To accompany the Global Fraud Summit in London in March this year, Interpol has shared a snapshot of the range of fraud-based financial crime. Offences fit into six broad types. The four most common are investment fraud, advance payment fraud, romance fraud, and business email compromise.
Also featuring are impersonation and identity fraud. Plus, there’s the investment-romance hybrid which carries the unappealing name of “pig-butchering.” In this scam, innocents are played for a long game. They think there’s a genuine romance, and in the process they are introduced to a promising cryptocurrency investment scheme. All’s fine until the victim tries to withdraw funds – then all contact with the new friend and associates is lost, along with the money.
Regional Favorites
Interpol have identified scam preferences by world region. Of course, all types of scams can happen anywhere, but the regional differences are interesting. Advanced payment frauds are “popular” in the Americas and parts of Africa, Europe and Asia. Investment frauds link Asia and Europe; and in the latter there’s an especially high frequency of email compromise. Romance fraud is big feature across the African continent, although it is also a common technique worldwide. Impersonation and identity fraud seems most used in Asia, although they too can happen anywhere.
Responding or Pre-empting?
It’s clear, that with other financial crimes, “straightforward” fraud is a significant threat to economies worldwide. However, there are real challenges combating it effectively. The stereo typical victim of fraud is a naïve private citizen, but businesses can be targeted too. Typically, victims innocently and actively facilitate the crime. Public awareness campaigns can alert people to the risk, but no-one believes it will happen to them.
This is where financial service providers have a double role to play. They are perfectly placed to identify both direct criminal activity, and the perhaps unwitting involvement of their clients. For financial service providers it’s essential, and is mandated by law and regulations. However, the big question remains: how effective are compliance safeguards in reality?
Transaction Monitoring Helps Identify Fraud
Financial services businesses should ensure their compliance activity is up to date and effective. Careful vetting (Know Your Customer – KYC) of new clients and business partners is standard practice. After KYC (with checks re-visited routinely) comes transaction monitoring. In the context of fraud, this is all important. It provides an essential real-time check on who’s doing what, with the chance to identify anomalous individual events or patterns.
For any substantial business it’s almost impossible to do that manually without a big team. The solution, therefore, is a service that can automate the whole process from start to finish. This will provide for
- automatic checks for KYC (including checking for stolen and sold-on identities),
- a customizable rules engine to match the needs of the business
- automatic alerts to initiate a response to suspicious or unusual activity and
- always-on transaction and behavior monitoring.
Where can one find this level of responsive automation? Well, one of the best is Compli, from Essiell Compli. It’s a sophisticated suite of compliance services that does exactly what’s required to protect businesses against financial crime. It’s flexible, scalable and cost-effective. Adoption is straightforward and implementation brings genuine peace of mind.
Interested? Why not get in touch ?
By Declan Morton, staff writer for Compli and Essiell Compli.
For Reference
INTERPOL Financial Fraud assessment: A global threat boosted by technology, Interpol, March 11, 2024.
Global Fraud Summit Communiqué: 11 March 2024, UK Home Office, March 11, 2024
What is a ‘pig-butchering’ scam – and why is it on the rise? BBC, October 9, 2023
