Banks Face Heightened Risk of Fraud as Account Activity Surges

As the number of account transactions and fund movements increases exponentially, banks are grappling with a heightened risk of fraud and financial crime. With more customers accessing their accounts online and through mobile devices, scammers and fraudsters are likely to take advantage of this surge in activity.

Key Concerns

Banks may see an influx of fraudulent transactions, including:

• Impersonation of customers or use of stolen/synthetic identities to create new accounts or withdraw funds
• Targeted phishing and phone-based scams where fraudsters pose as banks and pressure customers into revealing personal and account information
• Insider trading or money laundering activities

Actions to Consider

To mitigate these risks, banks should:

• Evaluate fraud detection controls, including identity proofing, authentication, and rules/models to ensure they can handle the increased activity
• Work with commercial onboarding teams for fraud referrals when unusual activity is identified
• Review transactions for potential money laundering or insider trading activities
• Monitor for infiltration risk into the institution, including via contractors

Risk Oversight Issues

As the volume of transactions increases, risk oversight teams must be able to adjust their monitoring and reporting to ensure they can keep pace. This includes:

• Monitoring more frequently and differently to understand the impact on the risk and control environment
• Evaluating key risk indicators (KRIs) to inform strategic decision planning

Potential Issues

Banks may face difficulties in gaining visibility into the true state of affairs due to outdated reporting and KPIs, which could lead to:

• Poor communication within business and operations, or between lines of defense
• Existing fraud KRIs that are not tuned to the surge, leading to masking or overinflating of true fraud impacts

Key Actions

To address these issues, banks should:

• Increase independent monitoring over first-line functions to account for new or elevated risks
• Monitor and evaluate fraud KRIs to understand true fraud impacts and inform strategic decision making
• Accelerate monitoring and reporting with new indicators to supplement KPIs and KRIs

How PwC Can Help

PwC offers a range of services to help banks address activity surges in an agile way, including:

• Identity proofing and verification
• Fraud alert vetting and review
• Fraud investigations
• Customer due diligence and enhanced due diligence reviews
• SAR drafting
• Fraud detection rules and model tuning

In addition, PwC specializes in enhancing fraud and AML programs through risk and control assessments, fraud controls and technology architecture design, and program cost analytics.