Bankloch

Financial crime   continues to be a major issue, undermining the trust and safety of global financial systems. The United Nations estimates that a staggering 2 to 5% of global GDP, or between EUR 715 billion and 1.87 trillion, is laundered each year. Moreover, about 50% of companies worldwide have experienced fraud in the last two years, underscoring the urgent need for effective measures against financial wrongdoing. Financial crimes fall into three main categories:   money laundering, financial fraud, and sanctions evasion , each with its own implications. However, sanctions evasion stands out for its direct threat to global economic stability and security. Sanctions   are punitive measures imposed on entities or individuals to restrict their trade or financial transactions. Sanction evasion aims to bypass these restrictions, often through methods like using shell companies or exploiting legal loopholes, making detection and prevention challenging for financial institut...

Following our previous blog ' Rethinking AML: A Call for Innovation and Efficiency ' ("https://bankloch.blogspot.com/2024/02/rethinking-aml-call-for-innovation-and.html"), where we navigated the complex world of AML and pinpointed three primary   categories of malicious financial activities : Money laundering : Transforming proceeds from illicit activities into seemingly legitimate funds. Sanction bypassing : Circumventing governmental sanctions. Payment Fraud : Exploiting stolen or fake payment details to illicitly acquire goods or funds. Focusing on Payment Fraud, we discern two principal categories:   insider (internal) fraud , conducted from inside an organization by its own staff, and   external fraud , perpetrated by outsiders like customers or suppliers. This blog delves into   external fraud within the financial sector , particularly the unauthorized extraction of customer funds. This subset of "Payment Fraud" can be further split-up in several types...