What is this article about?
The findings of the Financial Crime 360 survey, focusing on the challenges, prevalent fraud types, and strategic responses across various sectors.
Why is it important?
It underscores the critical need for advanced technologies, regulatory compliance, and comprehensive strategies to effectively combat financial crime and safeguard the financial ecosystem
What’s next?
Continued investment in innovative fraud detection technologies and adaptive regulatory frameworks is essential to stay ahead of evolving financial crime threats.
As financial crimes grow in complexity and sophistication, payment firms find themselves at the forefront of the battle to safeguard their operations and consumer trust. The industry is now confronting emergent threats driven by technological advancements, such as AI-generated fraud and social media exploitation, amidst challenging economic conditions. In 2023, the most prevalent types of fraud included identity fraud, facility takeovers, and misuse of facilities, reflecting the persistent and evolving nature of these threats.
The Financial Crime 360 State of the Industry Survey 2024, which involved 150 participants from 32 countries, provides critical insights into the payments industry. Key findings reveal that fraud remains the foremost concern, with identity fraud being the most common type encountered. The survey also highlights the growing investment in technologies such as AI and machine learning for fraud prevention, as well as the importance of industry collaboration and regulatory updates. These insights are crucial for payment firms aiming to develop proactive strategies to stay ahead in this dynamic and demanding environment.
Top Challenges in Financial Crime:
2) Prevalent fraud types:
3) Emerging fraud trends:
4) Technological investments:
5) Fraud prevention and management:
6) Spending trends:
7) Industry collaboration and updates:
8) Regulatory environment:
The survey reveals a diverse representation across the payments/fintech ecosystem, with technology/solution providers leading at 21%, followed closely by professional services to the industry at 20%, and banking/account providers at 18%. This diversity indicates a broad interest and investment in addressing financial crime from various perspectives, highlighting the ecosystem’s multifaceted approach to combating fraud.
Fraud remains the top challenge, cited by 65% of respondents, underscoring its persistent threat. Cybercrime (52%) and AI-enabled fraud (38%) are also significant concerns, reflecting the evolving nature of technological threats. The focus on anti-money laundering (36%) and data sharing quality and governance (34%) emphasises the need for robust regulatory compliance and improved data management practices.
Identity fraud is identified as the most prevalent type at 42%, indicating a critical area for enhanced identity verification measures. The significant percentage of ‘other’ (28%) suggests a variety of emerging fraud typologies that require adaptive and comprehensive detection strategies. Misuse of facility (13%) and facility takeover (12%) further highlight the vulnerabilities within financial infrastructures.
Authorised push payment (app) fraud leads at 26%, illustrating the sophisticated nature of scams targeting direct customer payments. Identity fraud (17%) and internet/telephone/mobile banking fraud (13%) showcase the digital shift in fraudulent activities. The presence of AI-enabled fraud (7%) and chargeback fraud (5%) underscores the complexity and breadth of threats facing businesses today.
Identity deepfakes are perceived as the most significant threat (56%), highlighting concerns over the misuse of AI in creating highly convincing fraudulent identities. Automated personal data collection (32%) is also a notable threat, indicating the risks associated with large-scale, automated harvesting of personal information for fraudulent purposes.
A significant majority, 59%, are aware of the new APP rules proposed by The PSR, reflecting industry readiness to adapt to regulatory changes. This awareness is crucial for implementing measures that can effectively combat APP fraud.
Among those aware of the new APP rules, 70% will implement a combination of measures, demonstrating a comprehensive approach to fraud prevention. Reviewing transactions and limiting them based on a max cap (19%) and the sending bank/PI/EMI (18%) are also significant strategies, indicating targeted efforts to mitigate risks.
There is a lack of consensus on acceptable fraud loss levels, with 48% unsure. However, 41% believe it should be less than half a billion pounds, reflecting a significant concern for minimising financial losses due to fraud.
Investment priorities are clear, with machine learning and AI leading at 59%, followed by digital identification verification (46%) and automation processes (44%). This focus on advanced technologies indicates a strategic move towards leveraging innovation for fraud detection and prevention.
A majority, 60%, believe current fraud technologies are fit for purpose, suggesting confidence in existing solutions. However, the 40% who disagree highlight the need for continuous innovation and improvement in fraud prevention technologies.
Answer choices | 1 | 2 | 3 | 4 | 5 | Total | Weighted average |
|---|---|---|---|---|---|---|---|
Artificial Intelligence and Machine Learning systems | 13.25% | 13.91% | 35.10% | 20.53% | 17.22% | 151 | 3.15 |
Blockchain and other Distributed Ledger Technologies | 30.46% | 21.85% | 25.17% | 10.60% | 11.92% | 151 | 2.52 |
Advanced Analytics and Big Data solutions | 11.26% | 7.95% | 32.45% | 29.14% | 19.21% | 151 | 3.37 |
Automated Digital Identity Verification systems | 9.93% | 12.58% | 28.48% | 27.81% | 21.19% | 151 | 3.38 |
Real-time Transaction Monitoring tools | 6.62% | 9.27% | 21.19% | 28.48% | 34.44% | 151 | 3.75 |
Respondents suggest vendors should ensure their systems are fit for purpose, enhance data exchange capabilities, and develop more advanced analytics and machine learning tools. There is also a call for collaboration, best practices sharing, and involving consumers and small businesses in fraud prevention efforts.
Opinions are divided, with 51% considering it fit for purpose and 49% calling for updates. This split reflects a need for regulatory evolution to keep pace with emerging threats.
Suggestions include ensuring systems are fit for purpose, enhancing data exchange with vendors, developing advanced analytics and AI tools, providing trial access to AI solutions, and fostering collaboration and best practices sharing.
Responses are varied, with 40% positive and 40% neutral, indicating cautious optimism. Only 6% are very positive, reflecting the challenges in curbing economic crime amidst evolving threats.
Strong AML/CTL programmes (59%) and transaction monitoring systems (rules-based: 58%, machine learning: 49%) are widely deployed. Customer education programmes (41%) also play a significant role in fraud prevention strategies.
A significant portion (48%) reported spending between £50,000 and £500,000, indicating substantial investment in combating financial crime.
30% plan to increase spending by up to 25%, reflecting a proactive approach to enhancing fraud prevention measures.
Risk and regulatory enforcement (62%) are the primary triggers for investment, followed by cost considerations (18%) and revenue impacts (15%).
The industry relies heavily on industry reports (81%), conferences (71%), and industry media (68%). Collaboration with financial institutions (57%) and law enforcement agencies (44%) also play crucial roles in staying informed.
The banking and account providers sector is a crucial pillar of the payments ecosystem, playing a vital role in managing financial transactions and safeguarding customer assets. This segment faces a constantly evolving landscape of financial crime, characterised by increasingly sophisticated fraud techniques and regulatory challenges. As traditional banking interfaces converge with digital innovations, the sector must navigate a complex array of threats, from identity fraud to cybercrime, while ensuring compliance with stringent anti-money laundering (AML) and counter-terrorism financing (CTF) regulations. This section delves into the specific challenges, prevalent fraud types, technological investments, and strategic responses employed by banking and account providers to combat financial crime and maintain trust in their operations.
