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eCommerce Fraud Overview | Fraud in eCommerce

eCommerce is a big platform, increasing at an unparalleled pace globally; it constitutes a substantial possibility for brands and businesses to sell their goods and services. Consumers in recent times can purchase online products with multiple choices of brands at their ease and comfort. This gives customers an upper edge for an appropriate decision as they can do comparative pricing at a lesser cost without middleman intervention, thereby supporting eCommerce giants to perform at their best. Owing to this, there is an upward trend in online shopping in the last few years and eCommerce is undoubtedly the booming sector in online business.

The rapid expansion of online sales has introduced many competitors and significant contribution comes from online merchants like Amazon, Alibaba, eBay, etc. Online merchants are exploring multiple ways to generate additional traffic and sales. Hence the companies are creating numerous marketing strategies to increase their sales such as holiday sales, Black Friday sales, cyber sales, and much more to generate surplus traffic and sales. eCommerce can provide tremendous advantages if the company can differentiate amongst the genuine customers and fraudsters who are trying to escape amidst the multitude. With eCommerce growth, online fraud is also growing with skilled fraudsters using technology to hack systems, and criminals are continuously leveraging new types of sophisticated frauds.

eCommerce fraud

When a fraudster leverages embezzled payment details or fraudulently obtained bank account or credit card accounts to attempt or make online or retail transactions without the consent of the account or card owner is eCommerce fraud.

Major eCommerce frauds

Merchant Identity Fraud – Fraudsters create fake identities establishing a merchant account that appears to be an authentic business. Furthermore, they rob stolen credit card information to conduct multiple charges then proceed with the earnings prior the cardholder comprehends they have illicit transactions on their accounts and cannot retrieve the funds and held responsible for the damage and penalty.
Friendly Fraud or Chargeback Fraud – Customer pays for the online products using a debit card or credit card. In addition, they intentionally charge-back post after receiving the products declaring they never got the goods. Later, the customer is given a refund moreover the customer keeps the goods that they stated never received. Most of the time, the commodities are sold again to get money.

The other types of eCommerce frauds are Phishing, Clean fraud, Page Jacking, Affiliate Fraud, Triangulation Fraud, and Supplier Identity Fraud.

Online payments, digital wallets are luring more attention from cyber-criminals due to the prevailing limitations making this kind of fraud swift and simple to conduct which is quite often overlooked and unseen by users. Simple and easy pin passwords, non-coded data leverages hackers to exploit more and steal personal details and identities. Therefore, it is imperative for businesses to adapt to eCommerce fraud trends, monitor and analyze them to alleviate fraud risks and vulnerabilities.

In the current scenario, digital evolution is the critical factor for most of the enterprises and their expansion in the market who are embracing new technologies thereby shifting towards merging cashless economy, cloud deployment, mobility, an outbreak of Internet of things (IoT), and automation. The amalgamation of all these systems and technologies is enabling a data-controlled method to mitigate several financial risks and fraud threats throughout the financial landscape.

To combat and alleviate eCommerce frauds some far-sighted measures like ML, AI, IoT, and automation are adopted. eCommerce in the fraud space must be given the required attention and protection with the EFM platform, integrated with advanced technologies, cognitive learning, and automated tools helping to battle and block online frauds from digitalization.

Growing Fraud and Mitigation Trends | EFM Trends

In this digital era, fraud is getting sophisticated and is the most accelerating concern of this digital age. eCommerce and online payments are growing swiftly, resulting in a gigantic shift to mobile and digital applications, maneuvering to seamless payment executions. Frauds are performed in a sophisticated manner on the dark web leaving the least amount of time for banks and systems to battle frauds. A few of the emerging frauds are money laundering and terrorist financing, account frauds, and identity thefts. Hence, it’s vital for financial organizations to embrace advanced AI, ML technologies in Enterprise Fraud Management solutions as opposed to the conventional approach to block and mitigate financial thefts. EFM solutions aids in reducing operational losses, detecting and alleviating fraud attacks, and maximizing the overall customer experience.

