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Financial Crime Prevention Strategies for Online Transactions in Argentina: A Growing Concern
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As the digital payments sector continues to grow, so too does the risk of financial crime. In Argentina, where FinTech innovation has led to a rapid expansion of digital payment services, businesses and consumers are increasingly vulnerable to cyber threats.
Digital Payment Innovation: Not All Sunshine and Rainbows
While FinTech innovations have brought numerous benefits to consumers and businesses, including convenience, accessibility, and cost savings, they have also created new vulnerabilities that malicious actors can exploit.
Financial Cybercrime is Evolving Rapidly
Financial cybercrime is evolving rapidly, with threats becoming increasingly sophisticated and harder to navigate for businesses with insufficient controls and poor resilience. As a result, businesses must remain vigilant about their activities that could potentially expose them to cybercrime, which can manifest at numerous endpoints.
Assessing the Financial Crime Threat Landscape
Underestimating the severity and potential of financial crime is unwise, as it threatens everybody, from end-users to intermediaries, financial institutions, and economies worldwide. The LexisNexis Risk Solutions True Cost of Financial Crime Compliance Report shows that financial companies are shouldering a global compliance cost of $206 billion.
A Fragmented Regulatory Landscape
However, assessing the threat landscape involves far more than looking at global costs and addressing security gaps. PSPs (Payment Service Providers) are facing a more fragmented regulatory landscape compared to traditional financial institutions like banks. Given the lack of objective, independent regulators in the FinTech space, digital PSPs are more vulnerable to criminals who can easily circumnavigate online terrain.
Top Financial Crime Risks in the Digital Space
One significant example of financial criminal activity in the digital space is micro-structuring payments into multiple smaller transfers between accounts (also known as smurfing). This tactic makes it less obvious that illegal funds are being laundered, and indicators of micro-transactions are very hard to spot in an industry with such a huge amount of funds transferring across accounts.
Other Examples of Financial Crime
- Malicious actors may also leverage networks of associates (otherwise known as money mules) to transfer illegal funds to and from multiple accounts across borders.
- Another example is the anomaly of methodical digital identity theft, where cybercriminals steal personal data to commit financial crimes.
Financial Crime Prevention Strategies
To mitigate these risks, businesses in Argentina must adopt robust financial crime prevention strategies that prioritize real-time monitoring, automation, and strategic outcomes over check-box exercises. Here are some key recommendations:
1. Improve KYC Processes
Companies should focus on improving the quality of collected data to make more informed decisions about customers’ risk profiles and transaction histories.
2. Prioritize Strategic Outcomes
Revitalize compliance procedures and risk mitigation strategies to address both concerns, rather than treating them as separate check-box exercises.
3. Invest in Enterprise-Grade AI Solutions
Embed AI and Machine Learning technologies at the heart of financial crime prevention and threat detection strategies to outmaneuver cybercriminals.
Conclusion
As Argentina’s digital payments sector continues to grow, so too does the risk of financial crime. Businesses must remain vigilant about their activities that could potentially expose them to cybercrime and adopt robust financial crime prevention strategies to mitigate these risks. By prioritizing real-time monitoring, automation, and strategic outcomes, businesses can emerge as trusted pillars in the complex and highly scrutinized digital space.