Webinar takeaways: overcoming barriers to fincrime collaboration

Although authorised push payment (APP) fraud, otherwise known as bank impersonation fraud, fell by 5% in the UK last year, total losses are still high at almost half a billion pounds (£459.7m, or €551.4m), according to UK Finance.

With new UK rules imposing mandatory reimbursement for victims of APP fraud, the need for collaboration to support fraud prevention is more important than ever. “Knowledge is armour in this fight”, says Nicola Harding, CEO of We Fight Fraud.

This means overcoming collaboration fatigue and working together to share intelligence so fraud doesn’t happen in the first place, Nicola adds.

To that end, We Fight Fraud and Salv hosted a webinar featuring financial crime experts from Monzo Bank and Skipton Building Society to discuss how the industry can get better at information sharing to improve fraud prevention.

Here are the key takeaways from the webinar. If you’d like to watch the full recording, click here.

To collaborate effectively, focus on quick wins

While preventing fraud requires cross-industry collaboration, the key is to start small and then scale, says Taavi. “At first, you don’t need the whole banking sector around you,” he says.

Instead, if financial institutions have a live case they are investigating, they should identify which organisation they need more information from, work with them, and go from there.

“Focus on this one particular use case, and then find the legal basis to exchange the information,” says Taavi. “Then you can get a quick win, really fast.”

APP fraud doesn’t start in banks

Even though banks and payment service providers are liable to reimburse APP fraud victims, the scam often begins outside the financial services industry—typically on social media.

“We have to be mindful that scams don’t very often originate in a bank or building society,” says Stacey Blackwell, Head of Financial Crime at Skipton Building Society. Therefore to combat fraud, there needs to be a holistic approach. “The only way you can really address this typology of fraud is with a full ecosystem view,” says Richard Bromley, Head of Financial Crime Risk at Monzo.

The challenge is that no one in the UK has a full ecosystem view, which is why collaboration is so important for fighting financial crime. “You’re only going to really reduce fraud and deter criminal activity through collaboration,” Richard adds.

To watch the webinar recording in full, hit the button below.

Barriers to collaboration: limited networks and inconsistent communication

One challenge is that current approaches to collaboration are often limited. For example, some financial institutions rely on membership programmes to share information (such as Cifas), but those are constrained by who is in the network, says Stacey.

“It might be that the bank you want to speak to isn’t a member,” she adds. That can be a problem if the bank you need to speak to doesn’t have a mechanism in place for sharing info on potential fraud.

Taavi Tamkivi, Co-founder and CEO at Salv, says this was one of the main reasons for starting Salv. Taavi added that, while running the Compliance function at Wise, attempts to flag potentially fraudulent transactions with US banks got ignored because they didn’t have a standardised way of sharing information on suspicious transactions.

Competitive advantage isn’t a reason not to collaborate

Aside from the limitations already mentioned, some banks are reluctant to share intelligence because they view it as a competitive advantage—a misguided approach because it gives criminals the upper hand.

“Criminals are sharing [information] every moment of every day,” says Tony Sales, a former criminal now turned financial crime fighter as Chief Innovation Officer at We Fight Fraud.

“We have to be a little bit bolder and smarter in the way that we share data if we’re going to get as fast as or faster than the criminals,” added Stacey.

Intelligence sharing and compliance concerns

Another common barrier to compliance are the concerns about sharing intelligence, what’s allowed, what isn’t, and so on.

However, Taavi explains that new regulations such as the Economic Crime Bill in the UK should help ease these concerns. By defining what information financial institutions can share and under what circumstances, these new regulations should effectively work in tandem with privacy rules like GDPR.

Another way to ease discomfort around intelligence sharing is by building deeper relationships through partnerships. “Collaboration and data sharing and working together is all about trust,” says Andy McDonald, Head of Operations at We Fight Fraud and Former Head of the fraud squad at the Metropolitan Police. “Sometimes, you just have to trust the people you’re working with to take that extra step,” Andy adds.

Collaboration needs to happen in real-time

For collaboration to be more effective, organisations need to exchange information in the moment, rather than after the event, says Richard. “when banks do share real time information at the point of a payment being entered, that’s when you can have a real marked impact on reducing fraud.”

“At the moment, a lot of the stuff we do is after the fact,” says Richard. “We need to bring it right up to the top of the funnel because that’s where you can really make a marked difference.”

This is where Salv can help, enabling financial institutions to exchange data on suspicious activities in real-time. Then, the sender and receiver can jointly investigate whether or not this is criminal or legitimate activity.

For more, watch the webinar recording in full.