Takeaways from Financial Crime 360: Ben Agnew, The Payments Association

1. AI – friend and foe

Artificial intelligence (AI) has been a catalyst for change and innovation in detecting fraud over the past couple of years. Advanced systems can now enable real-time identification of suspicious activities. However, criminals are also leveraging AI to bypass traditional defences. Deepfake technology scams are increasing, particularly when it comes to identification verification processes. Fraudsters are using synthetic identities and sophisticated forgeries, making it imperative for financial institutions (FIs) to invest in more robust AI-driven countermeasures.

AI isn’t just a tool for combatting fraud—it’s a battlefield where institutions must fight to outpace sophisticated fraudsters. Collaboration between tech providers and government bodies is vital to ensure regulations support, rather than hinder, the fight against financial crime.

2. The new APP fraud rules

Staying on the threat of fraud, this was the first Financial Crime 360 following the introduction of the Payment Systems Regulator’s (PSR) new Authorised Push Payment (APP) regulations, which came into effect on October 7^th. The new rules inspired no small amount of media coverage in the run-up to the launch begging the question of what impact they would have. Naturally, it is too soon to say what the long-term implications will be, but we are keeping a close eye on the situation, which informed many of the discussions at the event.

One surprising benefit of the new rules has been the increased collaboration between sending and receiving Payment Service Providers (PSPs). Sharing the reimbursement obligation for APP scams has fostered deeper cooperation, which is in turn unlocking efficiencies and improving industry resilience. However, the challenge of social media fraud remains significant, with many discussions centring on the disproportionate role of tech giants, who bear no accountability despite the substantial fraud originating on their platforms.

Data sharing is another big mitigating factor that we need to invest in to prevent fraud, which made the launch of the Fraud Intelligence Reciprocal Exchange (FIRE) a hot topic at the event. This is a threat intelligence sharing programme for FIs – between some banks and Meta. It’s true that this is a very small step in the grand scheme, but at least it’s a small step in the right direction.

3. Shifting Consumer Attitudes Toward Nationalising Digital Identities

The UK government’s ongoing efforts to nationalise digital identities have sparked debate for years. While a unified digital identity system is widely seen as essential to combat the rise of AI-driven impersonation scams, it also raises concerns around data centralisation and potential misuse.

With AI-driven financial crime on the rise, one prediction from Financial Crime 360 is that public attitudes toward this contentious issue will begin to shift in 2025. The general public are growing increasingly concerned about AI advancements, such as deepfakes, potentially driving a sharp increase in financial crime.

To stay ahead of these challenges, FIs and the government must focus on nurturing public trust. This can be achieved through open dialogue, transparent policies, and a strong emphasis on security and personal control within a national digital identity system.

4. KYX and Seamless Customer Onboarding

The concept of “Know Your X” (KYX)—whether it’s customers, technology, or risk—also took centre stage at the event. KYX highlights the growing need to extend due diligence beyond traditional KYC (Know Your Customer) protocols.

Efficient onboarding processes are critical, especially as customers expect seamless digital experiences. However, balancing speed with security remains a pressing challenge. Many FIs are adopting layered security measures, combining AI-driven risk assessment with behavioural analytics to verify identities without compromising user experience.

Meanwhile, regulators are pushing for stricter compliance standards to curb onboarding fraud. This underscores the need for a 360-degree approach, where FIs not only meet regulatory requirements but also enhance their ability to detect anomalies during onboarding.

5. Moving Forward

The key trends at Financial Crime 360 underscore the importance of staying agile in the face of evolving threats. While technology is at the forefront of innovation, the human element—whether in customer education or inter-industry collaboration—remains crucial.