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Industry roundup: 8 September

Report shows how cyber attackers ‘cash out’ following large-scale heists

SWIFT and BAE Systems Applied Intelligence have published ‘Follow the Money’, a report that describes the complex web of money mules, front companies and cryptocurrencies that criminals use to siphon funds from the financial system after a cyber-attack.

The report highlights the ingenuity of money laundering tactics to obtain liquid financial assets and avoid any subsequent tracing of the funds. For instance, cyber criminals often recruit unsuspecting job seekers to serve as money mules that extract funds by placing legitimate sounding job advertisements, complete with references to the organisation’s diversity and inclusion commitments. They use insiders at financial institutions to evade or undermine the scrutiny of compliance teams carrying out know-your-customer (KYC) and due diligence checks on new account openings. And they convert stolen funds into assets such as property and jewellery which are likely to hold their value and less likely to attract the attention of law enforcement.

SWIFT commissioned BAE Systems to investigate this element of the money laundering process as part of its Customer Security Programme (CSP). The aim of this report is to illuminate the techniques used by cyber criminals to ‘cash out’ so that SWIFT’s global community of over 11,000 financial institutions, market infrastructures and corporates can better protect themselves.

Other findings in the report cover the following areas:

  • Front companies - cyber criminals tend to focus on textile, garment, fishery and seafood businesses to obfuscate funds. They find it easier to operate in parts of East Asia where less stringent regulations make it easier to conduct their activities.
  • Cryptocurrencies - while the number of identified cases of money laundering through cryptocurrencies is low so far, there have been a couple of major incidents involving millions of dollars. Digital transactions are appealing because they are conducted in a peer-to-peer manner that circumvents the compliance and KYC checks conducted by banks, and often require only an e-mail address
  • Experience - The method chosen by cyber criminals to cash out and spend the stolen funds is indicative of their levels of professionalism and experience. Some inexperienced criminals have immediately made extravagant purchases drawing the attention of law enforcement agencies and leading to arrests.

 

MarketFinance banks £50m as it ramps up CBILS support 

Fintech business lender MarketFinance has secured an additional £50m from Israeli asset manager Viola Credit, to lend to UK SMEs under the HM Treasury and British Business Bank CBILS initiative. The announcement comes as MarketFinance launches a “unified application” process in which SMEs will, through one application, be presented with a variety of finance options and be able to select those best suited to their needs. MarketFinance is now able to offer a combination of business loans, invoice finance and revolving credit facilities through this single application journey.

The CBILS initiative will conclude at the end of September 2020 with pre-submitted applications in September being valid until the end of November. In readiness to service the last minute dash for CBILS loans or revolving credit facilities, MarketFinance has secured this additional funding of £50m to support SMEs with their working capital at this time. Since 2011, institutional investors such as banks, asset managers and family offices have provided the majority (70%) of capital that MarketFinance lends out to businesses.

Alongside the fundraising, MarketFinance says it has improved its unified application process to allow faster decisions and access to the right funding for applicants. This means, for the first time, businesses will make a single universal application for finance and will be able to see, learn more about and select which option (or combination of options) is right for them. This will allow SMEs to draw down a loan today, but also set them up to use invoice finance or a revolving credit facility for when their order book fills back up.

Through collecting just a few pieces of information about the applying company, MarketFinance is able to make instant decisions on 45% of applications with their automated decision engine, “Autoflow”. Their proprietary risk model, “Selector”, can assess each applicant under pre-COVID conditions, which means funding decisions are not overly biased by these unprecedented and potentially temporary conditions. 

This year MarketFinance added business loans and revolving credit facilities to a product suite including selective invoice finance, contract finance and confidential whole-ledger invoice finance. Businesses are able to access a combination of these simultaneously from MarketFinance, making it the first fintech funder to offer multiple products within a single platform.

 

Form3, PPS and Countingup partner on UK SME banking solution

Form3, a cloud-native payment technology provider for banks and regulated fintechs is working with payments and accounting solution Countingup and its long-term banking technology, issuing and processing partner, PPS, to tackle the ongoing challenges of running a business for SMEs.  

The three partners say that each bring a unique offering to the benefit of UK SMEs. PPS is regulated by the FCA and licensed by Mastercard and has a payments platform enhanced by connection to the UK Faster Payments and BACs schemes via Form3’s real-time payment technology service. Countingup converts transactional data into categorised business accounts, in real-time.  The SME should therefore receive a simplified workflow to manage their finances and accounting.

The companies involved say that the cloud-based, mobile first model is expected to save SMEs 8-20 hours per month on running their business finances and accounting tasks. Along with self-funding, this initiative has submitted a proposal for the latest BCR grant submissions, which will be announced later this month. 

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