To combat this, banks need to implement advanced AI-driven fraud monitoring and detection tools, enhance identity verification processes, and stay vigilant with continuous monitoring and staff training to recognize anomalies. While most banks recognize the importance of fraud prevention, having a clear strategy and best practices is essential to mitigate the rising risks posed by these evolving technologies. Banking fraud and financial crimes are growing more sophisticated every day, and the banking industry continues to evolve by forging relationships with new partners. Alena Robertson is a seasoned financial crime governance leader with more than a decade of experience in BSA/AML compliance and fraud prevention within financial institutions. BaaS and embedded finance solutions offer significant advantages for modern banking, but they also present new challenges in fraud prevention. To stay protected, banks and their BaaS partners need a systemic approach to manage risk tolerance across the platform and protect themselves and their clients. The most successful way to be effective and successful in preventing fraud is to have a shared understanding of the risk appetite and compliance program. By understanding the threats, building strong collaborations, and investing in advanced detection tools, banks can stay one step ahead and protect themselves and their clients. Last year, US fraud losses totaled a staggering $12.3 billion, and the emergence of new technologies will amplify financial crimes further. The rise of banking-as-a-service (BaaS) and embedded banking has also created more opportunities for bad actors to try to exploit gaps in fraud prevention. In this model, banks lose the direct connection with the end user, adding complexity to fraud prevention efforts. Banks and BaaS partners who collaborate closely to continuously improve their risk programs can navigate the evolving risks and rewards of AI. By embracing these strategies, banks can confidently drive the innovation economy forward, unlocking the full potential of BaaS partnerships while safeguarding against financial crime. Banking fraud and financial crimes are growing more sophisticated every day. The partnership should also clearly identify roles and responsibilities to create clarity and transparency in the fraud prevention strategy. Through regular audits and swift, actionable responses, it ensures vulnerabilities are eliminated, keeping fraud prevention strong and resilient. PYMNTS.com reports that bad actors are targeting application programming interfaces (APIs) — serving as the bridge between banks and their BaaS partners — are being viewed by bad actors as entry points. Technology is a critical component of a successful fraud prevention program, but it can't stand alone. As BSA manager at Grasshopper Bank, she spearheads the development and implementation of BSA procedures, ensuring regulatory compliance while mitigating financial crime risks. Although the benefits of BaaS far outweigh the risks, fraud activity continues to accelerate. While these partnerships can introduce new fraud risks, banks don't have to be vulnerable. In the near future, synthetic identity fraud and account takeovers will increasingly be leveraged to maximize gains, and AI and machine learning will rapidly adapt to a bank's detection methods. Sometimes, this will mean the bank has to say no to a potential BaaS partnership, if the partner doesn't align with the bank's risk culture. A shared understanding should be established at the onset of the relationship, but partners should also routinely check in to ensure they remain aligned, as risk appetite is always evolving alongside growth. Recognized for her strategic approach to risk management, Alena continues to lead initiatives that strengthen governance frameworks and align compliance strategies with organizational objectives. By understanding the threats and building strong collaborations, banks can protect themselves and their clients. Research from Deloitte expects US fraud losses to grow to $40 billion by 2027, representing a compound annual growth rate (CAGR) of 32%. Before joining Grasshopper, she held key compliance roles at Barclays, Station Casinos, MidFirst Bank, and Nevada State Bank, where she specialized in AML investigations, sanctions monitoring, and regulatory reporting. Alena has a strong track record of building high-performing teams, driving cross-functional collaboration, and forecasting emerging threats to enhance institutional resilience.
This Cyber News was published on www.darkreading.com. Publication date: Fri, 14 Feb 2025 15:00:05 +0000