EFM platform provides s real-time screening of transactions across all channels and payment types. An increasing number of internal and external frauds with access to payment card data, personally identifiable information (PII), sim card cloning, and stolen credentials by fraudsters are resulting in a substantial financial and reputational loss. Furthermore, cybercriminals are increasingly targeting mobile channels for login attacks as customers across the global regions are adopting mobile applications for various financial transactions and online sessions.

The banking sector is concentrating on centralizing its risk management process, integrating all the key capabilities, analytics, systems to combat fraud efficiently. They are also emphasizing constantly updating fraud management processes with updated rules and models. Multiple financial organizations are acquiring real-time data of transactions from all channels and external data, thereby helping to enhance the accuracy in the identification of frauds.

The financial sector is experiencing a revolutionary metamorphosis, and higher hopes of customers expect banks to perform a smooth experience. In the modern world of intricate fraud attacks, financial enterprises are incorporating new technology innovation in the EFM solutions for identifying and mitigating internal as well as external frauds in the fraud domain.

Learn more about other EFM Trends here.

Future of ML and AI in Financial Sector | Fraud Management Trends

The financial landscape is experiencing a revolutionary transformation, and tech-savvy customers expect banks to deliver a seamless and rich experience.

In the ever-growing sophisticated threats, too many frauds must be examined and improved manually. Hence, it is imperative for organizations to incorporate AI and ML-based technologies to differentiate among anomalies and malicious fraud. AI and ML identify patterns and supports the systems in acquiring configuration rule based on the pattern and the information is detected. Furthermore, ML aids in detecting suspicious financial transactions and money-laundering activities in real-time thereby flagging such activities and minimizing false positives.

Regardless of emerging trends of ML and AI in the EFM platform, some enterprises have still not utilized them because of various challenges involved. Such as the integration of ML and AI into the existing business functions and framework, the need for new resolutions to mitigate new kinds of attacks, and others.

Future of ML and AI in financial sector

Let’s look at the benefits which ML and AI has to offer –
  • Behavioral Patterns are detected at an early stage using ML and AI analytical models
  • Ensures safety and security of integration of customers data collated from various channels
  • It provides deep insights and analytics with visual graphics and a unified dashboard.
  • Prevents attacks and mitigates fraud.
  • Offers personalized customer experience.
  • Includes automation of processes with a minimal scope of errors.
  • Ensures regulatory compliance.
  • Enhances the branding of companies.
  • Optimizes the overall efficiency of the organization.

Due to many benefits and stiff competition, financial enterprises are embracing new technology innovations and integrating intelligent automation with AI and ML into their EFM solutions. The AML software, when joined with ML and AI can offer a lot of benefits like reduction in compliance costs with enhanced and effective solutions.  AI and ML are becoming critical, empowering banks to handle the enormous quantity of datasets, combating and preventing fraud and fraud- attacks quickly thereby optimizing profit.

Hence in this ever-changing dynamics in an app-driven planet, it is crucial for banks to adapt to various combinations of AI and ML, supervised and unsupervised ML and technologies, multiple algorithms in accordance with their requirements, and then implementing them into their systems.

Emerging Fraud Trends in 2020

Let’s sneak a peek into major emerging fraud trends in 2020 to combat frauds. With evolving technology frauds are getting sophisticated. It is crucial for financial enterprises to be vigilant on various emerging frauds, quickly detecting and mitigating them. 

