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Tag: Digital Fraud

How can Banks Combat & Mitigate the COVID-19 Fraud Attacks

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Coronavirus is continuing to impact several lives of people and the economy worldwide; fraudsters are busily engaged in phishing and scamming mayhem. Both coronavirus and coronavirus scams can affect your health and finance. While the world is trying to deal with the threat of COVID19, cyber-criminals are coming with innovative ways to perform sophisticated frauds based on the continuing COVID – 19. Across the globe, people are working remotely with limited security features as opposed to working in the office. Everyone is in quarantine and following the social distance protocol. Owing to which everyone is shopping online for their daily needs. It is quite evident now customer shopping behaviors worldwide have changed and will persist in doing so in the times ahead. Doubtlessly, cybercriminals will keep following the trends of consumers and adapt their plans appropriately.

In most companies, fraud is identified post it happens; it’s imperative for financial organizations with the rise in technology, fraud detection, and mitigation takes place in real-time. They should adopt a real-time fraud management solution that can be tailored in accordance with their requirements. As online shopping continues to grow, even the security of online channels should become stronger and more advanced. Detecting frauds at a very early stage at the same time optimizing the customer experience should be the motto for banks. Various enterprises are plunging into a multifaceted method to combat and alleviate frauds. Acting recklessly with a haste plan can cause more damage than any good in the current COVID-19 situation.

Several types of fraud are hitting both the merchants and the consumers in these difficult times. Banks should conduct further authentication steps to access data, also adapt the limit for any fraud ranking models, enabling more false positives which support in preventing frauds. Banks or financial organizations should comply with regulatory compliance to alleviate risks. With a swift system in place, banks can be agile and smoothly alter algorithms or update models to safeguard their customers’ security.

Presently frauds are majorly attacking Business Email Compromise (BEC), Phishing, Gift Card Fraud, fake and fraudulent sites, eCommerce Fraud, Account Fraud, and such others. As It is easier to get distracted at home or be under different stress; hence such an audience becomes a soft target, and most people are falling prey to such fraudulent activities

COVID-19 phishing attacks – It started to rise in January 2020 and by the end of March 2020 it had a sudden surge. Most of the phishing attacks comprised of brand spoofing, scams, fraud emails, and business email compromise (BEC).

How can Banks Combat & Mitigate the COVID-19 Fraud Attacks

Disclaimer: Actual Numbers in the graph may vary as these are approximate figures.

Preventive measures to avoid frauds

Incorporate ML and AI-powered fraud detection solution

With the support of ML and AI, the fraud solution can consolidate data from all internal and external channels and analyze historical data, enabling the risk model to detect anomalies and abnormal behavioral patterns. Hence one of the best practices recommended is to integrate fraud management software coupled with intelligent automation, and advanced AI and ML.

Secondly, some fraud solution experts use risk scoring, device fingerprinting along ML and AI approach for detecting anomalies in payments and combating fraud attacks. The ML models can spot the probability of HTTP referrer is a phishing site and how to react to the phishing scams scenario. Sophisticated risk engine incorporated with AI and ML continuously monitors transactions and detects various fraud patterns along with the actual series of user behavior and continuously monitors and scrutinizes data. Whenever anomalies or fraud attacks happen, frauds can be detected by the fraud management solution in real-time, suggesting enhanced fraud protection layers.

In this rapidly evolving dynamics, the financial domain is facing a radical metamorphosis and customers expect banks to deliver a seamless experience. Smart banks advise today a comprehensive fraud approach demanding the intervention of human touch with sophisticated technology. Hence banks are embracing new technologies which help in flagging suspicious transactions and reducing false positives thereby minimizing losses and optimizing the customer experience.

Embracing multi-faceted and multi-layered security approach 

A lot of sensitive information of entities and companies exists with banks. If hackers get access to such sensitive information, then the probability is higher to initiate a breach or fraud attacks. To combat such situations with stronger performance and response, it is becoming crucial for banks to embrace a multi-layered approach to cyber-safety.

Financial organizations must spend in data-ingestion from multiple channels enabling them to make a sound decision on fraud attacks and fraudulent activities. Integrating a series of valid tools like multi-layered approach, biometrics, behavioral analysis supports in minimizing frauds to a greater extent. It also helps in offering the right security level in accordance with the fraud levels.

Enhanced Protection for mobile payments

Many of us use mobile phones to shop online and pay through various channels and gateways. This is the reason cybercriminals are aiming the mobile platform in parallel with others. Whenever any person clicks on any unknown links or downloads any attachments, malware, trojans or virus can get downloaded which could steal sensitive and personal data, which may further lead to the malfunction of websites.

