The internet has always been a place ripe with the potential for criminal mischief. And as an online bank, payment service provider, or merchant who operates in this complex environment, we all need to make sure that our clients nor we become an instrument to phishing, money laundering or other financial fraud schemes.

What is financial fraud?

Financial fraud is the use of false, deceptive, or unfair business practices to an individual, group, or organization that results in financial loss. For the past few years, cybercriminals who specialize in this type of fraudulent activity have become increasingly versatile and inventive, making the most of the rise of mobile applications and social media.

These tech-savvy con artists can even work around safeguards and countermeasures, targeting their victims when they least expect it. As data from Statista on the last quarter of 2020 shows, almost 38% of phishing attacks have targeted financial or payment institutions, followed closely by SaaS and webmail services companies. A non-neglectable 9% of attacks were aimed at the e-commerce and retail sector.

Phishing techniques

It works the same as it sounds. Online fraudsters bait unknowing victims with fake promotions, messages, websites, and applications to fish outsensitive information like login data, passwords, credit card information, and social security numbers.

They use the branding elements of trusted financial institutions or businesses and sometimes even include a message to warn against financial fraud. Once they have the information they need, they can simply fake their identities and get their victims’ money.

Criminals have, of course, taken advantage of the current pandemic and adapted their well-known schemes to target individuals. And, with consumers turning to online channels to purchase goods and services during the confinement period, criminals have more opportunities to conceal illicit funds within a more significant number of legitimate payments made online.

Data from Statista shows a spike in attacks on legitimate brands and entities towards the end of 2020, as compared to previous years. In October 2020, 532 brands were targeted by attacks, up from 333 in October in 2019.

Money laundering schemes

Money laundering has become an easy and low-risk activity with today’s technology. Criminals can quickly get dirty money off their hands, getsomeone to carry it around for a while, and get that same money back clean. With proper care, the police has a hard time tracing it back to them, and the persons unknowingly acting as a money mule will be considered just as guilty.

Criminals have devised creative ways to recruit unsuspecting individuals who they can use to launder money in exchange for a commission, most of the time without them realizing what they’re doing. After all, these criminals carefully profile their potential victims to ensure that they will have a higher chance of converting them into their mules.

Educating our customers and employees

In addition to the security systems we put in place, it is crucial to educate our customers, partners and employees. After all, people are the weakest link, and they introduce the biggest vulnerability in any system. Awareness campaigns can help us avoid becoming victims and prevent our companies from becoming an accessory to criminal activity. So, stay alert and keep safe.