  • SMS Spoofing – is an emerging trend with the increasing use of mobile networks globally, sending bulk SMS by replacing the original mobile number, details with alphanumeric text and using it for deceiving and illegitimate acts. SMS spoofing is also used to conduct APP frauds, using technology to impersonate a reliable such as PSP as a sender of an SMS message. Targets and victims get these messages showing up from banks to which they react and respond thinking it’s from their banks however these are from the fraudsters waiting for an opportunity to commit fraud. The prevalent example of SMS spoofing is the text message comprising links to mobile malware suck links if clicked by mistake could lead to a malicious app being installed on your mobile thereby stealing your identity or valuable files for redemption.
  • Authorized push payment fraud (APP) – FCA (Financial Conduct Authority) executed a rule with effect from 31st Jan 2019, enabling victims of APP fraud with specific criteria to complaint to both, the sending PSP and receiving PSP supplier and not just to the sending PSP. Implementation of this rule has helped in reducing the fraud rates thereby fighting real-time payment fraud. This also is trending as a strong layer in managing data integration and leverage analytic insights thereby minimizing and combating APP fraud.
    e-Commerce Fraud – With e-commerce growth, online fraud is becoming sophisticated with the use of the latest technology to hack systems, such as online payment fraud, identity fraud, mobile fraud, digital wallet fraud, data breach, and loss of personal data. ECommerce in the fraud space must be given the required attention and protection with the EFM platform, integrated with advanced technologies and automated tools helping to combat and mitigate evolving online frauds.
  • Social and Voice Banking – Financial organizations are using innovative channels like social and voice banking such as Alexa, chatbots which are developing avenues for automated systems. With new channels come new challenges such as registration services are not robust and have certain loopholes which the cybercriminals take advantage of and conduct frauds.
  • Breaching 2FA – LinkedIn, Gmail, Facebook, Skype, and Google are using two-factor authentication (2FA) which creates a second layer of security curbing data breaches and identity attacks. However, cybercriminals and hackers are tech-savvy, conducting sophisticated frauds using technology to their advantage are accessing personal information, compromise systems, and clear bank accounts or take over the accounts (ATO).

Fraud Trends 2020

  • Increasing Identity Theft and Synthetic ID Fraud – Financial landscape is experiencing a revolutionary transformation, and tech-savvy customers expect banks to deliver a seamless experience. In the era of sophisticated threats, it is imperative for organizations to utilize AI and ML-based technology in EFM, to differentiate among anomalies, suspicious and harmful frauds. AI and ML are becoming critical, empowering banks to manage large volume datasets, early detection of behavioral patterns, ensuring safety and security of data integration, deep analytics insights, personalized customer experience, automated systems, reduced false positives, optimized operational efficiencies, reduced costs and maximized profits.
  • ATM Fraud – Increasing ATM services by banks such as real-time payments, card-less cash withdrawals are also leading to sophisticated fraud attacks such as card skimming and card shimming attacks, leading to emerging growth in ATM fraud and attacks.
  • Deepfakes and Voice Biometrics – Voice-fraud is the latest form of deepfake technology, emerging as a major threat in the fraud landscape. Fraudsters recently made headlines in the USA for deep faking voices of various CEO and established people. Conmen are perfecting deepfake to impersonate people to conduct fraud. With advancing technology, it’s really challenging to differentiate between original identity and fraudster. Cybercriminals may use deepfake on a larger scale to attack the C-suite and PSP’s verification measures to perform financial fraud.
  • Institutional Disruption – Cybercriminals are constantly hunting for large-scale campaigns causing disruption. They can perpetrate data of bank mergers and acquisitions by asking customers to re-verify credentials, update data and settings resulting in ATO attacks. Institutional disruption is likely to rise in the near future.
  • Digital Transactions – The new Age digital transactions are significantly Increasing Enterprise Risk Landscape and Vulnerabilities. Digital transformation is the foundation of most enterprise strategies today, and its increasing pace is significantly impacting technologies thereby drifting towards the integration of cashless economy, cloud adoption, mobility, the explosion of the Internet of Things (IoT), and deploying new solutions. The integration of all these systems, technologies are enabling a data-driven approach posing various security threats, as these inter-connected systems accelerate the speed and threats of attacks across the financial globe.

Enterprises are battling security issues with the increasing network complexity, rising gaps in security protection, polymorphic attacks, and compliance issues. It’s imperative for businesses to be secure, vigilant, and follow security best practices such as integration, automation, using technology and data to drive innovation. With the ever-growing digital transactions, enterprises are digging in real-time data analytics and blockchain integrated with cognitive learning to prevent risks arising from digitalization.

In 2020 financial enterprises are embracing new technology innovations and integrating intelligent automation with AI and ML into their EFM solutions. It is time, financial organizations to think differently and take advantage of updated technologies and integrate them into their processes.

Increasing Fraud and Information Theft | EFM Trends

There is a significant shift in the fraud landscape, with increasing fraud risk rapidly growing across the financial institutions. Fraud is cited as the most accelerating problem of the digital world. Exposure in online payments is on a rising toll, resulting in a big switch to mobile and digital apps, leading to swifter and smooth payment executions. Due to this, banks and systems get less time to detect and identify hidden funds when required. Furthermore, fraud is conducted in a sophisticated manner in the deep dark web.

