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Uniting Forces: A Holistic Approach to Financial Crime

Financial institutions face increasing challenges in combating financial crime. While technology has significantly advanced (e.g. thanks to AI), the methods employed by criminals have also evolved, becoming more sophisticated and harder to detect. One of the crucial challenges in this battle is the siloed approach to detecting and combating financial crime. Financial crime information is rarely shared between banks and even within various departments of a single bank, such as cybersecurity, risk, compliance, fraud, operations, and customer support. Despite these departments common goal of reducing financial crime, each department focuses on different aspects. For example, cybersecurity teams focus on protecting the bank’s digital infrastructure, compliance ensures regulatory adherence, and fraud teams detect and prevent fraudulent activities. Consequently, these departments often do not share information, leading to missed opportunities to identify and mitigate risks.

A centralized database acting as a runway for all teams to seamlessly access and contribute relevant customer information and context can significantly improve detection and prevention efforts. By integrating knowledge from various departments, banks can create a comprehensive risk scoring system that provides a full picture of each transaction, considering factors such as:

  • KYC Scoring: Evaluating the customer’s identity and background.

  • Sanction Screening: Checking transactions against global sanction lists.

  • AML Scoring: Monitoring for money laundering activities.

  • Verification of Payee Scoring: Ensuring the name of the creditor matches the bank account number.

  • Fraud Scoring: Assessing the likelihood of fraudulent activity based on payment details, IP address, payment history, merchant credibility, geo-location, etc.

  • Authentication Scoring: Verifying the user’s authentication through the channel, IP address, and authentication method used. This scoring can also consider the user’s behavior on the channel prior to initiating the transaction.

  • Business Application Monitoring Scoring: Detecting anomalies in the transaction flow to capture internal fraud. This can be done by identifying attributes that change over the transaction lifecycle or deviating statistical trends, both indicating potential internal fraud.

Combining these elements into a single, holistic overview allows for more accurate and timely decision-making, significantly enhancing the bank’s ability to combat financial crime.

Beyond these internal silos, there is also a reluctance of banks to share information on financial crime with other financial institutions and external entities. This reluctance stems from various concerns, including competitive advantage, exposure of procedural weaknesses, resource allocation, and data privacy issues. However, effective financial crime prevention requires cross-functional collaboration, not just within an institution but also with external partners and other financial institutions (both national as international).

This cooperation is however difficult to accomplish in real-time. Therefore it can be required to add some friction. While friction in the payment process can be perceived negatively by customers, it is sometimes necessary to ensure security. For instance, the UK is considering adding up to a three-day delay to instant payments if fraud is suspected. Although this could impact customer experience, it provides a critical window for banks to verify the legitimacy of transactions.

During this period, the sending bank can contact the customer to confirm authorization, potentially preventing fraud. If fraud is detected, the sending bank can reach out to the recipient bank for more information about the recipient, such as how long they have been a customer and when the last Enhanced Due Diligence (EDD) was conducted. Multiple inquiries about a recipient can also serve as a red flag, prompting further investigation by the recipient bank.

By adopting a holistic approach that integrates insights from various departments and encourages collaboration within and beyond the institution, banks can enhance their ability to detect, prevent, and respond to financial crime. While some measures may introduce minor delays in transactions, the long-term benefits of improved security and reduced fraud outweigh the temporary inconveniences. It’s time for the financial industry to embrace shared intelligence and work together to safeguard the global financial system.


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Joris Lochy

Joris Lochy

Product Manager at Intix | Co-founder


Member since

05 Apr 2017



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This post is from a series of posts in the group:

Exposing Financial Crime

Criminals are smart, and detection capabilities need to be smarter and always adapting to stay one step ahead. Time to drive out pointless investigations and finding true malignancies hidden from existing rules and machine learning techniques. Join us for conversations and articles on how to refocus financial crimes investigations into actually stopping crime.

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