Banks Face Heightened Risk of Fraud Amid Surge in Customer Activity
As banks struggle with an unprecedented increase in customer account and fund movements, fraudsters are likely to take advantage of the situation by impersonating customers or using stolen identities to create accounts or siphon funds. To mitigate this risk, financial institutions must implement robust quality controls and update their transaction monitoring rules and models to reduce false positives.
Potential Issues
- Opening of new accounts for fraudulent purposes
- Targeted phishing and phone-based scams
- Movement of funds by insiders or individuals with access to sensitive information
Key Actions to Consider
- Evaluate fraud detection controls, including identity proofing, authentication, and rules and 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, insider trading, or other financial crimes
Risk Oversight Issues
As banks experience an expected increase in transaction volume and potential operational backlog, risk oversight teams must be able to adjust their monitoring frequency and approach to ensure they can effectively manage the situation.
Potential Issues
- Difficulty in gaining visibility into the true state of affairs due to accelerated timeline
- Existing fraud key risk indicators (KRIs) may not be tuned to handle the surge
- Poor communication within business and operations or between lines of defense
Key Actions to Consider
- Increase independent monitoring over first line functions to account for new risks
- Monitor and evaluate fraud KRIs to understand true fraud impacts
- Accelerate monitoring and reporting with new indicators to supplement KPIs and KRIs
How PwC Can Help
PwC offers a range of services to help financial institutions address activity surges in an agile way, including:
Services Include
- Identity proofing and verification
- Fraud alert vetting and review (new account opening, transactional)
- Fraud investigations
- Customer due diligence and enhanced due diligence reviews
- SAR drafting
- Fraud detection rules and model tuning
By implementing robust quality controls and updating their transaction monitoring rules and models, financial institutions can reduce the risk of fraud and ensure they are well-positioned to handle the surge in customer activity.