The global business climate is rapidly changing, causing compliance and fraud issues to become more complex as well. Many organizations are under the impression that their fraud compliance standards are good enough, yet this is most likely not the case. Companies must update their spending policies as new security threats are detected. This is how businesses need to work actively to prevent fraud and mitigate risk.
Criminal fraud involves deceit or dishonest conduct to obtain money or other benefits. Globalization and technological advances have opened the door to massive amounts of criminal fraud. This is because the internet has allowed for the growth of customer-not-present business interactions. digital transformation has increased the chance of identity fraud through the theft of personally identifiable information. With this information, criminals can perform account takeovers or open new fraudulent accounts.
Today, identity fraud is the fastest-growing crime activity on the planet. Specifically, over 16.7 million United States citizens suffered from identity fraud in 2017. Even children are at risk. Over 1 million children in the United States suffered from identity theft in 2017 and this number expected to continue rising.
Managing fraud can be a daunting task. Legislation often requires monitoring, auditing, collecting, and reporting requirements on specific entities. Regulating entities must coordinate these efforts into a fraud-prevention plan. Plus when regulations change, fraud associates must work proactively to comply and protect the companies they work for.
The surge in fraud has caused a significant monetary burden for the financial institutions associated with the crimes being committed. It has also led to the exploitation of ineffective fraud rules and regulations. In order to face these challenges, businesses must take steps to create robust fraud and risk management standards.
For many organizations, fraud prevention, AML/KYC is still a matter of ticking boxes. This should not be the goal. Companies need to proactively prevent litigation or fines. They should find real value in the processes of complying with regulations. To actively and effectively fight fraud, the cost-value of products that may decrease fraud, like identity verification, must be added back to fraud prevention schemes. Employees must understand why maintaining these programs is important beyond simply avoiding regulatory fines.
Fraud professionals can be held responsible for fraud when it occurs. This can happen regardless of whether they had direct knowledge of the fraud being committed or not. Fraud professionals have a duty to know about fraud when it happens. More importantly, how and why it happened. The lack of attention to performing key supervising activities to mitigate fraud and risk can result in large fines. The bottom line is that it is in your company’s best interest to do everything possible to fight and prevent fraud before it can occur.
Different businesses face differing needs. This means some organizations, like financial institutions, will need to follow the fraud rules put in place by the Patriot Act. Other organizations will not have to follow such stringent regulations. It is important that businesses maintain a balance between meeting fraud compliance and their business objectives. Business objectives, such as onboarding customers quickly, and using a service that is cost-effective, should be considered when implementing a strategy to prevent fraud. All businesses should take fraud prevention seriously.
Instead of reacting to breaches after they occur, companies should proactively anticipate them before they ever happen. This will reduce the amount of fraud-related crimes within organizations and boost their credibility as fraud mitigation is maintained. A proactive approach is the most cost-effective choice.
IDMERIT has created a suite of fraud prevention solutions that work to reverse this damaging trend in fraud prevention. The solutions will detect and minimize identity fraud, provide frictionless online fraud detection, helps your company comply with regulations, prevent money laundering, manage data breaches and improve operational efficiencies.
Solutions are available that verify individual identities for minimum know-your-customer (KYC) checks. There are also solutions that validate business identities for know-your-business (KYB) checks. Anti-money laundering (AML) solutions are also available for added risk management. IDMERIT’s all-inclusive platform provides a variety of products that can address these needs.