Discuss on the 2-Prong Approach to Fighting Financial Crimes
Detection & Prevention
Prevention strategies enable protection at the earliest stage. Fraud is costly. It kills loyalty. Banks, credit card companies, payment processors, money transfer firms and settlement vendors know the huge impact of fraud on the success of their business.
Fraudulent transactions can not only impact revenue, but also compromise user trust and lifetime value. Yet preventing fraud is a balancing act between identifying criminal behavior while minimizing friction for trusted users.
The way firms have been dealing with fraud has changed over the years. The market today dictates that fraud detection and prevention be:
- Agnostic, to any kind of threat, whether it is a botnet, or a location manipulation, or a lost device
- Omni-channel, and support detections and actions across all forms of consumer interactions
- Dynamic, using real-time scoring of risk patterns and specific to a particular transaction for a particular device and particular consumer for a particular event
- Contextual, using many different data and signatures to come up with a unique assessment of risk
- Fast and real-time, within the boundary of application transaction.
Remediate and Compliance
Customers who are impacted by financial crime are treated with trust and Response controls are designed to take corrective action and remedy the harm caused by fraud or misconduct.
When information relating to actual or potential fraud and misconduct is uncovered, management should be prepared to conduct a comprehensive and objective investigation. The purpose of such an investigation is to gather facts leading to an objective and credible assessment of the suspected violation and allow management to decide on a sound course of action.
By conducting an effective investigation, management can address a potentially troublesome situation and have an opportunity to avert a potentially distress in relationship with the affected customer.
A well-designed investigative and remedial process typically includes the following attributes, among others:
- Contextually presented data of the transaction, risk assessment, party and counterparty so that investigator can have a proper line of inquiry
- Accountability of action and service level assurance metrics and measures
- Oversight through an audit trail by the organisation’s audit team
- Activities undertaken by investigators who understand the risk and legal dimensions and potential risks of the matter at hand, as well as the necessary investigatory skills
- Review and proving ability to external auditor so that the latter can consider the proposed scope of compliance
- Reporting that provide management, external auditors, regulators, and, where appropriate, the public, with information relevant to the investigation’s findings,
- Deliver compliance and transparency throughout the journey.