The pandemic-influenced increase in online activities has served as the perfect backdrop for increasingly nuanced racketeering efforts by financial crime syndicates who targeted everything from the boom in deliveries, to interest in the stock market and even the vaccine program to fleece consumers.  

In Indonesia, online fraud made up the second largest category of cases filed in police reports between January and September 2020. Clearly, cybercriminals were quick to take advantage of the crisis in the region for their own nefarious gains.

With banks offering record-low interest rates, consumers are turning to alternative places to put their money. Scammers lure consumers with all sorts of money-making opportunities promising high returns. Such investment scams are becoming more prevalent which is a cause for concern as there tends to be a larger sum of money involved compared to other types of scams. In Singapore for example, investment scams had the largest impact on victims in 2020, with almost US$52 million cheated in more than 1,100 cases. 

The pandemic has also contributed to the emergence of new scams. Delivery scams have risen as a new way to siphon funds. The scam works by sending consumers emails or SMSs impersonating delivery services to either inject malware onto a system or to obtain personal information under the guise of redirecting unsuccessfully delivered parcels that had never existed in the first place.

As COVID-19 relief programs ramp up globally, there has also been a proliferation of fraudulent sites stealing people’s money and data in exchange for aid. In an international scam - led by two Indonesians - $60 million was arrested from unwitting victims who had offered bank numbers and social security pins, in hopes of receiving $2,000.

Other COVID-19 related scams include the use of outbound sales teams to call consumers, offering home delivery of the vaccine after payment is made up-front. Predatory criminals are also issuing a fleet of text messages inviting recipients to set up an appointment for a coronavirus vaccination, or urgent offers of “leftover” vaccine supposedly up for grabs.

Throughout the pandemic, one of the biggest demands on fraud and financial crime technology has been the ability to adjust quickly. Fraud detection algorithms based solely on pre-pandemic purchase behavior might face difficulties accurately predicting consumer behavior due to the rapidly shifting environment and current uncertainties. Apart from the financial costs of missing fraud, these systems could also produce many false positives that inaccurately identify legitimate customer behavior as suspected fraud, frustrating the customer and creating friction around the use of payment cards.

To further complicate matters, the pandemic has also accelerated the adoption of real-time payments due to restricted facetime and greater demand for contactless payments. While the convenience of real-time payments is great news for customers, it has also opened a new window of opportunity for fraudsters. 

This is concerning as 4 out of 5 Asia Pacific banks (78 percent) say the introduction of real-time payment platforms in their country has resulted in increased fraud losses, due to not having the most advanced fraud analytics in place.

To keep scams and fraud at bay, financial institutions require purpose-built solutions that can adapt and prepare for unprecedented events. A layered fraud defense framework with advanced behavioral analytics for instance, can be deployed to detect out-of-pattern payments. Using two-way customer communication services can also help financial institutions demonstrate appropriate scam interventions before it’s too late.

Plus, by leveraging artificial intelligence, such as tapping into robotic process automation (RPA) banks can filter out scams through typically used keywords to help relieve some of the workload on personnel. This will allow them to focus on high-value tasks while automating routine decisions and workflows.

Aside from the necessary technological investments, collaborations and partnerships between financial institutions and regulators can go a long way in protecting consumers. Regulatory bodies can supplement technological efforts with ramped up efforts to bolster consumer awareness of the evolving scam landscape. These advisories keep consumers up-to-date with the latest scams and recommendations on how they can actively protect themselves.

With the increase in digital activities, geographical borders are quickly becoming irrelevant to scammers, as joint operations among scammers can be launched without the need for a physical presence on-ground. Hence, countries must work in tandem to improve detection capabilities on a transnational scale to effectively tackle fraud.

A recent Asia-Pacific-wide operation led by Interpol is testament to this, where  $83 million in illicit funds from cyber-enabled financial crime were successfully intercepted in under six months. 

Financial crime syndicates are constantly innovating new ways of infiltrating financial systems to illegally profit. There is simply no room for complacency. Financial institutions, regulators and consumers, all must remain vigilant and work collaboratively to adapt to the ever-evolving fraud and financial crime threat.

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The writer is FICO’s senior director of fraud and security line of business in Asia-Pacific.