Within the banking/account providers segment, the landscape of financial crime is dominated by fraud and cyber crime, each cited by 59% of respondents. These issues underscore the sector’s ongoing battle against increasingly sophisticated criminal activities targeting bank accounts and transactional integrity. Anti-money laundering (44%) remains a critical area, reflecting the importance of stringent compliance and monitoring measures to detect and prevent illicit financial activities. Regulation (37%) also presents a significant challenge, highlighting the need for banks to continuously adapt to evolving legal requirements and standards. Other notable challenges include money mules (30%) and anti-bribery and corruption (22%), which require robust internal controls and vigilance to mitigate their impact.
Identity fraud emerges as the predominant threat within the banking sector, reported by 48% of respondents. This type of fraud typically involves the unauthorised use of personal information to gain access to financial services and accounts, necessitating advanced identity verification and authentication measures. The significant occurrence of misuse of facility (15%) and facility takeover (11%) further indicates vulnerabilities in account management and access control, stressing the importance of continuous monitoring and robust security protocols. The ‘other’ category, accounting for 26%, suggests a variety of emerging fraud types that banks must be prepared to address through adaptive and comprehensive strategies.
Within the banking sector, identity deepfakes are perceived as the most significant AI-driven threat, with 52% of respondents expressing concern. Deepfake technology can create highly convincing but fraudulent digital identities, posing a significant risk to verification processes. Automated personal data collection (26%) and chatbot-powered fraud (19%) also represent notable threats, reflecting the broader trend of leveraging AI to conduct sophisticated and large-scale fraudulent activities.
For banking/account providers, authorised push payment (APP) fraud is a major concern, affecting 26% of respondents. This type of fraud involves tricking customers into authorising payments to accounts controlled by fraudsters, requiring enhanced customer education and secure transaction verification processes. Card not present fraud (16%) and account takeover (10%) highlight the need for robust digital security measures to protect against unauthorised transactions and access. Additionally, chargeback fraud (6%) and scams (3%) indicate the diverse threats that banks must manage to safeguard their operations and customers.
A substantial 63% of banking/account providers are aware of the new APP rules proposed by the Payment Systems Regulator (PSR). This awareness is crucial for the sector as it prepares to implement measures that can effectively combat APP fraud, ensuring compliance with regulatory requirements and protecting consumers from financial harm.
Among those aware of the new APP rules, 44% plan to implement a combination of measures to address fraud risks. This comprehensive approach includes reviewing incoming transactions and setting limits based on maximum caps (15%) and the origin of transactions (15%). Additionally, 11% are considering re-evaluating customers and closing high-risk accounts, indicating a proactive stance in mitigating potential fraud risks.
When considering acceptable levels of fraud loss, 44% of respondents in the banking sector remain unsure, reflecting the complexities involved in balancing risk and operational efficiency. However, 41% believe losses should be kept under half a billion pounds.
Investment in advanced technologies is a priority for banking/account providers, with 74% focusing on machine learning and AI to enhance fraud detection and prevention capabilities. Automation processes (48%) and enhanced due diligence (41%) are also key investment areas, supporting the sector’s efforts to streamline compliance and risk management. Cloud solutions (26%) and digital identification verification (41%) further highlight the sector’s commitment to leveraging technology for improved security and operational efficiency.
The banking sector exhibits mixed views on the adequacy of current fraud technologies, with 56% affirming their fit for purpose. However, 44% believe improvements are necessary, indicating ongoing challenges and the need for continuous innovation to keep pace with evolving threats.
Opinions on the fitness of the UK’s fraud regulation are split, with 59% considering it adequate, while 41% believe updates are necessary. This division underscores the dynamic nature of financial crime and the regulatory landscape, emphsising the need for adaptive and responsive regulatory frameworks.
Regarding optimism about the industry’s ability to curb economic crime, responses are varied. While 44% remain neutral, 37% are positive, reflecting a cautious optimism within the sector. However, negative (11%) and negative (4%) responses highlight the challenges and uncertainties that banking/account providers face in this ongoing battle.
Banking/account providers are deploying a variety of fraud management strategies, with a strong emphasis on transaction monitoring. Rules-based programmes are used by 81%, while machine learning programmes are utilised by 63%. A significant number also employ strong AML/CTL programmes (74%) and customer education initiatives (67%). Manual transaction monitoring (52%) and post-transaction dispute management solutions (48%) are also prevalent, highlighting the sector’s multi-faceted approach to managing fraud risks.
Spending on financial crime initiatives varies, with 48% of respondents indicating ‘other’ amounts. However, significant portions of reported spending between £50,000 and £500,000 (28%), and between £500,000 and £10,000,000 (24%), reflect substantial investments in combating financial crime.
Spending trends show a proactive approach, with 27% planning to increase spending by up to 25% and 19% by more than 25%. This indicates a commitment to enhancing fraud prevention measures. Conversely, some expect to maintain current spending levels (12%) or are unsure (19%), reflecting varying strategic priorities and budget constraints.
Investment in financial crime capabilities is primarily driven by risk and regulatory enforcement (74%), underscoring the importance of compliance and risk management. Cost considerations (11%) and revenue impacts (7%) also influence investment decisions, highlighting the need for cost-effective and revenue-protective measures.
Banking/account providers rely heavily on industry reports (85%), conferences (78%), and industry media (74%) to stay informed about emerging fraud trends and threats. Collaboration with other financial institutions (63%) and law enforcement agencies (33%) also plays crucial roles, ensuring that banks remain at the forefront of fraud prevention and detection.
The card industry, encompassing credit, debit, and prepaid cards, is critical to the payments ecosystem. This sector is uniquely vulnerable to various forms of financial crime due to the high volume of transactions and widespread usage of cards in both physical and online environments. As technology advances, the card industry must continuously evolve to address emerging threats, from identity fraud to AI-driven scams. This section explores the challenges, prevalent fraud types, and strategic responses the card industry employs to safeguard transactions and maintain consumer trust.
The card industry identifies fraud as its primary challenge, with 89% of respondents highlighting its significance. AI-enabled fraud (56%) and digital assets (44%) follow, underscoring the sector’s exposure to innovative and evolving threats. Cyber crime (44%) and money mules (22%) also pose substantial risks, requiring robust security measures and comprehensive monitoring systems. Anti-money laundering (22%), regulation (11%), and financial sanctions (11%) further complicate the landscape, necessitating continuous adaptation to regulatory changes and the implementation of stringent compliance protocols.
Identity fraud is the most prevalent type of fraud in the card industry, reported by 44% of respondents. This form of fraud typically involves the unauthorised use of personal information to make transactions, necessitating advanced identity verification processes. Misuse of facility (22%) and facility takeover (11%) also present significant challenges, highlighting the need for robust access controls and real-time transaction monitoring. Insider threats and other unspecified fraud types (11% each) indicate the diversity of risks that the card industry must manage.
Card not present fraud is the most impactful type, affecting 56% of respondents. This fraud type, common in online transactions, underscores the need for enhanced digital security measures and secure payment protocols. Identity fraud (22%) and lost and stolen fraud (11%) further highlight the importance of protecting customer information and preventing unauthorised access. Authorised push payment (APP) fraud (11%) also poses a significant risk, requiring banks to implement strong verification processes to protect customers.
Identity deepfakes are perceived as the most significant AI-driven threat, with 56% of respondents expressing concern. These sophisticated forgeries can bypass traditional verification systems, posing a substantial risk to the card industry. Automated personal data collection (33%) and chatbot-powered fraud (11%) also represent notable threats, reflecting the broader trend of leveraging AI for large-scale fraudulent activities.
