Tuesday, March 14, 2023
The channels included P2P, ACH, wires, checks, and card transactions. NICE found fraudsters increasingly sophisticated and relentless as they mounted traditional account takeovers and experimental first-party and third-party attacks designed to trick financial institutions into approving fraudulent transactions and opening fraudulent accounts, according to Craig Costigan, CEO, NICE Actimize.
"Fraudsters are leveraging faster payments innovation to conduct sophisticated scams involving money mules who transfer funds away from the FI—funds that are often unrecoverable," he said in a statement. "As the digital landscape evolves, so do fraudsters' tactics. The threats identified in our report are a glaring reminder of the ever-present risk that looms over digital channels and payments. Financial institutions must fortify their defenses, and review digital channel controls, to stay ahead of new and emerging threats."
Costigan further noted NICE Actimize's in-depth research showed bank fraud is a growing concern among financial institutions as fraud continues to scale. For example, he stated that attempted fraud transactions were up by 92 percent during the one-year period. Fraudsters are emboldened, he added, and they are exploiting higher transaction volumes and higher ticket transactions across multiple channels.
With cashless trends pushing up transaction volumes, NICE researchers found fraud attacks rising proportionally across channels and typologies, underscoring the need to protect online, mobile, and in-person transactions. Machine learning (ML) and artificial intelligence (AI) can help identify emerging threats, they added, including money mule fraud, which they claimed represents 59 percent of new account fraud.
"While mules don't generate direct loss at their FI, they impact revenue," researchers wrote, noting these fraudulent, unprofitable new accounts are costly to acquire and maintain and may also expose financial institutions to regulatory scrutiny and reputational damage. Researchers advised financial institutions to look beyond dormant accounts for suspicious activity.
"When it comes to detecting money mules, looking for unusual activity on dormant or unused accounts is not sufficient," they wrote. "Fraud controls must be multilayered. Money mule activity often operates in rings, so the activity will be interconnected. Your models must consider many factors, including monetary and non-monetary activity and many-to-one and one-to-many relationships between:
Additionally, insights from third-party enrichment sources like dark web intelligence can provide a valuable additional layer of protection."
Yuval Marco general manager, enterprise fraud management at NICE Actimize, emphasized the need for financial institutions to implement adaptive, continuously updated systems to meet emerging threats. "With the potential shift in liability to FIs for authorized payments fraud, revenue protection is of the utmost importance," he wrote, stating advanced AI, analytics, and typology-specific models can help safeguard institutions.
A downloadable copy of NICE Actimize's 2023 Fraud Insights report is available at: info.nice.com/2023-NICE-Actimize-Fraud-Insights-Report.html 
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