Financial crime across the globe continues to pose a threat to all banks, financial institutions (FIs) and fintechs. As innovative technologies such as artificial intelligence (AI) come to the forefront of all industries, cybercriminals often remain one step ahead. To find out how financial organisations plan to limit and tackle this crime head-on, The Fintech Times attended the Anti-Financial Crime Summit 2023 at the Millenium Gloucester Hotel in Kensington, London.
Hundreds of attendees from various challenger and traditional banks, FIs and fintechs gathered to discuss the best ways to approach rising levels of financial crime in the UK.
Alex Wood, CEO of Reform Courses, kicked off the event with his keynote speech, ‘The anatomy of a scam, inside the criminal mindset, and how can you start to fight back?‘, where he explained: “You can’t stop fraud being attempted – the only thing you can do is prevent causes.
“The vast majority of fraud is cashed out from networks of mule accounts, accounts that have been taken over by somebody other than the registered account holder.
“When these mule accounts are taken over, this is the opportunity for the financial sector to identify the exact point at which a mule account becomes a mule account – before it enables crime.”
Dr Elizabeth Carter, associate professor of criminology at Kingston University, also took to the main stage, focusing on the use of language by fraudsters to groom their victims – and the unreported psychological impact of this type of crime.
Carter explained: “We need to try to change the societal narrative that victims of financial crime are stupid or greedy. ‘They fell for it, so they deserve what they get’. This type of fraud is not only devastating to individuals financially, it also exhibits huge levels of psychological harm on victims.”
Carter also commented: “The general public needs to be really explicit, whenever they are contacted by anyone, that they are aware of fraud and scams, and will be protecting themselves.
“If the person on the phone, email, or WhatsApp doesn’t like it – they are not somebody that you want to be talking to.”
Regulation spotlight
Regulation became the next focus topic on stage at the Anti-Financial Crime Summit as Kalle Johannes Rose, associate professor at the Copenhagen Business School; Katarina Helde Cook, head of financial crime at RBC Brewin Dolphin; and Alicja Hellak, group compliance officer at Commerzbank AG, were joined by moderator Denisse Rudich, founder and executive director at Rudich Advisory.
Helde Cook covered some of the most important aspects of the new Economic Crime and Corporate Transparency Act 2023: “The Companies House reforms look very good on paper. It creates powers for Companies House to challenge people who register. It’s all ensuring that companies that register are not used for criminal purposes.
“There are some really interesting things coming in around identity verification. There are nearly 5 million companies registered in Companies House now. So it will be interesting to see how we are going to verify all of these, and how it will actually be useful for the industry.”
Johannes Rose gave his perspective to discuss what regulation looks like across the rest of Europe and the challenges the region is experiencing: “What is lacking is some of the new regulatory practises in the European Union are still being conducted at a director level – which means we will still see misinterpretation or different procedures nation-to-nation, jurisdiction-to-jurisdiction. A lot of the cooperative problems we’ve seen across Europe will probably remain.”
Using AI to tackle… AI
Nik Adams, commander and national coordinator of economic crime for the City of London Police, offered the perspective of UK law enforcement in the fight against financial crime.
Adams explained: “One thing that is really drawing our focus at the moment is the future impact of AI. I suspect that AI is going to be both friend and foe in our work. In the past, poor grammar or punctuation could be a key giveaway when identifying dodgy websites. AI will only make this situation harder for members of the public to navigate as it enables fraudsters to create a much more realistic mimic of your company website.”
He also warned attendees of the future dangers that AI can present, and how it can be used to make scams even more difficult to identify: “Most people are familiar with the ‘mum and dad’ WhatsApp scam circulating in the last year, where fraudsters pretend to be a child who has lost their phone and needs money.
“In the future, with AI, it won’t be texts that people receive. It could be a voicemail, or indeed an interactive phone call which mimics their child’s voice.
“However, AI as a friend could provide the solution to this. AI could spot an imperfection in a fraudulent voice note that the human ear would not be able to detect. So we’re looking at how we can embrace the current opportunities of AI, but also realise its threats.”
Generative AI and LLM hype
In the afternoon, Colin Whitmore, financial crime strategy, innovation and design lead at NatWest, kicked off proceedings for the Anti-Financial Crime Summit AML stage, as he explained the challenges of implementing AI into businesses’ AML approaches: “There’s a lot of talk and excitement about generative AI and large language models (LLMs).
“Putting technology aside, the difference between LLMs and generative AI as a whole, is they actually speak to us in our language. You can expose them to a user and they can interact with them in human language; they don’t have to write SQL statements, you don’t have to learn programming and you don’t have to ask a specialist to get some information – and that’s quite powerful.
“Customer engagement is also really interesting. One, how can we better through this technology engage with customers in a way that customers don’t fall for scams inadvertently? And then there’s also cross-industry sharing of data and how we can use technology to help us do that. We need to start to consider how to judge data that another organisation has sent to you, which may have a very different risk appetite than your organisation.
“Technology used to be seen as a big challenge which didn’t quite do the job. Nowadays, technology does do the job and the challenge is now more on us and how organisations will use that technology. You look at a human copilot supporting a human: where’s the level between support and decisioning? You don’t want the person just to blindly follow the machine, but on the other hand, you want to support the person in their role.”
