RESEARCH REPORT
Insights from the 3rd Annual State of Fraud and AML Report
We surveyed 350+ practictioners across banks, credit unions, and fintech. Five trends emerged.
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Scams have become one of the most prevalent and damaging forms of fraud impacting banks, credit unions, and fintech.
Credit unions have been hit the hardest, with 33% reporting a 50-100% rise in scam instances, especially romance scams (34%) and phishing (31%). Banks, on the other hand, noted a 61% overall rise in scam activity, with phishing (24%) as the most prevalent threat, followed by romance scams (23%) and money mule (21%).
Meanwhile, 35% of fintechs are seeing a 10-50% increase in scams, leading with phishing (34%) and money mule schemes (30%).
Speed is the key to effective fraud prevention. As fraudsters become faster and more agile, the ability to swiftly deploy new fraud rules is essential for institutions to stay ahead of evolving threats.
Our research found, 40% of respondents can implement rules within five business days, while 32% take over a month, exposing themselves to greater risk.
How you write and deploy rules is what unlocks agility. Those that rely on engineering are bottlenecked. In fact, 39% of respondents that rely on engineering wait over 1 month to deploy new rules. This vulnerability is exactly what fraudsters thrive on.
Traditionally, fraud and AML teams have worked in silos, leading to inefficiencies and a lack of communication. However, the report shows that the merger into a unified FrAML team has lead to significant improvements in fraud detection and prevention.
When looking at who’s investing in FrAML, fintechs are the clear leader. The likelihood of making this switch has grown in popularity over the last couple of years. Of those who switched to a FrAML approach, 18% did so 3-5 years ago, 22% 1-3 years ago, and 41% in the last year.
17%
17%
7%
0%
34%
28%
Investigators are facing increasing pressure with the sharp rise in SARs. Specifically, 18% of institutions report significant increases in SAR filings, whereas 45% of respondents claim consent orders take a significant amount of additional time and resources.
Time spent per alert is also growing. In fact, 36% of payment companies and 17% of neobanks have seen a significant increase in time spent. Additionally, 53% of credit unions report an increase in time spent.
Real-time monitoring (RTM) is revolutionizing fraud efforts across the financial sector, delivering significant benefits such as improved fraud detection, reduced false positives, and expedited investigations.
Of those surveyed, 55% have implemented RTM. This leads to real results. In fact, 49% of institutions using RTM report improved fraud detection capabilities, while 23% achieve false positive rates below 5%.
