Human – AI partnership against financial crime

It’s now over six months since Brexit. There are opportunities opening up for the UK to take advantage of new-found regulatory freedom. The domestic financial services industry is also seeing rising instances of organised fraud. A recent report from Cifas, the UK’s fraud prevention community, stated that during the first six months of 2021 there was an 11% increase in incidents of identity fraud. They also pointed to the rise in cybercrime as a service phishing kits, fraud tool kits and hacking services.

Takeover is a form of identity theft and fraud where a malicious third party successfully gains access to a user’s account credentials. Next is sign up fraud. Here a criminal combines stolen data with false information to create a new identity. There is also the challenge presented by money mules. And that is through a courier service, or electronically, on behalf of others. Regulators are looking to minimise the risks, because of many of such reasons. The FCA has started to take actions against banks over issues such as money laundering.  NatWest has been the first British bank to face a money laundering case at a cost of £265m.

Sophisticated fraudsters constantly adapt their methods, leaving traditional banks and fintechs open to attacks that they can’t necessarily keep up with. Because of this the sector is under increasing pressure to proactively spot fraud patterns. It has become clear that traditional approaches to fraud prevention, those that primarily rely on human intervention are losing out to criminals that can operate at huge scale. Instead, the combination of AI, automation and the human brain offers the strongest form of defence when it comes to fighting cybercrime. It will become virtually impossible to defeat fraudsters who are themselves using AI to optimise their approach, without increased investments. Sophisticated AI is able to predict, detect and deter financial crime.

Experienced human analysts infer the attacker’s motives, confirm the finding and react appropriately. These anomalies can be behavioural. Efficient and effective anomaly detection identifies behaviours that deviate from the expected and which might be symptomatic of criminal activity. AI can block attacks, and push criminals to the limit of their efficiency.

Organisations across the financial sector are competing to make their approach as seamless as possible. But this has left businesses and their customers exposed to fraudulent behaviour. Utilising AI to strengthen the validation, verification and transaction processes ensures security is enhanced. This will create a safer and more trusted customer journey. Also, improves the company’s reputation and attracts new customers. Also, automation is also key to narrowing the focus of investigations. Financial crime will always be with us. Realism suggests that the industry must work harder to mitigate risks. Blended with human experience and expertise, AI makes it possible to spot different types of threat vectors and respond to them early.