A significant majority, 66%, are aware of the new APP rules proposed by the Payment Systems Regulator (PSR), highlighting the industry’s readiness to adapt to regulatory changes aimed at enhancing the security of push payments.
Opinions on acceptable fraud loss levels vary, with 44% of respondents unsure. However, 33% believe that losses should be less than half a billion pounds, reflecting a strong commitment to minimising financial impacts from fraud. A minority considers higher loss thresholds, indicating differing perspectives on acceptable risk levels.
Investment in advanced technologies is a priority, with 80% of respondents focusing on machine learning and AI to enhance fraud detection and prevention. Automation processes (60%) and enhanced due diligence (50%) are also key areas of investment, supporting efforts to streamline compliance and risk management. Digital identification verification (50%) and cloud solutions (10%) highlight the sector’s commitment to leveraging technology for improved security and operational efficiency.
The card industry exhibits mixed views on the adequacy of current fraud technologies, with 56% believing improvements are necessary. However, 44% affirm that existing technologies are fit for purpose, indicating ongoing challenges and the need for continuous innovation to address evolving threats.
Opinions on the fitness of the UK’s fraud regulation are divided, with 56% considering it adequate, while 44% believe updates are necessary. This split reflects the dynamic nature of financial crime and the regulatory landscape, showcasing the need for adaptive and responsive regulatory frameworks.
Optimism about the industry’s ability to curb economic crime is relatively high, with 56% of respondents feeling positive about future prospects. This reflects confidence in the sector’s strategies and technologies to manage and mitigate financial crime risks effectively. However, 44% remain neutral, indicating cautious optimism amidst ongoing challenges.
The card industry employs a variety of fraud management strategies, with a strong emphasis on transaction monitoring. Rules-based programmes are used by 75%, while machine learning programmes are also widely adopted (75%). Strong AML/CTL programmes (63%) and post-transaction dispute management solutions (63%) highlight the sector’s comprehensive approach to managing fraud risks. Customer education programmes (50%) and AI solutions (50%) further underscore the industry’s commitment to proactive fraud prevention.
Spending on financial crime initiatives is substantial, with 63% of respondents reporting expenditures between £50,000 and £500,000. Additionally, 25% reported spending between £500,000 and £10,000,000, reflecting significant investments to combat financial crime and enhance security.
Spending trends indicate a mixed approach, with 44% planning to maintain current spending levels. However, 22% plan to increase spending by up to 25% and 11% by more than 50%, indicating a proactive stance towards enhancing fraud prevention measures. Conversely, some respondents expect to reduce spending by up to 25% (11%) or are unsure (11%).
Investment in financial crime capabilities is primarily driven by risk and regulatory enforcement (67%), underscoring the importance of compliance and risk management. Cost considerations (33%) also influence investment decisions, highlighting the need for cost-effective measures to protect the business and its customers.
To stay informed about emerging fraud trends and threats, the card industry relies heavily on industry reports (78%) and collaboration with other financial institutions (78%). Conferences (67%) and law enforcement agencies (56%) also play crucial roles in keeping the sector abreast of new developments. Industry media (56%) and other sources (11%) further support the industry’s efforts to stay ahead of evolving threats.
For the cross-border payments sector, fraud remains the foremost challenge, identified by 62% of respondents. The international nature of these transactions makes them particularly vulnerable to sophisticated fraud schemes that exploit jurisdictional differences and regulatory gaps. Cybercrime follows closely at 54%, underscoring the sector’s exposure to digital threats that can compromise sensitive financial data. Data sharing quality and governance (46%) and regulation (38%) are also significant challenges, reflecting the need for robust frameworks to ensure secure and compliant cross-border transactions. Digital assets (31%), AI-enabled fraud (23%), and money mules (15%) highlight the diverse range of threats that cross-border payment providers must navigate.
Identity fraud and misuse of facility are tied as the most common types of fraud in the cross-border payments sector, each reported by 38% of respondents. These fraud types often involve the manipulation of identity and transactional data to facilitate unauthorised transfers, requiring enhanced verification and monitoring processes. Facility takeover (8%) and the ‘other’ category (38%) indicate the presence of a variety of emerging fraud schemes that necessitate adaptive and comprehensive detection strategies.
Authorised push payment (APP) fraud is the primary concern for cross-border payments providers, impacting 54% of respondents. This type of fraud involves deceiving customers into authorising payments to accounts controlled by fraudsters, highlighting the need for rigorous transaction verification and customer education. Chargeback fraud (15%) and internet/telephone/mobile banking fraud (8%) are significant issues, reflecting the sector’s exposure to various digital and transactional fraud types. Identity fraud (8%) and card not present fraud (8%) further underscore the importance of robust digital security measures.
In the realm of AI-driven fraud, identity deepfakes pose the most significant threat, with 62% of respondents expressing concern. These advanced techniques can create highly convincing but fraudulent digital identities, challenging existing verification systems. Automated personal data collection (38%) is another major threat, reflecting the risks associated with large-scale data harvesting for fraudulent purposes.
A substantial 85% of respondents in the cross-border payments sector are aware of the new APP rules proposed by the Payment Systems Regulator (PSR). This high level of awareness is crucial as the sector adapts to regulatory changes aimed at enhancing the security of push payments.
Among those aware of the new APP rules, 89% plan to implement a combination of measures to address fraud risks. This comprehensive approach includes reviewing transactions, setting limits based on the sending bank/PI/EMI (44%), and reevaluating customers to close high-risk accounts (22%). Additionally, some respondents (22%) plan to implement transaction limits based on maximum caps, demonstrating targeted efforts to mitigate fraud.
Regarding acceptable levels of fraud loss, 54% of respondents in the cross-border payments sector are unsure, highlighting the complexity of assessing acceptable risk levels. However, 31% believe that losses should be kept under half a billion pounds, indicating a strong commitment to limiting financial impacts from fraud.
Investment in advanced technologies is a priority for cross-border payments providers, with 75% focusing on machine learning and AI to enhance fraud detection and prevention capabilities. Enhanced due diligence (58%) and automation processes (50%) are also key areas of investment, supporting efforts to streamline compliance and risk management. Digital identification verification (42%) and cloud solutions (25%) further highlight the sector’s commitment to leveraging technology for improved security and operational efficiency.
The cross-border payments sector shows confidence in current fraud technologies, with 62% of respondents affirming their fit for purpose. However, 38% believe improvements are necessary, indicating ongoing challenges and the need for continuous innovation to address evolving threats.
Opinions on the fitness of the UK’s fraud regulation are positive, with 62% considering it adequate for current needs. However, 38% believe updates are necessary, reflecting the dynamic nature of financial crime and the regulatory landscape, and the need for adaptive and responsive regulatory frameworks.
Optimism about the industry’s ability to curb economic crime is high among cross-border payments providers, with 77% feeling positive about future prospects. This reflects confidence in the sector’s strategies and technologies to effectively manage and mitigate financial crime risks. Only 8% hold a negative outlook, highlighting a minority perspective amidst broader optimism.
Cross-border payments providers employ various fraud management strategies with a strong emphasis on transaction monitoring. Rules-based programmes are used by 77%, while machine learning programmes are utilised by 46%. Strong AML/CTL programmes (92%) and customer education initiatives (54%) are also prevalent, highlighting the sector’s multi-faceted approach to managing fraud risks. Manual transaction monitoring (46%) and post-transaction dispute management solutions (15%) further underscore the importance of comprehensive fraud management strategies.