Major types of emerging and increasing frauds

Money Laundering and Terrorist Financing – Both money laundering and terrorist financing goes arm in arm, firstly illegal money is laundered then sponsored for terrorist activities.
Identity Fraud/Thefts refers to a crime in which the criminal acquires and use the victim’s data particularly in extracting his/her money or credit in an unlawful manner through illegal ways for wrong motives such as making transaction, online purchases or getting a tax rebate. The contextual information of people is sourced through loan application forms, online purchases, digital wallets, mobile banking, internet resources, from lost or stolen wallets or phishing frauds, or through medical and financial data.

AML Challenges_Identity thefts and data breaches

Types of Identity Thefts
  • Account Takeover (ATO) refers to inappropriate use of credentials (name, signature, etc.) and seizes control on a bank account without the owner’s permission and fraudsters performing unauthorized transactions such as fund transfer, online transactions, and shopping.
  • Driver’s License Identity theft is a prevalent form of Identity Theft. The person involved in stealing your identity may purchase things in your name also manage to obtain other forms of identifications with their photo and use them for unlawful activities.
  • Mail Identity theft is a very popular identity theft (ID) in which the criminals steal your sensitive and personal information to access your financial data, then make purchases, or even apply for new credit cards.
  • Online Shopping fraud / Ecommerce thefts refer to a criminal accessing customers’ payment or sensitive information through hacking systems later using them to purchase groceries, clothes, or goods online without the owner’s knowledge.
  • Social Security Number Identity theft could happen from tax identity theft or even circulars floating in your mailbox. With the stolen SSN numbers the thieves can easily commit crimes and fraud in your right name or also create another identity, exploit further for their selfish intentions.
  • Senior / Elder scams are crimes in which the elders are targeted with all kinds of schemes; criminals take advantage of their isolation and lack of technical know-how. The elders are soft targets and can be easily duped by taking their account or card information and used for criminal activities.
  • Email compromise (entity/business) is an increasing phishing fraud; the criminal takes control of your business email account by a hacking password then conducts wire transfers and such unlawful activities.
  • Insurance Fraud is any act executed to deceive an insurance process. Insurance fraud occurs when an individual or establishment makes incorrect insurance claims to acquire advantages or remuneration for which they are not entitled to or owned.
  • Credit Card and Debit Card Fraud is an example of Identity Theft (ID) in which both the cards are used without the owner’s knowledge to make unauthorized purchases, shop online / offline, or retrieve funds using the victims’ account.

Fraud identification and mitigating frauds are the heart of every risk management system. Banks select EFM solutions with features satisfying their overall work processes and framework requirements. Several functions and features are important to be considered while making an EFM platform selection. It should detect and prevent frauds across all channels, considering a lot of aspects such as customer financial data, mobile data, user access data, user demographics, financial patterns, etc.

Financial institutions experience hidden challenges while integrating the EFM platform into their system such as reducing losses, detect and mitigate rising frauds and enhance the customer experience. The fraud management solution should also consider integrating options, smooth arrangements, customer service experience, machine models, e-commerce fraud combating solution with a combination of ML and human intelligence, and much more. Banks are adapting updated technologies in EFM solutions against legacy methods to prevent and combat identity thefts.

The Rise of Blockchain Technology in Risk Landscape

Blockchain is a database framework that is divided and shared within the network framework, maintaining a record of each cross-border payment transaction. All such transactions and data entries are recorded in a specific sequence and non-changeable order which are chained together in blocks, giving the technology its name.

Blockchain aids not only in identifying frauds but also safeguards the links within the blocks and contents by encrypted data, this way the prior transactions cannot be damaged or forged. The cryptographic format supports the early detection and mitigation of fraud in the risk domain. It’s a rapidly emerging solution for secure, swift, and cost-effective money remittance service. Markets that are distinguished by reduced penetration, heavy demands for banking services, increased level of mobile penetration, etc. should adopt Blockchain for enhanced remittance services.

