Fraud bad news keeps on coming. Fraud levels keep increasing, so corporate treasury departments need to prepare for even more regulation and controls, and to be asked to use new technologies to fight fraud.

Anti-Money Laundering 

Fraudsters have found it easier to launder money than ever before, primarily because finding, freezing and forfeiting income and assets derived from criminal activities has become more difficult as developments in the international financial system have made it easier: financial deregulation, financial havens with evermore secrecy, etc. It is estimated that 2% to 5% of global GDP, or $1 to $2 trillion in current US dollars is laundered every year. Sadly United Nations Office on Drugs and Crime estimate that less than 1% of global illicit financial flows are currently seized by the authorities. 

One area where they are particularly concerned is West and Central Africa where it is rumoured that the former dictator of the Congo, Joseph Mobutu, transferred up to $55,000 million from the country.

Anti-money laundering technologies and controls being introduced today include:

• At a country level: To track what is happening across the financial services and telecomms sectors, Global Voice Group provides telecommunication governance technologies and financial protection monitoring systems. This system is used in Tanzania to monitor the AML market evolves and also the level of compliance with Tanzania’s laws and regulations 
• At financial institutions there are many solutions such as:
  • BAE Systems: NetReveal® AML Transaction Monitoring solution which employs advanced detection analytics and investigator-centric design to help minimise your reputational and regulatory exposure and reduce the cost of compliance
  • SmartSearch service enables banks (and corporates) to carryout an Individual Anti Money Laundering (AML) check - in just 3 seconds a complete AML check gives a PASS or REFER result which includes automatic worldwide Sanction & PEP screening. 

All governments have some form pf anti-money laundering regulations, e.g. the UK government is setting up an Office for Professional Body Anti-Money Laundering Supervision (OPBAS) - a new group that will sit within the Financial Conduct Authority (FCA) - by the start of next year. 

Complying with new anti-money laundering procedures and technologies is going to get much more onerous.

Payment card fraud 

FICO latest research shows that card fraud losses for 19 European countries hit approximately €1.8 billion, a new high. They conclude that the only way to spot the fraudulent transactions in the huge number of online e-commerce transactions is by using technologies such as behavioural analytics and artificial intelligence, combined with other enhanced information. 

Less sophisticated technologies are being used as well. Barclays are planning to issue new debit and credit cards with a security code that changes by the hour in a bid to tackle fraud. The card:

• Have a tiny computer screen on the back of the plastic near the signature strip for the three-digit code, called the CVV or CVC number, which customers must provide it when buying over the phone or online. 
• Will ensure that crooks would only be able to use the new code for an hour before it expires.

However, this only stops online fraud where the cardholder has to quote the CVV number. If the card is contactless, then the  card will still be usable at the point of sale as long as the transaction in the UK is below £30.

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CTMfile take: The example of the new Barclays card technology sums up the dynamics of fraud: When a new technology or procedure is introduced, the fraudstars just move the next easiest area. Corporate treasurers should expect a constant stream of new fraud prevention technologies and procedures because at the moment the banks, governments and financial service providers are loosing the battle.