyers have already started seeing more requests to verify their ID as payments providers and retailers adopt the new strong customer authentication (SCA) rules.
Under the changes, before a retailer can accept an electronic (online) payment it will have to verify that the customer is who they claim to be. The measures are similar to those already faced by people logging into online banking.
While most low-value retail purchases will go ahead as before, with checks carried out in the background, shoppers buying more expensive items online will have to input a password, a pin or a one-time-passcode they have been sent via a text or landline, or log into their banking app and approve the purchase.
The rules, which have been introduced by the Financial Conduct Authority (FCA), were supposed to come into force a year ago but were delayed to give retailers more time to adapt. The legislation came out of the European Banking Authority, and was adopted into UK law before Brexit.
An anti-fraud and identity verification platform is offering new plans for small business customers to provide identity verification and KYC/AML compliance and background checks.
London, December 13, 2021 — Sumsub, a startup that fights money laundering and online fraud, has launched the first Self-Start Service and offers new identity verification plans for small businesses. The initiative was launched in response to the 40 percent surge in fraud targeted at small and medium businesses that was registered during the pandemic.
With the new plans, Sumsub aims to expand its customer base and reach more than 100,000 small businesses around the world. Today, over 100 companies have already subscribed to a new plan.
Small businesses will have the opportunity to start remote identification and identity verification by conducting KYC/ AML compliance checks, without having to engage with a support service. Customers can choose from three plans, each with 50 free background checks, including a new Liveness solution — a refined liveness technology for ID verification and onboarding.
“Small and medium businesses are constantly exposed to fraud attempts. Identity verification is a service offered by many companies. However, choosing a reliable partner with flexible terms and conditions that can be tailored to the customer is not an easy task. We give our prospective clients the choice of trying our platform out and deciding how to invest their budget on fighting fraud,” — says Andrew Novoselsky, Chief Product Officer.
To subscribe to a new plan, customers need to create an account on Sumsub’s official website and choose one of three available packages. Its customizable user-friendly platform is globally applicable and offers a wide range of solutions for fully automated identity verification and agent-assisted verification. The no-code platform can be configured manually and doesn’t require software maintenance.
The global Identity Verification Market is set to surpass $17.63 billion by 2030. The topic of security and data privacy is a subject of frequent discussion, and technology that combats online fraud receives a lot of attention. Meanwhile, customers face difficulties in selecting and implementing identity verification and compliance software due to the requirement for additional investment in cybersecurity and IDV, as well as a reluctance to interrupt business operations while adopting KYC/AML solutions.
Account takeover cited as the fraud threat causing the most concern among 72% of global financial institutions surveyed. Other top fraud threats cited include phishing, synthetic ID fraud and social engineering scams. These threats are also the same ones identified by respondents as having the most financial impact over the last year.
1 in 2 financial institutions cite loss of productivity as the biggest non-financial impact of fraud.
47% of responders state lack of visibility into risks introduced by new digital technologies as a top fraud management challenge.
2 out of 3 of financial institutions expect to increase their investment in anti-fraud resources.
“While the industry has made great strides in protecting consumers from cybercrime, the risk of fraud continues to take a heavy toll on financial institutions and the clients they serve,” said Raj Dasgupta, Director of Fraud Strategy at BioCatch. “There is still much more work to be done to combat account takeover and other forms of fraud, and the study confirms the industry has placed behavioral biometrics at the forefront of investment in the coming year.”
The report also revealed customer experience is becoming as equally important to financial institutions as managing the bottom line from fraud losses. Among financial institutions surveyed, 62 percent cited making customers feel secure as a top priority for investing in fraud prevention technology. This highlights the changing role of fraud management within financial institutions and its evolution to a business issue that involves multiple stakeholders with one in two financial institutions noting digital channel business leaders as a top influencer in fraud management decisions.
Two out of three financial institutions expect an increased investment in fraud management resources with behavioral biometrics and analytics, transaction analysis and monitoring, and device ID and intelligence cited as the top three fraud prevention technologies slated for investment over the next 18 months.
The survey polled fraud and cyber security professionals at more than 175 financial institutions across the globe. All regions were featured with half of respondents from the U.S. and Canada, 18 percent from the UK and Europe and 14 percent from Latin America. The survey was conducted between July 1 and August 20, 2021.