Financial Technology

Financial Technology

December 18, 2013

Financial Fraud Attacks Appear Higher Outside of North America

Financial fraud may be occurring at higher rates outside of North America, but financial services executives in North America appear more concerned about it than their foreign counterparts.

In a new study from ACI Worldwide (News - Alert), conducted by Gatepoint Research, it was revealed that 40 percent of North American financial executives faced attempted ACH (automated clearinghouse) and wire fraud. The amount in other parts of the world works out to 54 percent.

On the other hand, 14 percent of North American financial executives experienced actual ACH and wire fraud. That amount worked out to 43 percent elsewhere.

Financial executives say the fraud causes them to worry about damage to reputations more than other concerns, the study said.

In one recent example, the bank account of a California firm, Efficient Services Escrow Group, was hacked in December 2012 and January 2013. It led to three payments totaling $1.5 million being wired to China and Russia, news reports said.

“Financial institutions are faced with not only increasing scrutiny and regulatory pressures, but also the risk of reputational damage and loss of customers, which is why they’re working tirelessly on preventative measures,” explained Mike Braatz, senior vice president, Payments Risk Management Solutions, ACI Worldwide. “The real-time nature of payments has a direct impact on fraud prevention tactics. Longer ACH settlement times likely contributed to the lower fraud rates in the U.S. compared to their global counterparts.”

In the survey of 100 senior financial, anti-fraud and operations executives from financial institutions worldwide, North American financial executives noted an increase in the rate of online account takeover attacks (63 percent) compared to foreign counterparts (50 percent) – in the last year. Attempted and actual wire and ACH fraud related to account takeover was lower in North America than in other nations.

Image via Shutterstock

To combat fraud, North American financial executives are stressing tools for device protection, while foreign counterparts are using “payment-specific transaction monitoring and online session anomaly detection,” the study said. It was shown that 84 percent of North American banks use device protection tools. Samples are device ID, secure browsing and malware protection. On the other hand, 89 percent of banks in other parts of the world are using payment-specific transaction monitoring.

All of the financial pros show they are confident in tools used to combat fraud. They disagree over which are most effective.

North American financial pros said layered security protocols were the best. Payment transaction monitoring was second. Device protection was third. In other nations, payment-specific transaction monitoring was the best. Device protection was second. Also, cross-channel fraud monitoring and online session anomaly detection were the kinds that most needed improvements, the study said.

And it was shown that 18 percent of the financial executives taking the survey said they were only “mostly” or “partially” compliant with security regulations.

US officials are taking the threat of fraud seriously. Last year, the FBI announced agents have detected more phishing e-mails, keystroke loggers and remote access Trojans, according to the American Banker. These methods were used to break into banking networks and to steal credentials. The attacks led to illegal wire transfers, the FBI warned. Common attack methods include: cross-site scripting, attacking specific bank applications, e-mail account takeovers, and various scams, the report adds.

Edited by Alisen Downey

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