Cybercrimes and online fraud have increased globally; last year, Europe saw identity fraud double compared to the year before. Regulators and organisations are in a constant cat-and-mouse game against fraudsters and cybercriminals. Many industries experts claim that Software-as-a-Service for AML compliance will be a crucial asset for regulated entities. Not least now that the rise of Crime-as-a-Service is reflected in the Dark Web markets.
The digital adoption rate is several years ahead of the projected evolution
The COVID-19 pandemic did bring about changes in the way companies in many sectors and regions do business. Due to the risk of infection and national lockdowns, consumers moved toward online channels, and companies and industries responded by adopting digital transformation technologies at an accelerating rate.
The extent of technology’s differentiating role in this crisis can’t be emphasised enough. Today, business is booming for many online retailers, service providers, and companies that embraced the pandemic's shift in consumer needs.
Those organisations that invested more capital in digital technology than their competitors are twice as likely to report revenue growth. Despite customer loyalty plummeting, these organisations took on the digital shift with flying colours.
Consumers are switching brands at an unprecedented rate now that a click is all it takes to find more convenient, trendy, competent and affordable products or services. The competition online is fierce, and companies are doing their utmost to increase their market share through measures that allure consumers, often by offering the same desirable products or services as the competitors but at a lower price.
There are numerous indications that the rapid shift to sales of products and services through digital channels that arose out of necessity during the pandemic is becoming the norm.
Due to the digital acceleration of the pandemic, today's digital adoption rate is several years ahead of the projected evolution in many countries and industries. Also, the world continuously faces new challenges that disrupt and changes the way companies and consumers do business and interact.
Today, the war in Ukraine causes complications to the supply chain worldwide, and new variants of the COVID-19 virus continue to bring havoc to already vulnerable economic markets. Consumers’ rapid shift to digital channels during the pandemic has proven to endure, but it is also becoming the benchmark within numerous industries.
With the emerging digital landscape comes opportunities, some positive and some negative. As companies innovate, enhance, and invest in technology to keep up with digital demand from consumers, they are also dealing with cybercriminals and fraudsters from the dark side of the Internet.
Crime-as-a-Service increases fraud
Recent studies indicate cybercrime’s cost to businesses globally amounts to hundreds of billions of Euros. For quite some time now, fraudsters who browse the Dark Web markets have been offered to buy leaked identity details such as social security numbers, dates of birth and addresses, and other personal data like phone numbers, education level, and employment information.
Today, Crime-as-a-Service (CaaS) is increasing on multiple fronts, showing that sometimes the truth is stranger than fiction. Believe it or not, the growing cybercrime is nested today in the broader development of packaged fraud processes.
The Crime-as-a-Service industry offer, among other things, ready-made phishing kits tailored to imitate the communication of a given brand and deceive consumers with a bogus landing page, mimicking emails or even SMS messages. The fraudsters only need to hold an email or phone number list to attack and deceive customers with a tailor-made phishing kit.
Cybercriminals regularly use the dark web markets, accessible through anonymisation services and special browser software, to sell stolen credit cards, hacking tools, exploits kits, botnets, hacked accounts, tutorials and much more to earn money. Numerous actors within the so-called CaaS industry even provide hacker-for-hire services and offer their shady customers support at an additional cost.
Fraud detection and prevention methods have also accelerated advancement, with machine learning and AI enabling businesses to keep pace with rapidly evolving fraudsters.
The internet hosts a cat-and-mouse game where the measures introduced by a company to fortify its defences almost immediately are faced with the cybercriminals' respondent technological advancements. Organisations have no other choice but to adhere to the inescapably enhancing demands from regulators and continuously improve how they conduct fraud risk assessments in scope and frequency through automation. At the same time, the criminals continue to try and take advantage of this fluid situation.
One out of many examples of this cat-and-mouse game dynamics is the introduction of one-time password-based authentication systems via SMS or apps across multiple leading services and verticals to stop account takeover fraud. The concept is that actions such as logins or transactions require a second authentication factor from the account holder. Even if a fraudster were to acquire someone's password, that person's account would still be protected.
The immediate response from "the dark side" has manifested in reports of fraudsters employing one-time password interception bots - specialised CaaS tools whose entire goal is to get the account holder to submit their one-time password just at the right moment fraudster has access to the user's account. In many ways, frauds and Crime-as-a-Service is an attempt to mirror the Software-as-a-Service (SaaS) model for enterprise-wide AML regulatory compliance.
Software-as-a-Service for AML compliance
An effective SaaS platform has the potential to protect the reputation and assets of an enterprise in an unrivalled manner. SaaS for AML compliance adds value from both a strategic and a practical standpoint, and the advantages of automation and scalability regarding risk management are evident. Especially for global operations and international companies, the mobility of applications delivered via the Internet can significantly improve efficiency and resource utilisation.
The SaaS model for AML regulatory compliance means a lower cost of ownership, more flexibility and agility, and a faster route from decision-making to the implementation of, e.g., fraud detection and prevention measures. As cybercrime, fraud, the cost of combating financial crime, and penalties for non-compliance increase, regulated companies that focus on secure, effective, and flexible KYC and KYB processes following AML regulations will gravitate towards the SaaS regulatory compliance model.
A progressive approach to risk assessment, making business, meeting consumer demands, and protecting both customers and the operation from the illicit doings of cybercriminals will undoubtedly require adopting innovative strategies that include Software-as-a-Service.
Did you know that ZignSec will soon transition from an API-focused compliance platform to a SaaS model for worldwide KYC and KYB regulatory compliance, including supreme fraud detection and prevention tools? Stay tuned!
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