An implementation paradigm for protecting payments against Money Laundering and Fraud via a combined systems’ approach

Author: Georgios E. Raikos, Senior Strategy Advisor

CEO ProfitApp.NET

In the modern payments industry, money is made and money is lost as a direct consequence of which side of the illegitimate fence you stand. It might be a cyberattack, an insider threat or a third-party engaging in Money Laundering and Accounting Fraud that starts the money-bleed.

Your treasury, SWIFT department and AML/internal-Fraud investigators must be aware of all those attack vectors and must be adequately trained to respond right after the incident is traced so that the various Incident Response Teams can take over. In order for all those professionals to be able to perform at the best of their capacity, an Organization needs to provision top-rated software tools that monitor payments against rule-based transaction filters. Fraud investigators also need granular transaction and KYC drill-down reporting tools to aid them in the asynchronous search and filing of cases to management and/or the authorities.

Modern implementations with fine transaction monitoring outcomes - for both AML and anti-Fraud, rely on the intelligent integration of specialized top-rated systems rather than the operation of each one of them in-silos. The effective use of such a combined monitored environment allows for a smaller number of highly experienced officers, as well as sharp reduction in false positives, given that a  constant fine-tuning of the system allows it to adapt to the ever-changing environment and behavior of people and payments within the transactional ecosystem.

In summary, our recommendation for banking systems and payment houses following PSD2 and the new open banking environment, is a synthesis (usually in serial architecture) of two or more well-defined and targeted systems each operating within either category of transaction monitoring – AML or Fraud – in a way that the business can scale transactions without hurting the back-office or the Compliance function and the experienced personnel have time to investigate those cases that are really worth their time and attention. In that sense, the organization can expect to incur lowered AML/Fraud-related costs as the business decides to scale its payments’ portfolio.