The Battle Against Financial Fraud Exploring New Technologies and Tactics
Apr
08

The Battle Against Financial Fraud: Exploring New Technologies and Tactics  

All industries have brilliant minds driving innovations forward, and the case of wrongdoers within them is no different. New fraud methods are emerging, and the best way to counter them is with the use of modern technology and methods.

One such method is transaction monitoring software. When we take a look at this market, it’s obviously growing. However, it’s also important to implement the traditional solutions that have passed the test of time. This article will explore new anti-fraud technologies and tactics as well as proven basics that have been around for a while.

Transaction monitoring software  

With the rise of artificial intelligence and machine learning, innovative approaches to writing, coding, and fraud prevention emerge. AI excels in analyzing vast amounts of data and then giving you the proper insights to allow you to make better decisions.

One of the greatest solutions these days is transaction monitoring software, such as Seon. Transaction monitoring software is highly important for the financial sector. This tool helps spot suspicious and unusual financial transactions, which are being analyzed for potential money laundering schemes.

Seon can quickly make extensive background checks on suspicious users. This includes checking sanctions, blacklists, lists of politically exposed persons, and much more. Furthermore, it combines methods such as digital footprinting, IP, email, and device analysis, allowing you to quickly recognize problematic connections.

Instead of providing you with a one-size-fits-all solution, it has a no-code environment that allows you to customize the monitoring according to your requirements.

Automated transaction flagging helps with preventing fraudulent transactions, helping you defend against chargebacks and other types of financial fraud. The fact that this software is automated allows you or your team to focus on other problems or business aspects.Based on your risk management strategy, the risk of each transaction will be calculated, and the results will be delivered. Sandbox testing is also available, which allows you to conduct tests on your historical data without having to implement the solution upfront.

Streamline KYC processes  

Companies that host platforms where transactions occur need to have know-your-customer protocols in place. What companies might those be? Casinos, cryptocurrency platforms, and even online stores.

KYC ensures that the individual signing up for an account is really who they say they are. Websites in the previously mentioned categories are often hotbeds for money laundering. This is why it’s important to prevent individuals with such intentions from even registering.

This process can include requirements for personal documents and additional information before they are able to conduct certain activities, which you can then cross-verify using identity verification tools. The main reason someone would implement a KYC protocol is to prevent a website from becoming a target for money laundering.

For example, an individual makes an account on an online casino, makes deposits, and then gambles that money until they’re able to withdraw it. KYC prevents this by recognizing problematic individuals and stopping them from making accounts.

Furthermore, in the event that someone succeeds in money laundering, the company will be able to find the individual and start legal action. A challenge for KYC processes is that some individuals who have no intentions of fraud find them tiresome or complicated.

This is why it’s important to make the process streamlined and easily understood by anyone. Furthermore, the information that you gather from your users needs to be stored safely. In the event of a successful cyber attack on your platform, you can suffer legal consequences for not handling the data safely and securely.

Stricter authentication protocols  

An important way to protect your business from both fraud and other methods of cyber attacks is through strict authentication protocols. Starting off with employees, who need to have strong passwords.

This is especially important for decision-makers and managers as they have access to sensitive resources and information. Your internal platforms need to have strict password requirements to ensure that passwords are long enough and include a combination of lower and uppercase letters, symbols, and numbers.

The best way to encourage strong authentication is by subscribing to an enterprise-grade password manager. Such software ensures a streamlined log-in process while also ensuring that employees utilize strong passwords.

On the other hand, password managers provide additional features such as resource and account sharing and single sign-on. SSO ensures that no information can be stolen through keyloggers, and it even helps prevent phishing attacks.

Employees aren’t the only group that should be protected by your systems. Encouraging each customer to use strong passwords is also important. This prevents unnecessary dissatisfaction with your platform in the event a customer account is compromised.

Strict authentication protocols are a great defense against brute force and dictionary attacks. These attacks are conducted by trying multitudes of passwords until they access the account, the latter using words from the dictionary.

Strong and random passwords are much more difficult to break, and it takes a couple of seconds to generate them. In the same manner, SSO also aids in avoiding such attacks.

Risk management  

All businesses are exposed to some risks. As an entrepreneur, it’s essential to recognize these risks and adequately mitigate them. For example, some risks can have a high impact, yet the chances of them occuring are minimal.

On the other hand, other risks have smaller impacts, yet their likelihood is much higher. Your goal should be to classify these risks and determine the proper solution for each of them. In the case of financial fraud, you should have a plan on how to minimize the impact.

No company can prevent all risks that they’re exposed to. Which is why it’s crucial to tackle the ones that are the most important and have a backup plan such as the ones mentioned in this Paypal guide.

Employee training programs  

Even with the most comprehensive software defense, a human mistake can still lead to catastrophic outcomes for the whole company. And of course, an employee with ill intentions can always find a way to do harm or misuse the company’s resources.

It’s also important to ensure that your employees don’t fall victim to phishing attempts or other forms of scams. While account takeovers via various means can be considered a fraud, it can also only be a tiny piece of a larger-scale attack.

When you’re leading a company of dozens or hundreds of employees, you can’t expect a software developer and an HR representative to have the same level of tech knowledge. Employee training programs should aim to provide your employees with the essential knowledge to recognize and prevent common attacks.

Such programs and education will help them both in their individual and professional lives. A phishing attack is a type of attack where an individual enters a fake website posing as a real one.

In such a situation, they can then unknowningly provide personal or financial information to the imposters website. Eventually, this information can be misused to conduct an account takeover or simply harm them financially.

Other aspects of employee training can include helping them recognize other forms of malware and teach them to identify risky behaviors. You can also aim to encourage employees to use VPNs, which can protect them when surfing the internet using the company’s devices.

Challenges to implementing modern solutions

Although transaction monitoring is one of the most innovative solutions that you can implement, it also isn’t cheap. Because it’s a newer software solution on the market, it can be expensive and potentially cost-prohibitive for certain businesses.

Small businesses are less likely to have a budget for implementing such software. Not only is there a direct expense for subscribing to the software, there may also be the additional expense of hiring specialized personnel to handle the implementation and maintenance. And depending upon the amount of transactions your company handles each day, a certain number of people will also be needed to respond to alerts and make decisions.

Fraud prevention software can be essential for your business  

It’s unlikely that we will ever live in a world that’s fraud-free. As entrepreneurs and individuals, we have to keep an eye on risks and tackle them before they cause damage. Starting from innovative monitoring software to traditional risk management tactics, each method has its benefits.

Don’t neglect the importance of cybersecurity and fraud prevention for your business. No business is too small or secure to become a target. Ensure that you’ve covered the basics while also keeping an open mind for modern solutions. The cost of some of the strategies isn’t nearly as significant as the amount you can lose in the event of a compromised system or legal case. Hopefully, this article has motivated you to implement, or at least consider, better fraud-prevention methods.