January 2017 Issue

Our 'Newsletter on Financial Fraud' is your monthly insight into the various new fraud types and methods used by fraudsters globally in the banking space. 

In this issue, we bring to light the effect of banking fraud creeping in and making banks lose millions to this plaguing menace.

Banks roll out speech recognition technology to battle fraud


Many of the current security procedures in place by banks are good, but they're not foolproof - anyone could theoretically access your account if they had your debit card, password and so on. But mimicking someone's voice is much more difficult, and it's for that reason many banks are now turning in that direction to provide added security.

Known as voice biometrics, the technology means that only your voice can access your bank on the phone - and it's something that could soon make its way to the general public. Voiceprint technology measures the characteristics of a person's speech. Typical speaker recognition software compares those characteristics with data held on a server. If two voiceprints are similar enough, the system declares them a match. Dan Miller, an analyst with Opus Research in San Francisco, estimates that the industry's revenue will roughly double from just under £250 million ($400 million) last year to up to £560 million ($900 million) next year.

Barclays PLC recently experimented with voice printing as identification for its wealthiest clients. It was so successful that Barclays is rolling it out to the rest of its 12 million retail banking customers.

'The general feeling is that voice biometrics will be the de facto standard in the next two or three years,' said Iain Hanlon, a Barclays executive.

In the US, law enforcement officials use the technology to monitor inmates and track offenders who have been paroled.

In New Zealand, the Internal Revenue Department celebrated its 1 millionth voiceprint, leading the revenue minister to boast that his country had 'the highest level of voice biometric enrollments per capita in the world.'

In South Africa, roughly 7 million voiceprints have been collected by the country's Social Security Agency, in part to verify that those claiming pensions are still alive.

However it seems that for now voice printing will become ever more ubiquitous in the coming years.

Source: Daily Mail

Nigeria ranks 2nd in occupational fraud, abuse in sub-Saharan Africa


Nigeria, Africa’s largest economy, ranks second in occupational fraud and abuse in sub-Saharan Africa (SSA), a 2014 report by the Global Fraud Study has shown.

Global Fraud Study examined the impact of various forms of fraudulent practices on businesses and the people around the world. The 2014 study analyzed 1,483 cases of occupational fraud that occurred in more than 100 countries. The report, which is released every two years, says SSA recorded 173 cases of occupational fraud, out of which Nigeria has 36 cases, behind South Africa with the region’s highest.

Incidence of fraud costs a company an average of at least $1 million (N162 million), while the SSA countries lost $120,000 (N19.4 million) on the average on occupational fraud and abuse.

“North Africa and Middle East had the largest percentage of reported corruption followed by SSA,” stated the report.

The banking and financial services, government and public administration, and manufacturing industries continue to have the greatest number of cases reported, according to the report. Anti-fraud controls by regions show that nearly half of the organizations in SSA had a dedicated fraud department, function or team.

Occupational frauds can be classified into three primary categories: asset misappropriations, corruption and financial statement fraud. Asset misappropriations are the most common, occurring in 85 percent of the cases in the study, as well as the least costly, causing a median loss of $130,000.

In contrast, only 9 percent of cases involved financial statement fraud, but those cases had the greatest financial impact, with a median loss of one million dollars. Corruption schemes fell in the middle in terms of both frequency (37 percent of cases) and median loss ($200,000).

Collusion helps employees evade independent checks and other anti-fraud controls, enabling them to steal larger amounts, the report states.

The Central Bank of Nigeria’s (CBN) report for the first half of 2013 had indicated that there were 2,478 fraud and forgery cases involving Nigerian banks valued at over N20 billion.

Source: Business Day

High-tech ATM fraud warning in Middle East


At least 174 credit and debit card holders in Bahrain have become victims of high-tech ATM fraud.

The Central Bank of Bahrain (CBB) confirmed that people's details and money had been stolen, but described the theft as a 'limited breach'. Sources said ATMs at Bahrain City Centre and other locations were targeted by thieves, who installed phony readers to collect data from cards' magnetic strips.

They are also said to have installed micro-cameras to record PIN numbers as they were being entered.

'It is a limited breach that affected 174 cards locally and the Central Bank of Bahrain contacted the banks concerned to prevent such data theft from happening,'said the CBB in a statement.

It said authorities were quickly alerted by customers who received text messages as soon as illegal transactions were made using their card details.

The news network has learnt that ATMs belonging to as many as six banks were targeted in the scam over the past two weeks. 'These fraudsters had physical access to ATMs and placed data detection devices and micro-cameras to capture details of customers,' said one senior banker. He said the fraud had also been reported in Oman and the UAE. 'These people (behind the crime) create duplicate cards and use people's stolen data to make purchases,'he explained.

Another employee of a multinational bank said it had cancelled the cards of customers who were affected. 'We immediately cancelled those cards and notified our customers that new cards will soon be dispatched,' she said. 'There are several local and international banks affected by this fraud and, like other banks, we are investigating the case with the Interior Ministry and the regulator.'She said the amount of money involved was small, although authorities have not revealed how much cash was stolen.

The Interior Ministry said its Anti-Corruption, Economic and Electronic Security Directorate had launched an investigation into the case. 'As the result of a number of banking operations through credit cards, the General Directorate of Anti-Corruption, Economic and Electronic Security follows the case in co-operation with CBB,' it said.

Source: Gulf Daily News

Anti-Fraud and Anti-Money Laundering in Banking- The Common Denominators


The need for real-time fraud monitoring of banking transactions across enterprises is well established and banks are catching up to move from traditional methods to advanced real-time fraud monitoring systems. But many banks are still living with the old generation anti-money laundering systems which only can perform offline transaction monitoring by taking the transaction data from core systems offline or in batch mode. Also, there is a lacuna with these systems from the perspective of agility and flexibility for changes required, with the changing times and the regulatory mandates.

Majority of the banks across the globe are not well-equipped with real-time suspicious transaction monitoring in their AML systems and this is one area banks need to gear up.

Here are the key aspects of alignment of anti-fraud and anti-money laundering efforts in a bank:-

Operational Processes and people: Both anti-fraud and anti-money laundering departments of the bank need dedicated investigated teams who investigate each case/alert that systems generate based on the severity level and category of the alert as per the defined processes of the bank.  It makes sense for the banks to optimize the efforts of investigation teams by having combined AML and fraud investigation under single umbrella.

IT Platform: If the both fraud management and AML can be done using a single platform bank will have huge benefits in terms of the capital and operational expenditure leading to significant benefits total cost of ownership (TCO).

Data: Data Integration is one challenging area for banks. Both fraud management and AML systems need the integration with the same host systems (core banking system, credit cards etc.) for the corresponding transactional data and master data.

With the need for sophisticated fraud detection capabilities and current state of outdated AML system many banks have, combined Real-time Enterprise Fraud Management and AML platform is an idea whose time has come. Few banks have already begun their journey on this front and we expect more banks to join the bandwagon.

Source: CustomerXPs

Related Blogs and Posts

Subscribe to Our Monthly Newsletter

Get insights & updates from the world of financial crime management in your inbox. Be on our newsletter mail list.

Subscribe Newsletter


©2017. CustomerXPs® Software