The rise of Blockchain technology

It offers an array of benefits such as allowing peer-to-peer (P2P) transactions, ensuring safety and transparency, mitigating frauds, cybersecurity, and optimizing operational costs. Due to this financial sectors are allocating better resources to apply Blockchain technology into their systems. Blockchain technology has the ability to build faith and transparency in organizations. Furthermore, supporting in the verification of documents of various entities and products, providing automated transactions, and reducing forged remittances.

Emerging establishments are gearing up to take advantage of Blockchain technology in their flourishing payment markets. It also helps in swift and secured cross-border money remittances with minimal intervention of middlemen, thereby saving costs on money remittances and minimizing losses caused due to frequent fluctuation in currency value.

Blockchain technology has the potential to transform the conventional business model to modern systems thereby ensuring safer, swifter, and cost-effective transactions with minimized frauds. We all should be aware, Blockchain is here to transform the banking sphere.

TrapX Security Recognized as Clear Technology Leader in Deception Technology

San Jose, CA – January XX, 2020 –   Quadrant Knowledge Solutions has announced today that it has recognized TrapX Security as the Technology Leader in Deception Technology.

Quadrant Knowledge Solutions conducted an in-depth analysis of the major deception technology vendors by evaluating their product portfolio, market presence, and value proposition. According to the analysis, TrapX, with its robust and comprehensive DeceptionGrid platform, has secured strong ratings for the overall parameters of technology excellence and customer impact and emerged as the clear technology leader.

Highlights of the report:

  • Deception technology offers a unique value proposition for threat detection and response, positioning organizations in the driver’s seat and actively engaging with cyber criminals with the use of a fake deception environment. The approach has proven to provide accurate threat detection in the early stage of attacks with significantly less or almost zero false positives.
  • TrapX DeceptionGrid multi-tier approach combines network emulation traps with real OS, offers a deep level of engagement, and supports enterprise-grade scalability. The comprehensive technology capability positions TrapX as the industry-leading provider of deception technology solutions across all deception use cases.
  • The majority of the deception tools available force a tradeoff between deep deception at low scale (virtualized decoys) and low interaction at large scale. TrapX has innovated the market by combining emulated decoys which can proxy attacker activity to high interaction decoys supporting deep deception at enterprise-grade scalability.
  • TrapX product strategy and roadmap is in line with the evolving threat landscape to provide comprehensive protection against next generation of targeted, smart, adaptive malware attacks, and automated attacks across an IT, OT (operational technology), IoT (internet of things), and cloud infrastructure environment.

“The innovative and sophisticated technology platform of TrapX is able to provide enterprise organizations with signatureless detection of sophisticated malware and other attacks,” said Divya Baranawal, Industry Research Manager at Quadrant Knowledge Solutions. “We were impressed by TrapX’s ability to fulfil all deception use cases without compromising enterprise-grade scalability.”

“This has been a year of record growth for TrapX, with organizations in finance, healthcare, manufacturing, and more choosing our patented deception technology over competitive options. Our ability to provide deep deception at enterprise-grade scale for IT and OT networks is disrupting a market historically dominated by legacy virtualized honeypots. This report further validates the choice our growing customer base has made,” said Ori Bach CEO of TrapX Security.

This announcement comes as TrapX closes out a record year with accelerated growth and significant competitive wins across the globe. In 2019 the company expanded its customer base in the healthcare, finance, and manufacturing sectors and has shown record revenue:

  • On July 1, 2019 TrapX announced that it secured $18 million in a series C financing round designed to expand the company’s global footprint to additional countries and verticals.
  • On July 29, 2019 TrapX announced that it appointed veteran sales exec Frank Sacco to expand and lead its global sales organization.
  • On November 13, 2019 Security Current, the premier CISO knowledge-sharing community, announced that CISOs from across industries selected TrapX as the winner of the Security Shark Tank® New York City 2019.
  • On November 14, 2019 TrapX released a case study featuring Procter & Gamble, a Fortune 100 company, on how its product, DeceptionGrid™, was used to transform Procter & Gamble’s cyber resilience program.
  • On November 15, 2019 TrapX announced that it had appointed NASDAQ veteran Mike Fabrico as its new Chief Information Security Officer.
  • On November 21, 2019 TrapX announced that it joined forces with Fortinet®, in order to provide real-time visibility, threat detection, improved incident response and rapid threat containment, leveraging the capabilities of Fortinet Fabric solutions.
  • The analyst firm Gartner recommended to security and risk management leaders to “include deception tools as an alternative in any threat detection initiative, as a main tool for small and midsize enterprises or as a complement to other approaches. At the very least, deception tools will offer high-quality alerts via an easy-to-manage ecosystem of simple landmines that nobody is supposed to touch.” *Gartner, Improve Your Threat Detection Function with Deception Technologies, Gorka Sadowski et al. March 27, 2019.
  • On December 11, 2019 TrapX announced that it named Ori Bach as its new Chief Executive Officer.

