A typical fraud case lasts 14 months before detection and causes a loss of over $8,000/month, according to the Association of Certified Fraud Examiners (ACFE) 2020 Report to the Nations. When considering today’s financial landscape, where transactions happen under one second, and the current age of economic turmoil that COVID-19 has caused on a global scale, these challenges and risks become all the more threatening, underlined Deloitte Romania and SAS experts in a series of webinars on fraud detection, anti-money laundering (AML) and use of analytics for these fields. However, there are reasons to be optimistic, as 55% of organizations expect to invest more in anti-fraud technology over the next two years, according to ACFE’s 2020 Anti-Fraud Technology Benchmarking Report, and new approaches to fraud prevention emerge, combining rules-based systems with machine learning and AI-based fraud detection systems that enable the identification of thousands of fraud patterns.
Compliance and anti-fraud departments need to start working together
Bridging the gap between compliance and anti-fraud departments is one of the main challenges that companies face in their fight against fraud and money laundering, given that there is currently very little integration between the two, said Deloitte Romania experts. If a financial crime occurs, the two departments will usually require much of the same information, in order to take the appropriate actions and measures. However, without having the full picture from both sides, this becomes difficult both from an investigation and a cost perspective.
“There are remarkable benefits to strengthening the collaboration between the compliance and anti- fraud functions in a financial institution. Fighting against perpetrators from both a fraud and an AML perspective and covering complex schemes such as CEO Fraud would only be possible by virtue of a strong bond between both functions,” stated Ioana Ungureanu, Forensic Manager, Deloitte Romania, one of the webinars speakers.
Proactive and aware of money mules
Criminal groups are well aware that they can easily recruit a new money mule at any time, so companies need to raise awareness on this risk among their employees, which have served without their volition or consciousness as money laundering intermediaries for criminals, underlined SAS specialists.
“Start adopting a proactive approach as opposed to a reactive one. Stay connected to the risk references to be able to identify new threats and address them effectively,” said Andreas Kitsios, Senior Business Solutions Manager, SAS Greece & Eastern Europe, Fraud & Security Intelligence, during the webinars.
Technology is a valuable ally for anti-fraud experts
Anti-fraud technology has become an important investment, as over 60% of organizations say the increased volume of transactions they can review with data analytics is beneficial to their anti-fraud programs, according to ACFE’s 2020 Anti-Fraud Technology Benchmarking Report.
“Advanced analytics also improves investigation efficiency by reducing the number of alerts which turn out not to be fraud, called false positive, and of cases of failure to spot actual frauds, called false negatives. This improves customer experience and reduces risk to the company,” explained Anna Lykourina, Senior Fraud Analyst Expert, SAS EMEA, one of the webinars speakers.
With two out of three organizations currently using exception reporting or anomaly detection techniques in their fraud-related initiatives, the use of artificial intelligence and machine learning as part of organizations’ anti-fraud programs is expected to drastically increase over the next two years. “Deploying the appropriate report-generating software and technology is an additional defence mechanism that we recommend in reducing the risk of fraud. This should, however, always be a complementary safeguard that must accompany the constant checking and processing of items by staff members,” emphasized Mihail Bucheru, Forensic IT Manager, Deloitte Romania, during the webinars.
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