Hence banks should implement multifactor authentication, additional account verification, end-to-end cryptography, fingerprinting device, providing real-time messages, alerts, and emails, proper banking mobile application, investigating behavior analysis, and using secure access with safe online documentation. This can help in monitoring financial transactions continuously, ensuring safety, and blocking fraud threats.

How can banks combat and mitigate the COVID 19 Fraud attacks1

Fraud Risk Management Solution

The fraud management solutions should help banks to safeguard from fraud attacks, detect and mitigate frauds and anomalies.

For an effective fraud management solution, you should bear the below pointers in mind –

  1. Can the fraud management software be integrated with the prevailing software model to enhance the fraud mitigation layer?
  2. Does the fraud management platform support multiple payment channels across different geographical locations?
  3. Is your fraud management solution, providing a deep insight into model analytics or it is just merely a Black Box?
  4. Does your fraud management program meet your expectations and appetite?
  5. Is it possible for your fraud management solution to ingest data from any channel during the customer lifecycle?
  6. Is your fraud management software coupled with intelligent automation, advanced ML, and AI?
  7. Is the fraud management solution able to detect frauds, trigger the right alerts, provide the right investigation, offer recovery or backup plans with appropriate communications?
    Is it improving the overall operational efficiency?

In difficult and uncertain times like this, we all are going through a tough phase. We are compelled to stay in isolation and work from home for our safety and protection. We must move slowly, watch out for minute details and refrain from taking hasty decisions. Banks should monitor coronavirus linked scams and implement a good fraud management solution to stay ahead of frauds. Stay vigilant and Be wise.

Growing Fraud and Mitigation Trends | EFM Trends

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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.

Emerging Fraud Trends in 2020

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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

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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.

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

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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 (AML) challenges | Intelligent Automation, AI and Machine Learning

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Intelligent Automation, Artificial Intelligence (AI), and Machine Learning (ML) are increasingly being incorporated into AML Technologies:

Financial outlook is experiencing a revolutionary transformation, tech-savvy customers expect banks to deliver smoother and swifter experiences. As a result, financial enterprises are embracing new technology innovations and integrating intelligent automation with AI and ML into their AML compliance solutions which is the future banking. Intelligent automation, AI and ML are crucial as it empowers banks to manage large volume data-sets, combat and prevent frauds quickly thereby optimizing operational efficiencies, by reducing costs and maximizing profits.

AI and ML identify patterns and supports the systems in acquiring configuration rules based on the patterns and information detected. Furthermore, ML aids in detecting suspicious financial transactions and money-laundering activities thereby flagging suspicious activities and helps in reducing false positives. Hence, it is crucial for banks to adapt to intelligent automation, AI, and ML and incorporate them into AML solutions.

AML Key Drivers_Intelligent Automation, AI and Machine Learning

The AML software, when coupled with intelligent automation, Al and ML can offer a lot of benefits like reduction in compliance costs, enhanced transaction monitoring process thereby providing an enhanced and effective solution.

Anti-Money Laundering Trends & Challenges in Digital Age

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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 is 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 into real-time data analytics and blockchain integrated with cognitive learning to prevent risks arising from digitization.

The continuing technology advancements and combating financial crime in a digital age

Digital evolution is continuously pacing up, you will see more companies switching to cloud technologies for many channels such as analytics security, KYC/CDD verification, risk scoring, financial transactions, and much more. Digital augmentation is followed with a bang of cybersecurity and it is building curiosity as to how will this impact AML compliance and security management across the financial space.

The outlook of businesses conducted over the last few years is very different as compared to the forthcoming years. In previous years, AML compliance has been drifting and evolving with increased government policies and regulations. Money laundering activities and terrorist funding have been growing for many years, keeping pace with new technologies, crimes have evolved and are becoming a critical issue to battle. Owing which banks must continuously keep updating their AML solutions and processes and adhere to compliance regulations else they can be penalized. So, adopting new technologies, updating frameworks, policies and being flexible is becoming a necessity for all Banks to combat the ever-growing AML threats. Financial institutions must concentrate on digital payment issues, regulatory framework, and money laundering risks related to internet payment methods such as mobile e-wallets and online payments and transactions.

Enterprises should think to switch from conventional risk methods to innovative technology. It’s time now companies should leave legacy systems and leverage new technologies along with intelligent automation in their compliance programs to combat financial crimes in the digital age. This is how technology innovations can support banks to fight fraud and provide security to their customers in the continuous battle against threats and cyber-crimes today.

