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Andrew Davies

Financial Crime Risks

Andrew Davies - Fiserv

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SWIFT Warning Must Be Heeded

14 July 2016  |  4752 views  |  0

Cyber fraud losses make headlines on a regular basis – the latest target on display for all. While these reports may often be viewed as extreme, worst-case scenarios, the case of SWIFT’s recent warning to its participating financial institutions and corporate user group members has helped to highlight the importance organisations need to place on payment fraud, particularly high-value cyber fraud.

Cyber fraud is constantly morphing, seeking out the path of least resistance and the path to increasing the value of fraud. Cyber fraud intersecting with the world of high value global payments poses a material threat to the stability of financial institutions and potentially, the global financial system itself. The threat is real and the lack of informed action by financial institutions could have consequences on a massive scale.

The $81 million cyber theft from the Bangladesh central bank account at the New York Federal Reserve Bank in February wasn’t the first fraud perpetrated and won’t be the last. Following this attack, SWIFT admits more could surface anytime and this type of financial fraud poses significant risk.

SWIFT provides secure financial messaging services to thousands of financial institutions around the world. The security of the SWIFT network has not been undermined. The threat right now is at the point where messages are initiated and these messages can facilitate the movement of funds between accounts at financial institutions around the world, which in turn, can drive payments for goods and services.

Imagine a legitimate account being taken over where criminals fraudulently initiate a transaction in the amount of millions of dollars. The funds are stolen, but there may be legitimate obligations for which those funds were set aside. Imagine now that the account holder is not able to meet obligations due to the fraud. This cycle of unfulfilled obligations could lead to a domino effect that could impact many organizations and the system itself. Such undetected large-scale fraudulent transactions could create gridlock in the financial system, impacting not only SWIFT members, but also large corporations.

What can be done? Financial institutions and corporations of every size can help protect themselves by:

  1. Ensuring any transaction with the potential to impact their business is monitored in real-time and that alerts for anomalies are in place.
  2. Deploying technology and advanced analytic models that are designed specifically to detect fraudulent activity and anomalies to ensure the accuracy and veracity of the messages being initiated.
  3. Leveraging data to inform the analytics, looking at previous payment activity and the outcome of potential frauds. The data is key and can help in high value/low volume payments as well as high volume/low value payments.

With the threat of cyber fraud being ever more present, it is vital that financial institutions prepare themselves for any possible situation. They must adapt their approach, not only to protect themselves from fraud, but to provide customers with fast, safe and reliable banking services that fit with the pace of their lives.


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job title VP Global Market Strategy
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Andrew Davies is VP, global market strategy, Financial Crime Risk Management. In this role, he works with Fiserv customers around the world to design and deploy effective risk management solutions to...

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