Spending on financial crime initiatives is substantial within the cross-border payments sector, with 69% of respondents reporting expenditures between £50,000 and £500,000. Additionally, 23% reported spending between £500,000 and £10,000,000, reflecting significant investments to combat financial crime and enhance security.
Spending trends indicate a proactive approach, with 69% planning to increase spending by up to 25% and 8% by more than 50%. This indicates a strong commitment to enhancing fraud prevention measures. Conversely, some expect to maintain current spending levels (8%) or are unsure (15%), reflecting varying strategic priorities and budget constraints.
Investment in financial crime capabilities is primarily driven by risk and regulatory enforcement (62%), underscoring the importance of compliance and risk management. Revenue considerations (31%) and cost implications (8%) also influence investment decisions, highlighting the need for cost-effective and revenue-protective measures.
To stay informed about emerging fraud trends and threats, cross-border payments providers rely heavily on industry reports (86%), industry media (29%), and conferences (50%). Collaboration with other financial institutions (43%) and law enforcement agencies (29%) also play crucial roles, ensuring that the sector remains at the forefront of fraud prevention and detection.
The financial crime and compliance services sector is pivotal in helping financial institutions detect, prevent, and respond to various forms of financial crime. This sector provides essential services and technologies that ensure compliance with regulatory requirements and enhance the overall security of financial transactions. As financial crimes become more sophisticated, robust compliance frameworks and advanced detection systems are becoming increasingly critical. This section explores the challenges, prevalent fraud types, and strategic investments that define the efforts of the financial crime and compliance services sector in safeguarding the financial system.
Within the financial crime and compliance services sector, fraud is identified as the top challenge by 70% of respondents. This underscores the persistent threat fraud poses to financial institutions and the critical role compliance services play in mitigating these risks. Regulation and AI-enabled fraud are also significant concerns, each cited by 60% of respondents. This highlights the dual challenge of adhering to complex regulatory frameworks while combating technologically advanced fraud schemes. Anti-money laundering (50%) and cybercrime (40%) further point to the need for comprehensive security measures and vigilant monitoring. Challenges such as digital assets (30%), data sharing quality and governance (30%), money mules (10%), financial sanctions (10%), and anti-bribery and corruption (10%) illustrate the diverse and evolving nature of threats that this sector must address.
Identity fraud is the most prevalent type of fraud within the financial crime and compliance services sector, reported by 50% of respondents. This type of fraud typically involves the misuse of personal information to access financial services, necessitating advanced identity verification and protection measures. The significant occurrence of ‘other’ types of fraud (40%) suggests a variety of emerging and evolving fraud schemes that require adaptive and comprehensive detection strategies. Facility takeover (10%) further highlights vulnerabilities in access control and the need for continuous monitoring and robust security protocols.
Identity fraud is the leading concern in the financial crime and compliance services sector, impacting 30% of respondents. This underscores the importance of strong identity verification processes. Internet/telephone/mobile banking fraud (20%) and authorised push payment (APP) fraud (20%) highlight the need for secure digital transaction systems and enhanced customer education to prevent scams. AI-enabled fraud (10%) and ‘other’ types of fraud (10%) reflect the increasing sophistication of threats that leverage advanced technologies.
Identity deepfakes are perceived as the most significant AI-driven threat, with 70% of respondents expressing concern. These highly convincing fraudulent identities pose a substantial risk to verification processes and highlight the need for advanced detection technologies. Automated personal data collection (20%) and chatbot-powered fraud (10%) also represent notable threats, reflecting the broader trend of AI being leveraged to conduct large-scale fraudulent activities.
A majority, 70%, are aware of the new APP rules proposed by the Payment Systems Regulator (PSR), indicating readiness to adapt to regulatory changes aimed at enhancing the security of push payments. This awareness is crucial for implementing effective measures to combat APP fraud.
Among those aware of the new APP rules, 40% plan to implement a combination of measures to address fraud risks. Reviewing transactions and limiting them based on the sending bank/PI/EMI (10%) and reevaluating customers to close high-risk accounts (10%) are also part of the strategies being considered. This comprehensive approach reflects a proactive stance in mitigating potential fraud risks.
When considering acceptable levels of fraud loss, 60% of respondents believe it should be less than half a billion pounds, indicating a strong commitment to minimising financial impacts from fraud. However, 30% remain unsure, reflecting the complexities of balancing risk and operational efficiency. A minority (10%) considers higher loss thresholds, indicating differing perspectives on acceptable risk levels.
Investment priorities in the financial crime and compliance services sector are clear, with 80% focusing on machine learning and AI to enhance fraud detection and prevention capabilities. Automation processes (70%) and enhanced due diligence (40%) are key investment areas, supporting efforts to streamline compliance and risk management. Digital identification verification (30%) and cloud solutions (30%) further highlight the sector’s commitment to leveraging technology for improved security and operational efficiency.
The sector shows confidence in current fraud technologies, with 60% of respondents affirming their fit for purpose. However, 40% believe improvements are necessary, indicating ongoing challenges and the need for continuous innovation to address evolving threats.
Opinions on the fitness of the UK’s fraud regulation are predominantly positive, with 90% considering it adequate for current needs. This reflects confidence in the existing regulatory framework’s ability to address contemporary financial crime challenges. However, 10% believe updates are necessary, highlighting the need for regulatory frameworks to adapt continuously to emerging threats.
Optimism about the industry’s ability to curb economic crime is moderate, with 40% of respondents feeling positive about future prospects and another 40% remaining neutral. This reflects a balanced view of the sector’s capabilities and the challenges ahead. However, 20% hold a negative outlook, indicating concerns about the effectiveness of current strategies and technologies in addressing evolving threats.
The financial crime and compliance services sector employs a variety of fraud management strategies with a strong emphasis on advanced technologies. Transaction monitoring through rules-based programmes (70%) and machine learning programmes (70%) are widely adopted, reflecting a multi-faceted approach to detecting and preventing fraud. AI solutions (90%) highlight the sector’s commitment to leveraging cutting-edge technology for fraud management. Post-transaction dispute management solutions (60%) and customer education programmes (40%) further underscore the importance of comprehensive strategies to manage fraud risks.
Spending on financial crime initiatives varies, with 40% of respondents indicating ‘other’ amounts. Significant portions reported spending between £50,000 and £500,000 (30%), and between £500,000 and £10,000,000 (30%), reflecting substantial investments to combat financial crime and enhance security.
Spending trends indicate a proactive approach, with 40% planning to increase spending by up to 25%. This indicates a commitment to enhancing fraud prevention measures. Conversely, some expect to maintain current spending levels (30%) or are unsure (30%), reflecting varying strategic priorities and budget constraints.
Investment in financial crime capabilities is primarily driven by risk and regulatory enforcement (50%), underscoring the importance of compliance and risk management. Revenue considerations (20%) and cost implications (20%) also influence investment decisions, highlighting the need for cost-effective measures that protect both the business and its customers. A minority (10%) indicated other triggers, reflecting diverse strategic priorities within the sector.
To stay informed about emerging fraud trends and threats, the financial crime and compliance services sector relies heavily on industry reports (80%) and law enforcement agencies (70%). Industry media (70%) and conferences (70%) also play crucial roles in keeping the sector abreast of new developments. Collaboration with other financial institutions (50%) and other sources (10%) further support the industry’s efforts to stay ahead of evolving threats.
