The RegTech Hub
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The RegTech Hub

Best practices for fraud and risk management 2022

Financial crime is often thought of as white-collar crime and not a serious and violent act. But laundering the proceeds of crime is at the heart of many heinous acts as criminals look to profit from their illicit activities. Aside from the real victims of those crimes, we all are victims as corruption, tax evasion and tainted money flows distort government, business and society.

Fighting fraud, managing risk and performing financial crime compliance are not only legal obligations, they’re the right thing to do. But with all the rapidly changing potential threats and regulatory requirements, how can you keep up-to-date? The Paypers has published its Financial Crime and Fraud Report 2022 — Best Practices into Fraud and Risk Management to help organizations review and reassess their security posture.

The report provides insights from experts, industry associations, top players, consultants and financial institutions about topics such as:

  • Creating safe digital economies using IDV solutions
  • The role of digital ID in establishing trust
  • Enhancing digital onboarding processes
  • BNPL fraud
  • Corporate identity theft
  • Benefits of having a risk-based approach to prevent financial crime
  • Regtech in the Metaverse
  • Regtech trends
  • Tackling fraud through collaboration

With a better understanding of the risks, best practices and solutions you’ll be better positioned to combat crime for your organization and society.

Best practices in digital onboarding and KYC

The customer onboarding process is your organization’s first barrier to fraud and financial crime. After all, if you prevent a criminal from getting an account, they have less opportunity to do any damage.

For payment and financial service organizations, effective onboarding includes Know Your Customer (KYC) compliance obligations. The first step of KYC, identity verification, helps you determine that you are dealing with a legitimate person and is fundamental to protecting your business and customers.

But more than just being a tick-the-box exercise, identity verification can provide numerous layers of data to inform your risk management procedures better. Adding in more identity data or additional identification procedures helps create a more robust profile to base your onboarding decisions. For example, adding an ID document verification on top of a digital identity verification process provides much more complexity for a criminal to overcome.

But while security is essential, creating a seamless and relatively quick onboarding for your customers is also vital. If the process is too slow or demanding, the customer can be discouraged or even abandon the process.

Customer onboarding needs to consider both speed and security.

Fortunately, the risk-based approach provides a proven model for considering the complexities of different markets, legal requirements and risk scenarios. Not all customers are the same; some customers should go through the most rigorous checks, while others only require simple due diligence. As Zac Cohen, Trulioo COO, states in the report:

Every interaction presents a unique scenario that poses different levels of business risk and may benefit from an optimized onboarding flow.

By understanding fraud trends, risk models and how your audience interacts with your services, you develop deep insights into who makes a good customer and who poses a risk. You can then optimize your onboarding programs to better enable good customers to quickly sign up and begin transacting. Or, in the case of higher risk scenarios, require more checks or rejections. As Cohen puts it,

Onboarding users or transacting requires a layered approach to compliance and Anti-Money Laundering requirements. Essentially, a layered approach combines a multitude of verification services working harmoniously to increase acceptance rates for legitimate customers while keeping out bad actors or perpetrators of fraud.

Identity solutions that provide a layered approach will help your organization deliver on your risk management model.

Controlling the account experience

When looking to optimize customer onboarding, you need to understand the markets you operate in (or want to), the legal obligations and your risk management approach. This information will help you determine what identity verification vendor best fits your needs.

Perhaps you will only operate in one market and have a set risk model. In that case, a single-point solution might fit your needs. If you operate in multiple markets, deal with numerous customers and need flexible solutions, the number of vendors that can fit the bill drops dramatically. The Paypers report provides a comprehensive section of company profiles with details regarding the key player’s core solutions, business partners and technology.

The Buyer’s guide to digital identity verification is another resource designed to help business leaders understand different verification methods and determine the right solution for their needs. This Trulioo resource offers insight into the processes, the marketplace, solutions and critical buying considerations. Whichever vendor you select, understanding the industry’s dynamics will help ensure that your organization moves forward with a solution that meets your needs now and into the future.

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Trulioo

Trulioo

Trulioo is the leading global identity verification provider helping businesses meet #AML #KYC and #KYB compliance https://www.trulioo.com/blog/