Banks Must Ratchet Up Security Measures as Transaction Volumes Soar
As the financial sector grapples with an unprecedented surge in customer account and fund movements, fraudsters are likely to seize the opportunity to strike. Banks must take immediate action to fortify their defenses against a heightened risk of fraud and other financial crimes.
Fraudulent Schemes Emerge
With increased transaction volumes come new vulnerabilities. Fraudsters may attempt to impersonate customers or use stolen identities to create accounts or siphon funds from unsuspecting account holders. Insider trading, money laundering, and other financial crimes may also be on the radar of perpetrators seeking to capitalize on the chaos.
Key Concerns
- Opening of accounts for malicious purposes
- Targeted phishing and phone-based scams
- Movement of funds by insiders or individuals with access to sensitive information
Action Plan
Banks must evaluate their fraud detection controls, including:
- Identity proofing
- Authentication
- Rules and models
to ensure they can handle the increased risk. Commercial onboarding teams should work together to identify unusual activity and coordinate with incident response teams when fraud is detected.
Regulatory filings may be necessary if concerns arise related to money laundering or other financial crimes. Institutions must also monitor for infiltration risks and collusion, particularly among temporary laborers who require strict user access and entitlement restrictions.
Risk Oversight Challenges
As transaction volumes skyrocket, risk oversight teams face the daunting task of adjusting their monitoring strategies to keep pace with the changing landscape. Independent risk functions may struggle to gain visibility into the true state of affairs due to outdated key performance indicators (KPIs) and periodic reports.
Mitigating Risks
To address these challenges, banks should:
- Increase the cadence of independent monitoring over first-line functions
- Evaluate fraud KPIs to understand true fraud impacts
- Accelerate monitoring and reporting with new, well-defined indicators
- Enhance communication across lines of business about risk and operational stress
PwC Expertise
PricewaterhouseCoopers (PwC) offers a range of services to help financial institutions navigate this challenging environment. Our experts can assist with:
- Identity proofing and verification
- Fraud alert vetting and review
- Fraud investigations
- Customer due diligence
- SAR drafting
- Fraud detection rules and model tuning
By partnering with PwC, banks can bolster their fraud and anti-money laundering programs, identify regulatory risks, and design effective controls to mitigate the risk of fraudulent activity.