Financial Crime World

BANKING INDUSTRY’S ROLE IN PREVENTING FINANCIAL CRIME IN SVALBARD AND JAN MAYEN

Financial institutions in the remote archipelago of Svalbard and Jan Mayen are taking a proactive approach to prevent financial crime, despite the challenges posed by the harsh environment and limited connectivity.

WHAT IS BANKING FRAUD?

Banking fraud is a type of financial crime that uses illegal means to obtain money, assets, or other property owned or held by a bank, other financial institution, or customers of the bank. This type of fraud can be difficult to detect when misclassified as credit risk or written off as a loss rather than investigated and prevented in the future.

TYPES OF BANKING FRAUD

There are several types of banking fraud that impact financial institutions, including:

  • Identity theft: When a bad actor steals a consumer’s personal information and uses it to take money, open credit accounts, make purchases, and more.
  • Check fraud: This type of fraud occurs when a fraudster writes a bad check, forges information, or steals and alters someone else’s check.
  • Credit card fraud: A form of identity theft where a bad actor makes purchases or gets a cash advance in the name of an unsuspecting consumer.
  • Phishing: These malicious efforts allow scammers to steal personal and account information through use of email, or in the case of smishing, through text messages.
  • Direct deposit account fraud: Also known as DDA fraud, criminals monetize stolen information to open new accounts and divert funds from payroll, assistance programs, and more.

The financial industry is constantly evolving, and so are fraudsters. As a result, it’s essential for organizations to stay ahead of the curve by investing in new fraud prevention technologies. Some emerging trends include:

  • Use of artificial intelligence (AI) and machine learning (ML): These technologies can be used to identify patterns consistent with fraudulent activity – some of which are difficult or time-consuming to detect with traditional methods.
  • Behavioral analytics and biometrics: By noting standard customer behaviors — e.g., which devices they use and when — and how they use those devices — organizations can flag riskier users for additional authentication and verification.
  • Leveraging additional data sources: By looking beyond standard credit reports when opening credit accounts, organizations can better detect signs of identity theft, synthetic identities, and even potential first-party fraud.

HOW TO PREVENT AND DETECT BANKING FRAUD

In order to be successful in the fight against fraud and keep yourself and your customers safe, financial institutions of all sizes and types must:

  • Balance risk mitigation with the customer experience: Ensure seamless interactions across platforms for known consumers who present little to no risk.
  • Leverage proper identity resolution and verification tools: Recognize good consumers and apply the proper fraud mitigation techniques to riskier scenarios.

EXPERIAN’S INTERCONNECTED APPROACH TO FRAUD DETECTION IN BANKING

Experian’s interconnected approach to fraud detection in banking incorporates data, analytics, fraud risk scores, device intelligence, and more. This enables financial institutions to track and assess various activities and determine where additional authentication, friction, or human intervention is required.

Learn more about how Experian can help your organization prevent and detect banking fraud.