To obtain the report by Quadrant Knowledge Solutions visit:


About TrapX Security

TrapX Security is the pioneer and global leader in cyber deception technology. Their DeceptionGrid solution rapidly detects, deceives, and defeats advanced cyber-attacks and human attackers in real-time. DeceptionGrid also provides automated, highly

accurate insight into malicious activity unseen by other types of cyber defenses. By deploying DeceptionGrid, you can create a proactive security posture, fundamentally halting the progression of an attack while changing the economics of cyber-attacks by shifting the cost to the attacker. The TrapX Security customer-base includes Forbes Fortune 500 commercial and government customers worldwide in sectors that include defense, healthcare, finance, energy, consumer products, and other key industries. Learn more at www.trapx.com.

About Quadrant Knowledge Solutions

Quadrant Knowledge Solutions is a global advisory and consulting firm focused on helping clients in achieving business transformation goals with Strategic Business and Growth advisory services. At Quadrant Knowledge Solutions, our vision is to become an integral part of our client’s business as a strategic knowledge partner. Our research and consulting deliverable is designed to provide comprehensive information and strategic insights for helping clients formulate growth strategies to survive and thrive in ever-changing business environments. For more available research, please visit https://quadrant-solutions.com/market-research/.

Trademark Notice:
TrapX and TrapX Security is a trademark of TrapX Security, Inc.

More Information:
Visit the TrapX Website:  https://www.trapx.com

Hear what the users of DeceptionGrid have to say about the product: https://www.youtube.com/watch?v=U0EiOgh0fng

Learn more about DeceptionGrid: https://trapx.com/product/
Visit the TrapX blog: https://www.trapx.com/blog/

Follow TrapX on LinkedIn: https://www.linkedin.com/company/trapx

Follow TrapX on Twitter: @trapxsecurity
Follow TrapX on Facebook: https://www.facebook.com/pages/TrapX/258804147648401

Press Contact:

Jeff Bajayo


Anti-Money Laundering (AML) Challenges | Identity Thefts & Data Breaches

Rapidly Increasing Incidents of Identity Thefts and Data Breaches Across the Global Regions

Identity thefts and data breaches are rapidly growing across the financial domain hence cited as the fastest growing crime problem of the digital age. Banks are adapting updated technologies in AML solutions against legacy methods to prevent and combat identity thefts and data breaches. Updated technologies in AML solutions provide information helping people to safeguard their personal information and private records such as credit reports.

Identity theft is stealing personal information or identity then utilizing it intentionally without the owner’s consent for making transactions, online purchases, or getting a tax rebate. Personal information can be social security numbers, credit cards, driver’s licenses, bank details, etc. With evolving technology fraudsters acquire one’s information from digital wallets, mobile banking, internet resources, from lost or stolen wallets or phishing frauds.

Major types of Identity thefts are

  • Financial Identity theft
  • Medical Identity theft
  • Identity Cloning
  • Criminal Fraud
  • Child Identity theft
  • Bank Account fraud
  • Government benefits fraud

AML Challenges_Identity thefts and data breaches

Data Breach is a data leak of confidential and sensitive information, stolen from systems without the consent of the owner/enterprises into unsafe surroundings and utilizing that data intentionally for wrongful acts. Identity theft and Data breaches go hand in hand although all data breaches cannot be identity theft. Both Identity theft and Data Breach are interconnected but they are different from each other.

