What are the main challenges in cross-border transfers from a fraud prevention and detection perspective?
In the case of cross-border money transactions, the main challenges are often linked to regulatory technical standards for?Strong Customer Authentication, monitoring, reporting, secure communication, and fintech software systems.
It is imperative to have the highest security for payment services and strict security requirements for any type of payment and ensure the protection of consumers’ financial data. In this regard, the Payment Services Directive (PSD2) requires that payment service providers (PSPs) apply?Strong Customer Authentication (SCA)?each time a payment service user accesses its payment account online, initiates an electronic payment transaction, or carries out any action through a remote channel which may imply a risk of payment fraud.
To prevent fraud in a money laundering or terrorist financing scheme, each MSB must continuously monitor the customer’s transactions and the extent of the monitoring that is required will depend on the customer’s risk profile. This is a part of the compliance process that financial institutions have to comply with and certain smart financial systems can be handy for automation, monitoring, and reporting to prevent and detect fraud.
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On the other hand, one can argue about the additional challenges of?limited access, insufficient transparency, and process ownership responsibility issue between all partners involved. Multiple stakeholders participate when facilitating a cross-border transfer. Therefore, assuming the ownership and responsibility of the entire process for one partner alone can be difficult. Hence, one can assume that the?lack of a centralized intelligence?unit?that holds all the information and insights about a customer can be considered a barrier to monitoring and reporting the ongoing business relationships and review of individual transactions for money service businesses. Each party collects and monitors certain parts of the fund flow process and oftentimes it is not clear when and where in the process the one responsibility starts and/or ends.
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11 个月Elena Duquesne-Borta, your insights on the challenges of cross-border transfers are spot-on! I'm curious, how do you see technology evolving to address these issues shortly?