August 2016 Issue

The CustomerXPs Financial Fraud Newsletter is your monthly update on the world of financial crime and insights to innovative technology to combat the phenomenon. This issue highlights CustomerXPs’ recognition as an enterprise player in the RiskTech Quadrant, a prestigious analysis by Chartis - the leading provider of research and analysis on the global market for risk technology.

Singapore to Form New Body to Fight Money Laundering


Singapore said it would overhaul its system to combat money laundering, weeks after it ordered the local arm of a Swiss bank to shut down operations in relation to a laundering and bribery probe. The nation’s Central bank, MAS has announced a new anti-money-laundering department weeks after it ordered BSI to shut down local operations.

Singapore in past decades has become centre of trade and business. This growth has accompanied itself with both financial as well as operational risk. After recent incidents of frauds and security breaches Monetary Authority of Singapore (MAS) came up with a new AML regulation in June 13, 2016.  All the changes have to take effect by 1st of August, 2016. The changes include, firstly, a dedicated department to take care of AML related issues. Secondly, strengthen current AML and fraud prevention infrastructure across banking, insurance and capital market institutions. Finally, a supervisory team to see if regulations are properly followed and different risks are properly taken care of.

Singapore in light of events in neighbouring nations and recent unearthing of fraud and bribery incidents in large banks led MAS to take drastic actions. These incidents gave indications that if not taken care of Singapore would likely become conduit of money laundering and terrorist financing. Increasing complexities of different businesses makes it necessary for MAS to take preventive regulatory actions. Therefore a centralised reinforcement agency is required to monitor and regulate any misconduct in the industry. The new department will be responsible for taking actions against regulatory infringements of MAS banking, insurance and capital market regulations.

Clari5 Voted Best Fraud Detection Product


CustomerXPs' Clari5 Enterprise Fraud Management product has been named winner of the prestigious 'Best Fraud Detection Product Award’ in the annual Operational Risk Awards held in London last month. Winners were selected following a series of in-depth discussions with industry participants.

This system can bring a revolution in banks. The banks today are mostly taking a silo based approach to fraud, with separate systems for their credit card business, debit cards, internet banking and so on. The failure of these systems is, they fail to communicate with each other in real-time means banks are missing opportunities to identify and prevent fraud.

The challenge lies in from a processing point of view, is the ability to instantly synthesize and cross-pollinate intelligence from disparate systems in a split second. To do so, the Clari5 system needs to undertake complex analysis faster than the underlying systems. To attempt this on ‘traditional' monolithic architecture would be prohibitively expensive. To dramatically reduce costs, Clari5 instead runs on distributed commodity hardware, aping the approach taken by search engine Google.

Clari5 invariably increases the value of banks. The product does not stop at fraud protection. The holistic and real-time understanding it gives banks about their customers' activities provides opportunities to offer additional products or services – exactly when the client is most receptive.

Indian Regulator RBI Urges Banks to Hasten Cybersecurity


RBI’s recent communication to Indian banks emphasizes how the volume, frequency and impact of cyber incidents / attacks have escalated in the recent past, underlining the urgent need for banks to put in place a robust cyber security/resilience framework; and to ensure adequate cyber-security preparedness on a continuous basis. This development demands that banks go beyond regulatory compliance to evaluate and implement a proven solution that can address current and future cyber threats. Since the first cyber regulation in 2011, the amount of fraud has increased by 4 folds by 2015 across the globe. There is a very high probability that the amount of fraud will quadruple by 2019 according to Juniper Research.

Therefore, it is of utmost importance to fortify the defenses of our financial institutions. According to Symantec India tops as in victim of SPAM attacks, second in virus attacks, and third in all other kind of attacks. The most targeted are the financial institutions as victims of cyberattack. India has 42 million cybercrime every year. The fraud constitutes 42% of the total financial loss.

Moreover, the cybercrime is not targeted to a specific channel of banks, so a system that can simultaneously monitor all the channels and report fraud or a suspicious transaction in real-time and has the power to intervene to safeguard the banks. In light of these events, RBI had to come up with a mandate that can strengthen financial institutions against frauds and protect the interest of the customers. By end of September, 2016 .i.e. 30th of this month banks need to give a roadmap to RBI on how they plan to implement the mandate.

A Beating Heart for Faster Money Access


Banks are working on a wide range of initiatives biometric verification, such as fingerprint and voice recognition, to make banking safer. Besides IT companies, banks are also working closely with specialist Fintech companies to help combat fraud. This story in Live Mint features how CustomerXPs’ is working with banks to protect them and their customers from cyber fraud with real-time analysis.

Today, the transactions complete in tenths of a heart beat or even faster. So many channels operating at blazing fast speed, so are the fraudsters moving to far more advanced technologies challenging the way of everyday functioning of the financial institutions. They provide the hurdles that banks need to overcome to advance further and provide better quality and secure services.

Moreover, they become catalyst for each other’s development. Sometimes the damage is irreversible, but before the real damage happens there are always indications of storm coming. This storm cannot be faced by house of straws, but the banks need a fortress with strong defense for all round protection. Banks hold the information which is more valuable than value of the bank itself. If those information are not safe guarded properly, the fortress is destined to fall. The fraudsters adapt to changes faster than banks do. If the banks are equipped with a technology that adapts on the go, will make banks lot stronger. Even if the storm comes the damage will be minimal. A cross channel system monitoring and protecting at speed of extreme real time can only keep fraudsters at bay.

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