The merchant sector is a vital component of the payments ecosystem, encompassing a wide range of businesses that accept and process card payments from customers. This sector faces unique challenges in managing financial crime, including fraud prevention, chargeback management, and maintaining compliance with evolving regulations. As digital commerce grows and new payment methods emerge, merchants must adopt robust security measures to protect their transactions and customer data. This section explores the specific challenges, prevalent fraud types, and strategic responses employed by merchants to safeguard their operations against financial crime.
For the merchant sector, fraud is identified as the most significant challenge, cited by 60% of respondents. This highlights the ongoing battle against various forms of fraud that threaten merchant revenue and customer trust. Cybercrime (60%) and anti-money laundering (60%) are also major concerns, reflecting the need for comprehensive security measures and stringent compliance protocols. Regulation (40%) presents an additional challenge, requiring merchants to stay updated with legal requirements and ensure their operations are compliant. Digital assets (20%) and anti-bribery and corruption (20%) also pose risks that merchants must address through robust internal controls and vigilance.
Within the merchant sector, fraud types are diverse, with identity fraud, facility takeover, and misuse of facility each reported by 20% of respondents. These fraud types involve unauthorised use of customer information and manipulation of account access, necessitating advanced identity verification and access control measures. The significant percentage of ‘other’ types of fraud (40%) suggests a variety of emerging schemes that require adaptive and comprehensive detection strategies.
Card not present fraud is a major concern for merchants, impacting 20% of respondents. This type of fraud, common in online transactions, highlights the need for secure payment protocols and enhanced digital security measures. Lost and stolen fraud (20%), account takeover (20%), and counterfeit fraud (20%) further underscore the importance of protecting customer information and preventing unauthorised access. The presence of ‘other’ types of fraud (20%) indicates the diverse range of threats merchants must manage to safeguard their operations and customers.
Automated personal data collection is perceived as the most significant AI-driven threat, with 80% of respondents expressing concern. This involves large-scale harvesting of personal information for fraudulent activities, challenging existing data protection measures. Chatbot-powered fraud (20%) is another notable threat, reflecting the broader trend of AI being leveraged to conduct sophisticated scams and phishing attacks.
A majority of respondents (80%) are not aware of the new APP rules proposed by the Payment Systems Regulator (PSR). This lack of awareness indicates a need for better dissemination of regulatory updates to ensure merchants are prepared to comply with new requirements aimed at enhancing payment security.
Regarding acceptable levels of fraud loss, 60% of respondents believe it should be less than half a billion pounds, reflecting a strong commitment to minimising financial impacts from fraud. However, 40% remain unsure, highlighting the complexities involved in assessing acceptable risk levels.
Investment priorities for merchants focus heavily on automation processes (80%), reflecting the need for efficient and scalable fraud prevention measures. Cloud solutions, machine learning and AI, and digital identification verification are each prioritised by 60% of respondents, highlighting the sector’s commitment to leveraging advanced technologies for improved security and operational efficiency. Enhanced due diligence (20%) further supports efforts to streamline compliance and risk management.
Opinions on the fitness of the UK’s fraud regulation are divided, with 60% considering it inadequate and 40% finding it fit for purpose. This split reflects the dynamic nature of financial crime and the regulatory landscape, pointing to the need for adaptive and responsive regulatory frameworks.
Optimism about the industry’s ability to curb economic crime is moderate, with 40% of respondents feeling positive about future prospects and another 40% remaining neutral. However, 20% hold a negative outlook, indicating concerns about the effectiveness of current strategies and technologies in addressing evolving threats.
Merchants employ a variety of fraud management strategies, with a strong emphasis on advanced technologies. Transaction monitoring through rules-based programmes (40%) and machine learning programmes (80%) are widely adopted, reflecting a multi-faceted approach to detecting and preventing fraud. AI solutions (60%) highlight the sector’s commitment to leveraging cutting-edge technology for fraud management. Post-transaction dispute management solutions (60%) and customer education programmes (40%) further underscore the importance of comprehensive strategies to manage fraud risks.
Spending on financial crime initiatives varies within the merchant sector, with 60% of respondents reporting expenditures between £50,000 and £500,000. Additionally, 40% reported spending between £500,000 and £10,000,000, reflecting substantial investments to combat financial crime and enhance security.
Spending trends indicate a cautious approach, with 40% planning to reduce spending by more than 50%, reflecting budget constraints or perceived adequacy of current measures. Conversely, 20% plan to increase spending by more than 50%, and another 20% are unsure, indicating varying strategic priorities and budget flexibility.
Investment in financial crime capabilities is primarily driven by risk and regulatory enforcement (80%), underscoring the importance of compliance and risk management. Cost considerations (20%) also influence investment decisions, highlighting the need for cost-effective measures that protect both the business and its customers.
To stay informed about emerging fraud trends and threats, merchants rely heavily on industry reports (100%) and conferences (80%). Law enforcement agencies (60%), industry media (60%), and collaboration with other financial institutions (60%) also play crucial roles in keeping the sector abreast of new developments.
Non-bank financial institutions (NBFIs) encompass a wide range of entities, including investment firms, insurance companies, and fintech companies that provide financial services without holding a banking license. These institutions play a crucial role in the financial ecosystem by offering innovative solutions and services. However, they also face significant challenges in managing financial crime, including fraud, cyber threats, and regulatory compliance. As NBFIs continue to grow and diversify, adopting robust security measures to protect their operations and maintain customer trust is essential. This section delves into the specific challenges, prevalent fraud types, and strategic responses employed by NBFIs to safeguard against financial crime.
For non-bank financial institutions, fraud is the leading challenge, cited by 69% of respondents. Data sharing, quality, and governance (54%) and anti-money laundering (46%) also present significant challenges, reflecting the need for robust compliance frameworks and effective data management. Financial sanctions (31%), cybercrime (31%), and AI-enabled fraud (31%) further point to the sector’s exposure to evolving technological threats and regulatory requirements. Regulation (23%), money mules (15%), digital assets (8%), and anti-bribery and corruption (8%) highlight the diverse range of threats that NBFIs must address.
Within the NBFI sector, ‘other’ types of fraud are the most prevalent, reported by 38% of respondents. Facility takeover (23%), misuse of facility (15%), and identity fraud (15%) also highlight the need for strong identity verification and access control measures. Insider threats (8%) indicate the importance of internal security protocols.
In the NBFI sector, authorised push payment (APP) fraud, AI-enabled fraud, and account takeover are each major concerns, impacting 15% of respondents. The diverse range of fraud types, including ‘other’ (8%), lost and stolen fraud (8%), internet/telephone/mobile banking fraud (8%), identity fraud (8%), counterfeit fraud (8%), chargeback fraud (8%), and card not present fraud (8%), underscores the importance of comprehensive fraud management strategies.
Identity deepfakes are perceived as the most significant AI-driven threat, with 54% of respondents expressing concern. Automated personal data collection (31%) and ‘other’ AI-driven threats (15%) reflect the broader trend of AI being leveraged to conduct sophisticated fraudulent activities.
A substantial majority, 85%, are aware of the new APP rules proposed by the Payment Systems Regulator (PSR). This high level of awareness is crucial as the sector adapts to regulatory changes aimed at enhancing the security of push payments.
Among those aware of the new APP rules, 54% plan to implement a combination of measures to address fraud risks. Reviewing transactions and limiting them based on the sending bank/PI/EMI (8%), implementing new fees for customers (8%), and reviewing transactions based on a max cap (8%) are part of the strategies being considered. This comprehensive approach reflects a proactive stance in mitigating potential fraud risks.