  • Different types of Data Breaches are
  • Cyber-attacks / Hackers
  • Stolen, loss of devices of Mobile, USB, etc.
  • Employee negligence /error/ data leak of sensitive data or employee data
  • Human error

AML Challenges_Identity thefts and data breaches

It’s imperative for banks to take a stronger approach in AML solutions in combating the increasing identity thefts and data breaches.

Anti-Money Laundering trends and challenges – Data Security & Privacy

Growing Concerns about Data Security and Privacy (Data explosion)

The ever-growing universe of technology, threats, and intricacies in the cybersecurity landscape is evolving at an increasing pace in which data security and privacy are a persistent challenge. Owing to the increased use of personal data in digital transactions; creates vulnerabilities and dependencies in two major threats – data security and privacy. To combat such threats data privacy rules and regulations complying with GDPR is necessary to be implemented and play an integral part of any best-practiced compliance program thereby thinking about the safety and security of consumers. Data privacy laws are designed to provide entities control on the process of information gathered, exchanged, and used whereas Data security laws lay emphasis on securing data from thefts and breaches and both data privacy and security have a common goal to protect sensitive data and mitigate risks. Data Security and Privacy Laws are created to provide companies control across their personal data as to how it is consolidated and handled. As a result, constraints on data protection can lead to severe issues.

Integration of AML solution with Data Security is becoming essential

The significance of embedding Data Privacy and Security Measures into Anti-Money Laundering and compliance programs is becoming of utmost importance for all financial institutions. Data privacy and security features in various stages throughout the KYC and EDD cycle. Due to which banks must ensure data privacy compliance is always their priority and point of focus. Enterprises are required to conduct enhanced due diligence in knowing their customers, thereby mitigating money laundering and corruption risk. If Banks fail to comply with the government regulations, there are chances they will be penalized. With transforming technology, regulators should ensure the Anti-Money Laundering environment has the clarity and flexibility to adapt to new technology innovations to prosper while safeguarding customer data and privacy.

The Convergence of CyberSecurity, Fraud, and AML

In recent times, many financial organizations are integrating many technologies to manage compliance and anti-money laundering frauds. With increasing demands in risk management, many businesses face new challenges. For instance, there is a lot of new software and technologies in the market to combat such risks; hence it’s difficult for banks to scrutinize them and consider their specific requirements. This is where AML, cybersecurity, and anti-fraud systems are converged together to streamline detection management from suspicious transactions.

Battling financial crime is challenging, hence fraud and anti-money laundering functions need to be integrated for a holistic approach to the solutions and users. For instance, if a customer opens an account with a bank, the bank can check for fraudulent activities, cybersecurity, and money laundering activities simultaneously and not separately. If there is any suspicious activity, the customer will end up receiving three different calls from the AML team, cybersecurity team, and fraud team, hence convergence of all three is a must.

Typically, any financial institution has a fraud and compliance segment. The fraud team is responsible for fraudulent activities and losses whereas the compliance team is responsible for the legal processes, government regulations, and tax evasions. If there is any suspect or any financial crime detection both the departments may have captured similar information and will have to take the right action. But in most such cases, both these departments do not share such information which doesn’t provide full proof information and a picture of the customer, leaving investigations incomplete. This means multiple systems are maintained in the same company, but the information is not transferable. Imagine such scenarios can be frustrating for customers as they will get calls from different departments asking for the same information repetitively when the pool of information is available with the Bank. To streamline investigations, they’ll need to converge their cybersecurity, AML, and anti-fraud solutions.

Challenges in CyberSecurity, Fraud, and AML

The road to convergence is quite challenging and tough, depending on the nature, size, and complexities of the organizations. Many factors must be focused such as which areas can be integrated now or in the future; some areas could be kept separate and combined at a later stage, some segments can be quickly converged, some segments can be added at a later stage. Another challenge is one solution will not be suitable for all organizations, it must be tailored for organization-specific needs like demographics, nature, and type of company, client type, legal rules, etc.

Increasing demands of customers, expecting payments, and other requests grow swiftly, hence converging has become a necessity. As to perform this, banks will have to detect behavioral patterns and assess them quickly, so converging is crucial as it will lead to faster payment processing and quick services.