Financial crime overwhelms government efforts

Financial crime – you can also call it economic crime – is, of course, everywhere.

And in an effort to blunt the attacks of fraudsters targeting unwitting victims, leveraging their efforts in phishing schemes and account takeovers, crypto theft and all sorts of avenues…

…perhaps the best defense lies in the proactive use of advanced technologies. Government efforts to tackle bad actors can simply be overwhelmed and overwhelmed by the sheer scale of the problem.

The inadequacy and financial drain on agencies designed to protect consumers and businesses from fraudsters was made increasingly apparent with a recent report from the UK.

As detailed in this space in recent days, a report by the anti-corruption charity known as Spotlight on Corruption states that economic crime in the UK ends up costing the government “hundreds of times more” than it that the government spends to fight the criminals themselves.

See: Economic crime in the UK exceeds government spending to fight it, data shows

In terms of the numbers themselves, the report notes that the UK government spends £825m ($1.1bn) annually on the budgets of national economic crime agencies. However, that estimate pales in comparison to the 190 billion pounds ($258 billion) lost to fraud and the 100 billion pounds ($135.6 billion) spent fighting money laundering.

So: About $136 billion is spent fighting fraudsters, and about $258 billion is lost to them despite the battle. The charity that published the report has suggested that a new crime-fighting fund be created, reinvesting at least some of the law enforcement revenue.

We note that there are other avenues through which, in the UK and elsewhere, the battle can be joined more fully by all of us.

In a recent interview, Todd Raque, Head of Financial Crimes Compliance and Anti-Money Laundering at Featurespace, told PYMNTS, “As we come out of the pandemic, scams are on the rise, and I think it will continue.”

Education remains a key line of defence, he said, for individuals and businesses alike, while businesses themselves (especially financial institutions) need to be alert to the various red flags being raised. by fraudsters.

Read also: Companies must be proactive in the fight against financial crime

“You have to put yourself in a position where you’re proactive, not reactive, and you have to get ahead of the game,” Raque told PYMNTS. “Technology is a part of that, but you also need to have a good core process based on identifying emerging risks and typologies.”

Regarding the efforts of government agencies themselves, Raque said the US Financial Crimes Network is currently working to implement major anti-money laundering (AML) reforms over the past few years. next two years, which will likely require some institutions to provide law enforcement with more than useful information about the frauds and scams they encounter.

Elsewhere, we noted that identity and new account fraud pose significant threats in the context of the great digital shift, with 85% of financial institutions (FIs) reporting fraudulent activity in the account opening process. US banks were expected to lose $3.5 billion from new account fraud in 2021.

As for the advanced technologies that can be (and are) being deployed, as a weapon that takes its place in the aforementioned proactive approach: behavioral analytics offers a way to scare off passing fraudsters.

Typical vs. atypical consumer behavior

Analyzing data at the time of transaction, at the time of account opening to determine whether input, angle of devices, and other information “deviates” from typical online consumer behavior can be very effective. Behavioral analytics, as case studies have shown, has the potential to reduce fraud rates by up to 35%, a significant reduction. This is especially important given that, as PYMNTS estimated, 75% of consumers plan to retain most of the digital banking habits they have adopted even after the pandemic is over.

Read more: How Behavioral Analytics Can Prevent New Account Fraud

Jumio’s head of digital identity, Philipp Pointner, told PYMNTS that it’s a form of identification with government-grade security that cardholders can also use to access private sector services ( including but not limited to financial services). Half of companies surveyed by PYMNTS said they intend to invest in digital authentication solutions. This can cement trust in transactions and other activities performed online.

“That data can be shared with a click and perhaps scanning your face to make sure it’s really you using that identity,” Pointner told PYMNTS. “Imagine all the places online and in the real world you can go using this identity – from provider to provider, service to service, country to country.”

Read also: Government-issued digital IDs lay the foundation for trust – online and offline



On:More than half of US consumers believe biometric authentication methods are faster, more convenient and more reliable than passwords or PINs. So why do less than 10% use them? PYMNTS, in collaboration with Mitek, surveyed more than 2,200 consumers to better define this perception in relation to the usage gap and identify ways companies can increase usage.

About Darnell Yu

Check Also

SolarEdge Q3: Rangebound ahead of earnings, macro risks weigh in (NASDAQ:SEDG)

nattrass/E+ via Getty Images It’s the last peak week of the earnings season. John Butters, …