Regarding acceptable levels of fraud loss, 69% of respondents in the NBFI sector are unsure, highlighting the complexities involved in balancing risk and operational efficiency. However, 31% believe it should be less than half a billion pounds, indicating a strong commitment to minimising financial impacts from fraud.
Investment priorities for NBFIs focus heavily on automation processes (62%) and digital identification verification (46%). Machine learning and AI (38%), enhanced due diligence (38%), and cloud solutions (23%) highlight the sector’s commitment to leveraging technology for improved security and operational efficiency.
The NBFI sector shows confidence in current fraud technologies, with 69% affirming their fit for purpose. However, 31% believe improvements are necessary, indicating ongoing challenges and the need for continuous innovation to address evolving threats.
Opinions on the fitness of the UK’s fraud regulation are predominantly negative within the NBFI sector, with 69% considering it inadequate. This reflects the need for regulatory frameworks to adapt continuously to emerging threats. Only 31% believe it is fit for purpose.
Optimism about the industry’s ability to curb economic crime is high, with 71% of respondents feeling positive about future prospects. This reflects confidence in the sectoOptimism about the industry’s ability to curb economic crime is moderate, with 46% of respondents feeling positive about future prospects and 31% remaining neutral. However, 23% hold a negative outlook, indicating concerns about the effectiveness of current strategies and technologies in addressing evolving threats.r’s strategies and technologies to manage and mitigate financial crime risks effectively. However, 29% remain neutral, indicating cautious optimism amidst ongoing challenges.
NBFIs employ a variety of fraud management strategies, with a strong emphasis on advanced technologies. Strong AML/CTL programmes are deployed by 100% of respondents, while transaction monitoring through rules-based programmes (85%), manual monitoring (54%), and machine learning programmes (46%) are also widely adopted. Post-transaction dispute management solutions (54%), customer education programmes (38%), chargeback management systems (38%), and AI solutions (23%) further underscore the importance of comprehensive strategies to manage fraud risks.
Spending on financial crime initiatives varies within the NBFI sector, with 47% of respondents reporting expenditures between £50,000 and £500,000. Additionally, 33% reported spending between £500,000 and £10,000,000, reflecting substantial investments to combat financial crime and enhance security. A minority reported other amounts (13%) and more than £10,000,000 (7%).
Spending trends indicate a cautious approach, with 31% planning to maintain current spending levels and another 31% planning to increase spending by up to 25%. Additionally, 23% plan to increase spending by more than 25%, 8% by more than 50%, and 8% are unsure, reflecting varying strategic priorities and budget flexibility.
Investment in financial crime capabilities is primarily driven by risk and regulatory enforcement (77%), underscoring the importance of compliance and risk management. Revenue considerations (15%) and other factors (8%) also influence investment decisions, highlighting the need for cost-effective measures that protect both the business and its customers.
To stay informed about emerging fraud trends and threats, NBFIs rely heavily on industry reports (100%) and conferences (92%). Collaboration with other financial institutions (85%), industry media (84%), and law enforcement agencies (31%) also play crucial roles in keeping the sector abreast of new developments. Other sources (15%) further support the industry’s efforts to stay ahead of evolving threats.
Open banking is revolutionising the financial services landscape by allowing third-party developers to build applications and services around financial institutions. This initiative aims to provide more financial transparency and enhance the consumer experience through open APIs. However, with the increased integration and sharing of financial data, the sector faces significant challenges in managing financial crime. This section explores the specific challenges, prevalent fraud types, and strategic responses employed by open banking providers to safeguard against financial crime and ensure a secure and transparent financial ecosystem.
For the open banking sector, fraud is identified as the most significant challenge, cited by 80% of respondents. Data sharing quality and governance (40%) and cyber crime (20%) are also major concerns, highlighting the need for robust compliance frameworks and effective data management practices. Regulation (20%), digital assets (20%), money mules (20%), anti-money laundering (20%), and AI-enabled fraud (20%) further underscore the sector’s exposure to evolving technological threats and regulatory requirements.
Identity fraud and misuse of facility are the most common types of fraud within the open banking sector, each reported by 40% of respondents. These fraud types typically involve the unauthorised use of personal information and misuse of account access, necessitating advanced identity verification and monitoring measures. The significant percentage of ‘other’ types of fraud (20%) suggests a variety of emerging schemes that require adaptive and comprehensive detection strategies.
In the open banking sector, authorised push payment (APP) fraud is a major concern, impacting 40% of respondents. Other fraud types such as money mules (20%) and internet/telephone/mobile banking fraud (20%) highlight the need for robust security measures and customer education to prevent scams.
Automated personal data collection is perceived as the most significant AI-driven threat, with 40% of respondents expressing concern. Identity deepfakes, chatbot-powered fraud, and other AI-driven threats each account for 20%, reflecting the broader trend of AI being leveraged to conduct sophisticated and large-scale fraudulent activities.
A majority, 60%, are aware of the new APP rules proposed by the Payment Systems Regulator (PSR), while 40% are not. This awareness is crucial for implementing measures that can effectively combat APP fraud and ensure compliance with regulatory requirements.
Among those aware of the new APP rules, 60% plan to implement measures such as reviewing transactions and limiting them based on a max cap. Other strategies include reviewing transactions based on the sending bank/PI/EMI (20%) and reevaluating customers to close high-risk accounts (20%).
Regarding acceptable levels of fraud loss, 40% of respondents believe it should be less than half a billion pounds. Other responses include £3 billion (20%), £1 billion (20%), and unsure (20%), highlighting diverse perspectives on acceptable risk levels.
Investment priorities for open banking providers focus heavily on automation processes (80%). Other key areas of investment include cloud solutions (40%), machine learning and AI (40%), digital identification verification (40%), and enhanced due diligence (40%).
The open banking sector shows confidence in current fraud technologies, with 60% of respondents affirming their fit for purpose. However, 40% believe improvements are necessary, indicating ongoing challenges and the need for continuous innovation to address evolving threats.
Opinions on the fitness of the UK’s fraud regulation are predominantly negative within the open banking sector, with 80% considering it inadequate. This reflects the need for regulatory frameworks to adapt continuously to emerging threats. Only 20% believe it is fit for purpose.
Optimism about the industry’s ability to curb economic crime is moderate, with 60% of respondents feeling neutral about future prospects. Positive and negative outlooks are each held by 20% of respondents, indicating mixed confidence in current strategies and technologies.
Open banking providers employ a variety of fraud management strategies, with a strong emphasis on transaction monitoring through rules-based programmes (80%) and customer education programmes (80%). Post-transaction dispute management solutions (60%), manual monitoring (40%), machine learning programmes (40%), strong AML/CTL programmes (40%), and AI solutions (20%) further underscore the sector’s comprehensive approach to managing fraud risks.
Spending on financial crime initiatives varies within the open banking sector, with 60% of respondents reporting expenditures between £50,000 and £500,000. Additionally, 40% reported spending between £500,000 and £10,000,000, reflecting substantial investments to combat financial crime and enhance security.
Spending trends show a proactive approach, with 40% planning to increase spending by more than 50%. Other responses include increasing by up to 25% (20%), staying the same (20%), and unsure (20%), indicating varying strategic priorities and budget flexibility.
Investment in financial crime capabilities is primarily driven by cost considerations (60%) and risk and regulatory reinforcement (40%), highlighting the need for cost-effective measures that protect both the business and its customers.
