To combat fraud and financial crime in 2024 and beyond, financial institutions, regulators, law enforcement and private venders need to do a better job of sharing information, writes Matt Stanton.

Financial institutions, their customers and the wider community can all suffer from financial crime. From money laundering and terrorist financing to bribery, human trafficking, the drug trade and organised crime, illicit activities corrode the underpinnings of financial systems and society at large.

The Australian Criminal Intelligence Commission reported that financial crime cost Australians as much as $60.1 billion in 2020-2021. The rise of readily available artificial intelligence (AI) tools only adds ease, sophistication, localisation and personalisation to these attacks, making them more difficult to detect and more likely to succeed.

The way and where we live our lives in this digital age also leaves us exposed. Our screen time increases by the day, we share personal updates on social media, we browse and spend on e-commerce sites, we communicate exclusively by text message and we pay bills, transfer funds and check account balances all from our mobile devices. Every day, it grows closer to impossible to exist in this world without a digital identity, leaving us all vulnerable to malicious actors ready and rabid to exploit the casual and constant way in which we use the internet.

Global survey

To better understand the current and future landscape of financial crime, and how and where it intersects with AI, BioCatch conducted a global survey of 600 fraud-management, anti-money laundering and risk and compliance officials in 11 different countries on four continents.

More than half of the organisations represented said they lost between $5 million and $25 million to AI-powered attacks in 2023. Nearly 75 per cent of those surveyed said their employer already used AI to detect fraud and/or financial crime, while 87 per cent said AI has increased the speed with which their organisation responds to potential threats.

These solutions will help to combat financial crime around the world but alone they are not sufficient.

Despite the ongoing efforts of financial institutions, law enforcement and governments to bolster defences against financial crime and fraud through technology and resource allocation, bad actors continue to innovate, devising new strategies to evade prevention measures faster than fraud fighters can keep up. Nearly 70 per cent of those BioCatch surveyed said they believed criminals were better at using AI to commit financial crime than banks were at using the technology to stop it.

Information sharing

To combat fraud and financial crime in 2024 and beyond, financial institutions, regulators, law enforcement and private venders must do a better job of sharing information.

Cybercriminals operate in incredibly sophisticated international syndicates that all communicate with one another. Fraud fighters must do the same if they hope to keep up. BioCatch found 40 per cent of fraud-fighting decision makers said their company  handled fraud and financial crime in separate departments that did not collaborate. Nearly 90 per cent of those surveyed agreed financial institutions and government authorities needed to share more information to combat fraud and financial crime.

Sharing intelligence allows the good guys to better utilise available resources and identify new technologies and operation models to strategise how best to combat financial crime. While starting this exchange of information might sound like an easy fix, only requiring all these parties to agree to do it, right now a tangled web of legal and regulatory rules around the world makes sharing this kind of intel quite difficult.

As the velocity and volume of scams in both Australia and around the world continue to increase, it will be pivotal for financial institutions to work with governments, bringing businesses, banks and financial institutions together under a national – or international – strategy to provide the best possible defence against a ceaselessly innovating group of cybercriminals.

With various national agencies already in-place (like The Australian Transaction Reports and Analysis Centre (AUSTRAC), Australia is headed in the right direction, but Australian citizens also have a part to play. Education campaigns can arm citizens with the background they need to better recognise and report AI-fueled frauds, preventing more of us from falling victim to these schemes.

*Matt Stanton is global VP at BioCatch