The growing number of cases of fraud highlight the importance of focusing on processes and technologies that offer mitigation and prevention, as well as the priorities emphasized by regulators. Meanwhile, there are persistent gaps in the practices of financial institutions that require attention.

 

We understood the nature of fraud affecting the current technology by speaking with Faisal Abidi, the co-founder of Resourcifi and a marketing and advertising expert with over ten years of experience. Continue reading to learn how frauds are changing the world of technology.

 

Fraud has had a negative impact on economies all over the world in recent decades. As a result, effective measures and methods must be used to effectively prevent and detect fraud in a rapidly changing and technologically-based business environment. Internal controls have long been the focus of auditors’ risk assessments as they seek to ensure that the control environment works effectively to reduce the possibility of fraud. As standards have evolved to place a greater emphasis on fraud, so has technology. Artificial intelligence (AI), robotic process automation (RPA), and blockchain have all been promoted as tools for detecting fraud.

 

Technology may be one of the greatest organizers of insider fraud, but it is also crucial to combating it. Here’s a look at how insider fraud has evolved and how technology has aided this process, according to Resourcifi’s Faisal Abidi.

From padded payrolls to financial crime

Scammer checks, the siphoning of investor funds through fictitious companies, the approval of loans without due diligence, and other such practices were popular among the era’s fraudsters. Desktop advancements ushered in a new era of cyber fraud. Retailers were especially hard to hit, with thieves forging corporate checks, depositing them in bank accounts, and then drawing on them. Employees engaged in “padded payroll” or similar schemes, and businesses initially succeeded in shifting losses to banks. It provided a strong incentive for businesses to tighten internal controls and improve employee supervision, particularly in the accounts receivable area, where check fraud had previously been remarkably easy to perpetuate and difficult to detect.

Fraud in the digital age

As per Faisal Abidi, calculating the total cost of insider fraud is a highly complex undertaking; organizations continue to face challenges as a result of their digital business models, which emphasize investments in technology to enable omnichannel interactions, 24/7 real-time services, efficient and scalable operations, and better customer experiences. In any case, the costs to individual businesses affected by insider fraud and scams can be devastating. Furthermore, the average internal fraud event lasts well over a year before being detected, reducing the likelihood of recovering financial assets if and when the fraudster is apprehended.

 

To make matters more complicated, businesses’ embrace of digitization to better serve their always-connected customers has resulted in the emergence of new threats. Fileless malware allows for easier and more difficult detection of sensitive customer information. The rapid transmission of information via hyper-efficient online payment methods allows insiders to gain unauthorized access to funds, emphasizing the importance of real-time transaction monitoring.

 

Since insider attackers are exploiting their trusted access to data rather than attempting to hack into databases and file shares, it is even more condemning for businesses to deploy autonomous anti-fraud technologies that act against internal threats when controls are circumvented and privileged access is abused. These technologies protect businesses’ sensitive customer data and finances by monitoring and securing payments throughout their transaction journey, allowing organizations to gain in-depth visibility into the security and vulnerability of their assets. These technologies assist organizations in detecting and stopping fraudsters before they cause significant revenue loss and internal subversion.

Procedures to prevent fraud, scams, and spam

To help prevent fraud, scams, and spam, the following should be in place at all levels of an organization:

 

• Proper communication with employees is critical, and setting the right tone from the top is critical.
• Strong compliance and anti-fraud programs are also essential and should include an easily accessible with assurances of no retaliation.
• A controlled environment that takes into account how processes may have changed
• Boards should fulfill their responsibility to monitor from the top by approaching management discussions with professional apprehension.
• Create a culture where employees care about one another; this will go a long way when they recognize that their colleagues require assistance.
• Invest in employee assistance programs; ensure that employees are aware of their existence, that they are confidential, and encouraged to use them.

 

Technology may have aided the so-called “insider threat,” but it is unquestionably critical in combating employee crime and other types of cyber-enabled fraud. Organizations must face an uncomfortable reality for anti-fraud technologies to truly serve their purpose: their greatest threats are frequently within the company. Insiders have a powerful combination of means, motive, and opportunity to commit fraud. Faisal Abidi warns that organizations may continue to be vulnerable to fraud and scams unless they invest in technology to keep their security one step ahead of the threats they face.