To stay informed about emerging fraud trends and threats, open banking providers rely heavily on industry reports (100%) and conferences (100%). Collaboration with other financial institutions (80%) and industry media (80%) is also crucial, while law enforcement agencies (40%) play a significant role in keeping the sector abreast of new developments.
The payments industry supplier sector encompasses a variety of entities that provide crucial services and technologies to support the broader payments ecosystem. These suppliers face unique challenges in managing financial crime, including ensuring robust security measures, maintaining compliance with evolving regulations, and addressing emerging threats from sophisticated fraud schemes. This section explores the specific challenges, prevalent fraud types, and strategic responses employed by payments industry suppliers to safeguard their operations and support their clients in mitigating financial crime risks.
For payments industry suppliers, fraud and cyber crime are identified as the most significant challenges, each cited by 40% of respondents. Regulation, digital assets, anti-money laundering, and financial sanctions each present challenges for 20% of respondents, highlighting the diverse regulatory and compliance landscape these suppliers must navigate.
Identity fraud is the most common type of fraud reported by payments industry suppliers, cited by 80% of respondents. The significant occurrence of ‘other’ types of fraud (20%) suggests a variety of emerging schemes that require adaptive and comprehensive detection strategies.
Internet/telephone/mobile banking fraud is a major concern, impacting 40% of respondents. Other types of fraud, including identity fraud (20%), chargeback fraud (20%), and authorised push payment (APP) fraud (20%), underscore the diverse range of threats that payments industry suppliers must manage to safeguard their operations and customers.
Identity deepfakes are perceived as the most significant AI-driven threat, with 80% of respondents expressing concern. Automated personal data collection (20%) also represents a notable threat, reflecting the broader trend of AI being leveraged to conduct sophisticated and large-scale fraudulent activities.
Awareness of the new APP rules proposed by the Payment Systems Regulator (PSR) is mixed within the payments industry supplier sector, with 40% of respondents indicating awareness and 60% not aware.
Among those aware of the new APP rules, 20% plan to implement a combination of measures to address fraud risks. Other strategies include reviewing transactions based on the sending bank/PI/EMI (20%), implementing new fees for customers based on transaction amount (20%), and implementing fixed fees for customers (20%).
Regarding acceptable levels of fraud loss, 60% of respondents are unsure, highlighting the complexities involved in balancing risk and operational efficiency. However, 40% believe it should be less than half a billion pounds, indicating a strong commitment to minimising financial impacts from fraud.
Investment priorities for payments industry suppliers focus heavily on digital identification verification (60%). Other key areas of investment include machine learning and AI (20%), domestic and global payee verification (20%), and cloud solutions (20%).
The payments industry supplier sector shows a need for improvement in current fraud technologies, with 80% of respondents indicating they are not fit for purpose, while 20% believe they are adequate.
Opinions on the fitness of the UK’s fraud regulation are predominantly negative within the payments industry supplier sector, with 60% considering it inadequate. This reflects the need for regulatory frameworks to adapt continuously to emerging threats. Only 40% believe it is fit for purpose.
Optimism about the industry’s ability to curb economic crime is moderate, with 40% of respondents feeling positive and another 40% feeling neutral about future prospects. A minority, 20%, hold a very positive outlook, indicating some confidence in current strategies and technologies.
Payments industry suppliers employ a variety of fraud management strategies, with a strong emphasis on AML/CTL programmes (60%) and customer education programmes (60%). Manual transaction monitoring (40%), machine learning programmes (40%), AI solutions (20%), and chargeback management systems (20%) further underscore the importance of comprehensive strategies to manage fraud risks.
Spending on financial crime initiatives varies within the payments industry supplier sector, with 60% of respondents reporting expenditures between £50,000 and £500,000. Additionally, 20% reported spending between £500,000 and £10,000,000, and another 20% indicated other amounts, reflecting substantial investments to combat financial crime and enhance security.
Spending trends indicate a cautious approach, with 60% planning to maintain current spending levels. Other responses include reducing spending by up to 25% (20%) and increasing spending by up to 25% (20%), reflecting varying strategic priorities and budget flexibility.
Investment in financial crime capabilities is primarily driven by risk and regulatory reinforcement (60%). Revenue considerations (20%) and cost implications (20%) also influence investment decisions, highlighting the need for cost-effective measures that protect both the business and its customers.
To stay informed about emerging fraud trends and threats, payments industry suppliers rely heavily on industry reports (100%), industry media (100%), and conferences (100%). Collaboration with other financial institutions (60%) and law enforcement agencies (60%) also play crucial roles, ensuring that the sector remains at the forefront of fraud prevention and detection.
The payments industry supplier sector encompasses a variety of entities that provide crucial services and technologies to support the broader payments ecosystem. These suppliers face unique challenges in managing financial crime, including ensuring robust security measures, maintaining compliance with evolving regulations, and addressing emerging threats from sophisticated fraud schemes. This section explores the specific challenges, prevalent fraud types, and strategic responses employed by payments industry suppliers to safeguard their operations and support their clients in mitigating financial crime risks.
For professional services to the industry, fraud is identified as the most significant challenge, cited by 59% of respondents. Cyber crime and AI-enabled fraud follow closely, each cited by 52% of respondents, reflecting the sector’s vulnerability to sophisticated digital threats. Data sharing quality and governance (31%) and digital assets (31%) also present significant challenges, highlighting the need for robust data management practices. Regulation (28%), financial sanctions (10%), anti-money laundering (10%), and money mules (7%) further underscore the diverse range of threats that this sector must navigate.
Identity fraud is the most common type of fraud reported by professional services, cited by 34% of respondents. The significant occurrence of ‘other’ types of fraud (31%) suggests a variety of emerging schemes that require adaptive and comprehensive detection strategies. Misuse of facility (14%), insider threat (10%), and facility takeover (10%) also highlight the need for robust internal controls and continuous monitoring.
Identity fraud is the leading concern, impacting 28% of respondents. Internet/telephone/mobile banking fraud (24%) and authorised push payment (APP) fraud (21%) further underscore the importance of protecting digital transactions and customer data. AI-enabled fraud (14%), ‘other’ types of fraud (7%), and account takeover (7%) reflect the increasing sophistication of threats that leverage advanced technologies
Identity deepfakes are perceived as the most significant AI-driven threat, with 72% of respondents expressing concern. Automated personal data collection (17%) and chatbot-powered fraud (10%) also represent notable threats, reflecting the broader trend of AI being leveraged to conduct large-scale fraudulent activities.
Awareness of the new APP rules proposed by the Payment Systems Regulator (PSR) is split within the professional services sector, with 52% of respondents indicating they are not aware, and 48% indicating awareness.
Among those aware of the new APP rules, 24% plan to implement a combination of measures to address fraud risks. Other strategies include reviewing transactions based on the sending bank/PI/EMI (7%), reevaluating customers to close high-risk accounts (7%), and reviewing transactions based on a max cap (3%).
Regarding acceptable levels of fraud loss, 59% of respondents are unsure, highlighting the complexities involved in balancing risk and operational efficiency. However, 31% believe it should be less than half a billion pounds. A minority consider higher thresholds, with 3% each suggesting £1 billion, £2 billion, or £3 billion
Investment priorities for professional services focus heavily on digital identification verification (52%) and machine learning and AI (52%). Enhanced due diligence (34%), cloud solutions (24%), and automation processes (24%) highlight the sector’s commitment to leveraging technology for improved security and operational efficiency. A minority (3%) also consider other technologies.
