Mike Nathan

SAS

Online Payment Banking Fraud

A world of opportunity or a perilous journey?

Can business analytics strengthen Online Banking fraud detection?

Money mules - who owns the problem?

Why businesses are shifting their focus to Online Banking Fraud?

Organisations are faced with tough challenges to focus on reducing losses AND ensure a smooth customer journey AND take effective, timely action.

Potential projected global fraud losses related to occupational fraud are more than $3.5 trillion USD.

ACFE 2012 Report to the Nations

“Cyberthieves have cost US companies and their banks more than $15 billion in the past five years, the FDIC found in a recent study.”

Financial Times, 2012

Estimated global financial crime IT spending will grow to $4.3 billion USD by 2013.

Chartis Research

Online Banking Fraud increases by 71% in the first 6 months 2014

UK Payments

Tough challenges for organisations

Today’s frauds are

Increasingly sophisticated

Higher velocity/faster

Cross industry

Multi channel

Advanced technologies

Social with pressures on staff

Siloed by line of business - No sharing of data

Act on event or customer

Rules and predictive models alone have limitations

Few proactive steps taken to combat cross channel fraud

Evidence insufficient to act upon

Investigation time consuming

Current fraud systems

are not good at finding

fraudsters:

Today’s schemes are

Online Banking Fraud is when fraudster has illegally

accessed a customer’s online banking system to

misappropriate funds

Would make a terrible heist movie!

Real Fraud

REAL FRAUD

How to rob a bank

The perfect heist requires:

• Advanced safe cracking

• Mountain climbing

• Kung Fu

• Computer hacking

• CCTV hacking … Or …

The perfect heist…

Or…

Go fishing…Go f(ph)ishing…

… or….

… and definitely….

Get to know someone who has a job at the bank

Get to know someone who has a job at the bank

Recruit some money mules…

… or….

Recruit some money mules…

An open-box solution covering all areas

Point of Compromise

Anomalous behaviourChange of details

Saving account drainingScore incoming transactions

Point of Exit

New beneficiariesVelocity Rules

Session data rules

Customer Level

Mule account scoringVictim propensity scoring

Watch-list accountsBehavioural scoring

Social Network Analysis

Points of vulnerability for online fraud

Points of vulnerability for online fraud

Fixing FraudHow to detect Money Mules

Fixing Fraud How to detect staff behaving badly

Avivah Litan, VP Gartner

"Security and fraud risk exposure is increasing as organizations are

threatened at multiple points of vulnerability.

Companies are re-evaluating how they tackle security since a

fragmented approach is consistently leaving organizations at greater

risk of attack. A more holistic approach to security ensures all layers

of protection function together.“

Money Mule Detection 3 step programme

Step 1

Train your staff to spot the signs of mule account behaviour

Step 2

Improve Application Fraud Systems to help identify money mules before they can open accounts

Step 3

Identify data sources and utilise analytics to enable you to distinguish Mule account behaviour.

Hybrid Analytics

Network

Entity

Event

Money mules - who owns the problem?

An issue with money mules is that it is often perceived as another bank’s issue.

Fraudsters realize this, exploiting it by committing fraud in one bank and withdrawing at another.

There is little incentive to prevent the fraud, both banks accuse each other of failing to control their mule problem

Mules = Application fraud...

Questions & Answers

For further information

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