Financial crime continues to tick up as more payment processes move online — and fraudsters take advantage of the digital shift.
In fact, 69% of global executives and risk professionals expect crime to increase over the next 12 months, naming cybersecurity and data breaches as primary drivers, according to Kroll’s 2023 Fraud and Financial Crime Report. The report surveyed 400 executives in the first quarter and was released June 29.
The latest victim of cybercrime to come to light is neobank Revolut, which lost $20 million to fraudsters in a payments system flaw detected in 2021 but addressed in 2022, The Financial Times reported Sunday.
The issue involved payments between the United States and Europe, Simon Taylor, head of strategy and content of anti-fraud fintech Sardine, told Bank Automation News. Declined transactions, instead of being canceled, were refunded by Revolut funds.
“Imagine you have trains that run on European train tracks,” Taylor said, and the trains come to the United States, and they look like they fit on the tracks, but they might come off the rail.
“Your technology platform that you launch and appears to work, actually could be exploited,” he said.
If there’s a random gap in operations, fraudsters “will find a way, they’re incredibly creative,” he said.
Investing in tech
To respond to cyberthreats, including the $800 billion that is laundered globally every year, two-thirds of Kroll’s survey respondents said they plan to invest more in technology.
Such tech investment enables financial institutions and businesses to combat crime, according to the report. For example, FIs are now looking to AI and machine learning algorithms to monitor their systems for fraud and money laundering.
The $3.1 trillion Bank of America is investing in low-level code and cybersecurity training to fill cybersecurity jobs in banking, Alberto Garofalo, the bank’s market president for New Jersey, previously told BAN.
Similarly, tech providers including Google Cloud and UBS are meeting market demand with investment in AI-powered tools to fight money laundering.
In conjunction with technology investment, decision-makers should invest in strong authentication protocols, regular cyber-risk assessments and employee training to detect vulnerabilities, according to Kroll.
Neobank payments systems
Despite Revolut’s $20 million loss, other neobanks are expressing confidence in their own payments platforms.
Berlin-based neobank N26, which has raised $1.8 billion and has 8 million customers, told BAN through a spokesperson that its payments system “remains secure.”
Revolut declined Bank Automation News’ request for comment.