The sector shows mixed views on the adequacy of current fraud technologies, with 52% affirming their fit for purpose and 48% believing improvements are necessary.
Opinions on the fitness of the UK’s fraud regulation are also mixed, with 52% considering it adequate and 48% believing updates are necessary. This split reflects the dynamic nature of financial crime and the regulatory landscape, highlighting the need for adaptive and responsive regulatory frameworks.
Optimism about the industry’s ability to curb economic crime is moderate, with 48% of respondents feeling neutral about future prospects. Positive outlooks are held by 28%, while 14% feel negative, and 10% feel very positive, indicating mixed confidence in current strategies and technologies.
Professional services employ a variety of fraud management strategies, with strong AML/CTL programmes (41%) and rules-based transaction monitoring (31%) being widely adopted. Customer education programmes (31%), machine learning programmes (28%), manual monitoring (24%), AI solutions (21%), post-transaction dispute management solutions (21%), and chargeback management systems (7%) further underscore the importance of comprehensive strategies to manage fraud risks. A minority (17%) also consider other strategies.
Spending on financial crime initiatives varies within the professional services sector, with 55% of respondents reporting expenditures between £50,000 and £500,000. Additionally, 17% reported spending between £500,000 and £10,000,000, and 7% indicated spending over £10,000,000. A minority reported other amounts (21%).
Spending trends indicate a proactive approach, with 34% planning to increase spending by up to 25%. Other responses include maintaining current spending levels (28%), being unsure (17%), increasing by more than 50% (7%), increasing by more than 25% (7%), reducing by up to 25% (3%), and reducing by more than 50% (3%).
Investment in financial crime capabilities is primarily driven by risk and regulatory reinforcement (66%). Cost considerations (21%) and revenue impacts (10%) also influence investment decisions, with a minority (3%) indicating other factors.
To stay informed about emerging fraud trends and threats, professional services rely on industry reports (69%) and industry media (55%). Conferences (52%), law enforcement agencies (48%), and collaboration with other financial institutions (45%) also play crucial roles. A minority (14%) use other sources to stay updated.
Technology and solution providers play a crucial role in supporting the payments and financial industry by offering innovative tools and systems to combat financial crime. These providers must address a wide array of challenges, from fraud detection to compliance with evolving regulations, while integrating advanced technologies like AI and machine learning. This section explores the specific challenges, prevalent fraud types, and strategic responses employed by technology and solution providers to safeguard against financial crime and support their clients in maintaining secure operations.
For technology and solution providers, fraud is identified as the most significant challenge, cited by 65% of respondents. Cyber crime (61%) and anti-money laundering (55%) also present major challenges, reflecting the sector’s vulnerability to sophisticated digital threats and the need for robust compliance measures. Data sharing quality and governance (48%), AI-enabled fraud (42%), and regulation (29%) further underscore the diverse range of threats that these providers must navigate. Other notable challenges include money mules (29%), digital assets (23%), financial sanctions (16%), and anti-bribery and corruption (13%).
Identity fraud is the most common type of fraud reported by technology and solution providers, cited by 48% of respondents. The significant occurrence of ‘other’ types of fraud (19%) suggests a variety of emerging schemes that require adaptive and comprehensive detection strategies. Facility takeover (16%), insider threat (10%), and misuse of facility (6%) also highlight the need for robust internal controls and continuous monitoring.
Authorised push payment (APP) fraud is the leading concern, impacting 32% of respondents. Identity fraud (23%), internet/telephone/mobile banking fraud (10%), and card not present fraud (10%) further underscore the importance of protecting digital transactions and customer data. Other types of fraud, such as lost and stolen fraud (6%), AI-enabled fraud (6%), QR code fraud (3%), money mules (3%), chargeback fraud (3%), and ‘other’ types (3%), reflect the diverse range of threats that technology and solution providers must manage.
Identity deepfakes are perceived as the most significant AI-driven threat, with 57% of respondents expressing concern. Automated personal data collection (40%) and chatbot-powered fraud (2%) also represent notable threats, reflecting the broader trend of AI being leveraged to conduct large-scale fraudulent activities.
Awareness of the new APP rules proposed by the Payment Systems Regulator (PSR) is mixed within the technology and solution providers sector, with 62% of respondents indicating they are not aware, and 48% indicating awareness.
Among those aware of the new APP rules, 32% plan to implement a combination of measures to address fraud risks. Other strategies include reviewing transactions based on a max cap (13%), reevaluating customers to close high-risk accounts (6%), and implementing new fees for customers based on transaction amount (3%).
Regarding acceptable levels of fraud loss, 52% of respondents believe it should be less than half a billion pounds. However, 42% remain unsure, highlighting the complexities involved in balancing risk and operational efficiency. A minority consider higher thresholds, with 6% suggesting £1 billion.
Investment priorities for technology and solution providers focus heavily on machine learning and AI (55%) and digital identification verification (45%). Enhanced due diligence (32%), automation processes (32%), and cloud solutions (19%) highlight the sector’s commitment to leveraging technology for improved security and operational efficiency. A minority (6%) also consider other technologies.
The sector shows confidence in current fraud technologies, with 74% affirming their fit for purpose. However, 26% believe improvements are necessary, indicating ongoing challenges and the need for continuous innovation to address evolving threats.
Opinions on the fitness of the UK’s fraud regulation are mixed, with 52% considering it inadequate and 48% believing it is fit for purpose. This split reflects the dynamic nature of financial crime and the regulatory landscape, reflecting the need for adaptive and responsive regulatory frameworks
Optimism about the industry’s ability to curb economic crime is moderate, with 42% of respondents feeling positive about future prospects. Neutral outlooks are held by 39%, while 10% feel very positive, 6% feel negative, and 3% feel very negative, indicating mixed confidence in current strategies and technologies.
Technology and solution providers employ a variety of fraud management strategies, with a strong emphasis on transaction monitoring through rules-based programmes (55%) and machine learning programmes (52%). Strong AML/CTL programmes (42%), manual monitoring (35%), AI solutions (29%), post-transaction dispute management solutions (23%), chargeback management systems (19%), and customer education programmes (16%) further underscore the importance of comprehensive strategies to manage fraud risks. A minority (16%) also consider other strategies.
Spending on financial crime initiatives varies within the technology and solution providers sector, with 45% of respondents reporting expenditures between £50,000 and £500,000. Additionally, 23% reported spending between £500,000 and £10,000,000, and 6% indicated spending over £10,000,000. A minority reported other amounts (26%).
Spending trends indicate uncertainty, with 39% unsure about future spending. Other responses include increasing by up to 25% (23%), maintaining current spending levels (16%), reducing by more than 25% (6%), increasing by more than 50% (6%), increasing by more than 25% (6%), and reducing by more than 50% (3%).
Investment in financial crime capabilities is primarily driven by risk and regulatory reinforcement (52%). Revenue considerations (23%) and cost implications (19%) also influence investment decisions, with a minority (6%) indicating other factors.
To stay informed about emerging fraud trends and threats, technology and solution providers rely heavily on industry media (81%), industry reports (77%), and conferences (74%). Collaboration with other financial institutions (55%) and law enforcement agencies (42%) also play crucial roles. A minority (6%) use other sources to stay updated.
A deep dive into the Financial Crime 360 survey, highlighting key challenges, prevalent fraud types, and strategic responses across various financial sectors
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