In collaboration with Fintrail, Resistant AI, which improves automated financial risk and compliance systems throughout the client lifecycle, has published a new whitepaper. The whitepaper, "Unmasking Fraud: Dynamic Controls for an Ever-Changing Threat Landscape," delves into the reasons why combating fraud demands a multi-layered defense and a simple method for companies to identify vulnerabilities.

Resistant AI looks at different fraud profiles in the whitepaper and how businesses might address them. Additionally, it uses case studies and examples to demonstrate how holistic methods and layered controls can strengthen the battle against fraud.

With over £1.2 billion stolen by thieves in the UK alone in 2022—that's a whopping £2,300 stolen every minute—the need for effective countermeasures has never been greater, the report claims. Fraud reached its despicable peak as the most common crime in England and Wales during this time, with almost 3.5 million occurrences. There have been suggestions for the categorization of fraud as a national security risk in the UK due to the severe underreporting of fraud, which is estimated to occur in only one out of every seven occurrences.

In light of this, government authorities and regulatory agencies are putting increasing pressure on financial firms to step up their efforts to combat fraud. The Financial Conduct Authority (FCA) of the United Kingdom has expressed that companies must improve their fraud detection and management techniques in order to more effectively combat fraud and related losses. While progress has been made—for example, sophisticated controls prevented the theft of £651 million in the first half of 2023—it is still generally agreed upon that combating fraud necessitates a robust, multifaceted strategy that combines prevention, detection, and redress—all of which are grounded in a detailed knowledge of potential fraud vectors.

The government's ambitious Fraud Strategy, which was launched in June 2023, is an example of how the political will to tackle fraud has solidified in the UK. The strategy aims to reduce fraud incidents by 10% and signals a shift towards proactive and preventive measures. It is supported by an additional £100 million in financing for law enforcement. Furthermore, the Payments Service Regulator (PSR) will implement new rules for fraud victim reimbursement starting in October 2024, and Europe's revamped PSD3 framework will support cooperative anti-fraud activities. These developments signal major changes in the regulatory landscape.

Understanding the intricacy of this problem and realizing that combating fraud is an ongoing battle is essential. Despite its magnitude, the financial sector's endeavors demand a coordinated, ecosystem-wide response from the telecom and social media sectors. The widespread risk is highlighted by Ofcom's statistics, which show that nine out of ten internet users have come across suspected scam activity and that a quarter have fallen victim to these schemes. The Online Safety Act and the Online Fraud Charter, together with the support of major tech companies like Amazon, TikTok, and Instagram, are examples of legislative initiatives that are critical to preventing the spread of fraudulent content and protecting consumers.

Resistant AI highlighted that the proverb "It takes a village to raise a child" acquires new meaning in the context of fraud prevention, underscoring the necessity of a coordinated, cross-sectoral campaign against the fraudsters as businesses attempt to sail through these turbulent waters. We may aim for a future where the financial integrity and security of both consumers and businesses are protected by working together and strategically building defenses, even though the path towards a fraud-resistant financial ecosystem is long and difficult.