The Convergence of CyberSecurity, Fraud, and AML

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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.

Cryptocurrency and Money Laundering

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Cryptocurrency and Money Laundering

We all have been hearing since last year about cryptocurrency and the lucrative profits it offers which is attracting all the money-launders, terrorism financing, and other financial fraudulent activities. A lot of news of crypto scandals is floating in the market. Due to emerging trends of cryptocurrency and the fraud activities involvement, the government authorities and regulators have increased their focus on all the institutions dealing with cryptocurrency in making them compliant and ensuring them to follow the regulations.

How fraudsters use Crypto to launder illegal money?

Fraudsters and criminal use crypto money laundering to conceal all their illicit funds in a lot of ways. The most dignified form of money laundering is bitcoin money laundering. There are three main stages in money laundering, and these same stages are applied to crypto money laundering as well.

Let’s understand what is Money Laundering first –

Money laundering is a process where a large amount of proceeds is generated by criminal activities and terrorist funding such as drug trafficking, arms trafficking, gambling, tax evasion etc.

Three stages of Crypto Money Laundering or Money Laundering

1. Placement – The first stage is introducing illegal proceeds into purchasing cryptocurrency, creating a digital wallet to do financial transactions just like a bank account. Cryptocurrencies or can be acquired with cash or other types of crypto, online cryptocurrency trading exchanges, or through licensed exchangers which may or may not require customer identification. Legal transactions follow the regulatory process for identity verification and are AML compliant.

2. Layering – The second stage is where the illicit money is separated from its source and where the funds are concealed through various ways such as transferring funds to different wallets or shifting services to hide the fund source.

3. Integration – The final stage is the funds that were laundered money goes back to the owner who uses the money to make purchases or invest in new business. Cryptocurrencies could be switched to fiat currencies through the exchange process. This exchange process mostly follows a stringent identification process and supports popular coins such as Bitcoins etc. Offshore fiat currency bank account sometimes can be used to launder dirty money through an online company that is accepting bitcoin payments and can be created to allow income and switch dirty cryptocurrency into white/legal bitcoins. Cryptocurrency can be used to purchase goods also digital wallets can be stored on phones, online devices making it possible to sell crypto coins for physical cash/money.

What is AML Transaction Monitoring ?

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What is AML Transaction Monitoring?

Transaction Monitoring system (TMS) is an integral part of an efficient anti money-laundering solution. Monitoring financial transactions help detect anomalies and mitigate fraud risks.

The main purpose of the AML transaction monitoring platform is to detect frauds, protect the banks from any illegal transactions or illicit transactions dealing in money laundering and terrorist financing.

Transaction Monitoring is very important in the banking sector due to new ways of fraud introduced in the market with evolved technology these days. TMS can be defined as a formal process for identifying anomalies with a method of monitoring such anomalies then raising alerts and filing SARs if required.

On a daily basis, customers’ financial transactions are monitored, assessed, and analyzed including customers’ historical financial transaction data like withdrawals, deposits, cash transfer, online transactions, investments, etc. TMS has a significant impact in reducing false positives, helps in the analysis of high-risk profiling, and improves operational efficiency.

A well-designed and structured TMS system is a crucial component of a robust AML compliance program. It helps in combating and preventing money laundering and terrorist financing activities, ensuring compliance and managing customer data.

AML Transaction Monitoring System

Let’s understand the AML-Transaction Monitoring Process:
  • Firstly, it monitors each customer’s financial transactions utilizing all contextual data spanned across all channels.
  • Secondly, it detects and raises alerts for any suspicious activities.
  • Thirdly such alerts or cases are assigned to the investigation team who review and scrutinize if these activities are genuinely unusual or not, if activities are found suspicious then such activities are escalated, and suspicious activities reports (SAR) are filed or flagged.
  • Lastly, it creates risk-scoring model management for transactions using rules, ML, and statistical algorithms.

What is SAR?

SAR is Suspicious Activity Reporting. If any alerts are triggered for anomalies, the case is reviewed by the investigation team, and if found suspicious, SAR is raised. SAR filings are based on many criteria such as client type, demographics, ownership, enterprises, and other customer factors.

To conclude, the Transaction Monitoring System is the backbone of the AML process which helps in identifying fraudulent activities and mitigating fraudulent risks.

InfoSecurity Outlook Magazine focuses on keeping track of Information Security, Data Security, Cloud Security, IoT Security and Fraud Management related technology to help entrepreneurs protect their organizational data from threats and misuse.

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